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People intuitively jump to the conclusion that the problem is caused by a lack of building. While more building would help, a lack of it isn't the main cause of

• jachee 2y ago
  > This is a problem of underutilisation in my view. Too many properties are being used as investments and not as a primary residence. I've believed for a long time that heavily taxing income from second+ properties, similar to capital gains, would help reduce rent-seeker hoarding, to help free up and reduce the cost of properties for primary-residence owners.
  • tmnvix 2y ago
    Yes, any government that was serious about addressing this issue would take measures to decrease the incentives for property investment. Instead in most of the countries I mentioned property investment enjoys benefits that other forms of investment don't (tax, leverage, etc). Personally, I think LVT would be the best approach.
  • Glyptodon 2y ago
    Thing is, rental buyers really only make out well because they can rent places for more than their purchase/mortgage equivalent. If supply were large enough, I'd think rental rates below the average monthly mortgage payment would be more widespread and tend to make rental property ownership less appealing.
    • jachee 2y ago
      The problem is that there’s enough demand out there—as capital seeking to be invested—to keep supply constrained.
  • WalterBright 2y ago
    Taxes on rental income are already more than capital gains tax rates.
    • jachee 2y ago
      Then they need to be at least doubled, and funneled into individual owner-occupied housing subsidies.
      • anon291 2y ago
        We tried subsidizing individual housing and caused the 2008 recession. It's better to let the homes be owned by those who will pay up whether their renter does or does not. A landlord provides a valuable insurance service in some ways.
      • WalterBright 2y ago
        Crushing the real estate business with taxes isn't going to increase the housing supply.
        • jachee 2y ago
          It will if every AirBNB becomes a place someone can buy.
  • anon291 2y ago
    People don't buy vacation homes in generic suburb #5 which is where most people statistically want to buy homes. Vacation homes are in beautiful tourist areas. That can be a problem for local workers but I doubt this is much of a problem for most markets.
    • NoGravitas 2y ago
      It's not about vacation homes. It's about rentals in generic suburb #5, primarily, but it's also the case that an increasing number of rental properties are being left vacant thanks to "algorithmic collusion" being used to drive up rents: * https://www.businessinsider.com/real-estate-apartment-rent-price-setting-landlords-realpage-lawsuit-illegal-2023-11?op=1 https://www.businessinsider.com/real-estate-apartment-rent-p... * https://www.propublica.org/article/yieldstar-rent-increase-realpage-rent https://www.propublica.org/article/yieldstar-rent-increase-r...
  • Panzer04 2y ago
    How is this not a defacto transfer of wealth from renters to owners? Rental supply will go down due to reduced profits, and therefore ultimately rental prices as a whole will go up once a new equilibrium with fewer rentals is reached. These sorts of suggestions generally seem hugely biased towards buyers at the expense of everyone else.
    • lotsofpulp 2y ago
      Marginally higher and higher property taxes for non primary residences would deal with that.
      • Panzer04 2y ago
        I don't follow. If you make holding an investment property more expensive than owning, than fewer people will own investment properties, reducing supply and increasing rental prices. Yes, the investor makes less, but the expected result is less supply so rents are higher, not the same supply but with strictly lower rents.
        • lotsofpulp 2y ago
          Renting homes and building and selling homes are two different business. Higherand higher marginal property taxes for owners of non primary residences disincentivizes owning secondary residences, hence disincentivizes renting, hence decreasing supply of buyers wanting to buy homes. There will still be first time buyers or people moving, so builders should still have incentivize to build homes, hence supply should not cease to come online just because there are fewer landlords.
• FactKnower69 2y ago
  1000%. I will never get tired of teaching people (it's news to every single one of them!) that at any given time, there are more than 20 empty housing units in the United States for every single homeless person on the street (https://www.self.inc/info/empty-homes/ https://www.self.inc/info/empty-homes/). There is not, nor has there ever been, anything resembling a "housing shortage". We live in a post-scarcity world as far as housing is concerned, and have for centuries. There is absolutely no barrier to housing every single human being beyond greed. The entire framing of the issue as a false NIMBY/YIMBY dichotomy is a distraction from the reality that there is not and has never been a supply issue. The only issue is artificial demand from speculators who choose to withhold and deny a basic human right in the hope that it might magically raise in value for no reason instead of depreciate like every other asset.
  • linguae 2y ago
    I’m curious about how these empty homes are distributed? Take California for example, where there are 19 empty homes per homeless person according to the link provided. But where are these empty homes in California? If they are disproportionately located in areas far from employment opportunities, then this suggests that we still need to build more housing near employment centers. But if there are plenty of vacancies in areas close to job centers, then this is definitely something that needs to be looked into more closely.
  • aegypti 2y ago
    A surplus of housing in Madison, WI is irrelevant to someone living and working in NYC, which has a severe housing shortage. We are still subject to space time.
    • nradov 2y ago
      I don't understand what you mean. Nothing prevents people from moving to Madison. And let's not have any spurious claims that there are no good jobs in Madison: the unemployment rate is significantly lower in WI than in NY.
  • jayski 2y ago
• shuckles 2y ago
  > People intuitively jump to the conclusion that the problem is caused by a lack of building. In my experience, people "intuitively" jump to basically every conclusion besides this one. "Greedy landlords" or "[favorite scapegoat] collusion" are intuitive conclusions which are far more common than supply and demand. > Ask yourself, do Canada, Australia, New Zealand, the US, Britain, Ireland, etc, all have the same inability to build or is there maybe some other common cause? Yes they do, to varying degrees. The Anglo land use regime is a disaster.
  • NegativeLatency 2y ago
    I only have firsthand experience in the US but it makes a lot of sense to me that the influence of colonization by Britain would cause all of the listed countries to have similar issues related to land use.
    • downrightmike 2y ago
      Every state west of the Mississippi has at least 50% of all land owned by the Fed Gov and isn't used at all. We have plenty of land, that isn't a real problem.
      • Terr_ 2y ago
        Much of that are involves forests far away from where people would want to live anyway. Often without roads. When people say the issue is land, that usually implies a very particular smaller subset of land which is in proximity other populations, economic centers, and with certain features and infrastructure.
        • Qwertious 2y ago
          There are also plenty of houses in recently a abandoned ghost towns. The catch is that they were mostly abandoned due to lack of jobs nearby, meaning nobody could afford to live there.
      • sach1 2y ago
• aegypti 2y ago
  The OECD link you’ve provided shows the complete opposite of your point. The UK, Ireland, Canada, and New Zealand are at the bottom of % vacant dwellings indicating the opposite of underutilization.
  • tmnvix 2y ago
    It's the difference between 2011 and 2022 that I was highlighting. Unfortunately the document doesn't show changes in vacancy rate.
    • aegypti 2y ago
      The difference showing that Ireland, Canada, New Zealand, and the US had either the same, or more dwellings per thousand inhabitants in 2011 than 2022? I don’t know if I’m just misunderstanding your point, or misreading the material, but that is also not an example of underutilization.
      • tmnvix 2y ago
        My point is that the relatively static proportion of people to dwellings in those countries over that period suggests that a supply shortage is not sufficient to explain the accommodation crisis. What I am suggesting is that incentives to invest in property have led to an increase in the number of properties that are not being used as a primary residence (i.e. are underutilised) and that that is the most significant factor causing the shortage of available homes.
        • lazyasciiart 2y ago
          I think you’d want to look at household size - 4 five person households need fewer houses than 10 two person households, even though the population is the same.
          • tmnvix 2y ago
            That's a good point and I have done that in the past (for NZ). Household size has remained steady over roughly the same period (decade up to 2018 where census data is available). This doesn't account for a possible significant change in household size distribution of course (e.g. the possibility of many more elderly living alone while young people increasingly live in shared housing).
• brabel 2y ago
  In Swedish big cities, prices are also ridiculously high despite investment in properties being much harder than in Australia or the US due to some strict rules regarding renting out. I live here now but lived in Australia before. Prices in Stockholm are more or less on par with Perth or Brisbane I think (i.e. crazy, but not at the completely off-the-charts Sydney prices, at least... when I lived in Sydney like 20 years ago I remember you already needed half-a-million to get just an average house... today it's like well over a million to get anything at all). Can confirm that as interest rates went up, people just can't afford the enormous loans anymore and prices of houses (and apartments to a lesser extent as they're a bit cheaper overall) fell, up to 20% at the worst, I believe. But as soon as interest rates are expected to go down, prices already shoot up again (even while interests are still high as people and banks estimate how much they may expect to spend in the near future).
  • LilBytes 2y ago
    Unfortunately Perth and Brisbane have climbed a great deal closer to Sydney now. The gap in terms of cost to buy or rent is narrowing, at current rates we're looking at the gap closing entirely in the next 5-10 years.
• neilwilson 2y ago
  The issue is always lack of building. Higher interest rates just mask the problem and hand more money to rich people for no effort. The problem is that the private housing production system responds to increased credit availability only at the margins and does not over produce. That’s largely because houses are still hand built and not really substitutable like a vehicle. You don’t generally have a choice of two houses on the same site. However if you produce houses publicly then you can force private housing to compete outside the margins. At which point you get excess supply, as we see with cars and then house prices start to stabilise and even depreciate. At which point the “investment” hoards would start to liquidate. We need the housing market to behave like the production car market, not the classic car market. The fix is public policy producing housing in order to force a situation of excess supply.
  • killjoywashere 2y ago
    > The fix is public policy producing housing in order to force a situation of excess supply. So... we should have paid builders to build more houses during the pandemic?
    • pfdietz 2y ago
      Eliminate regulations and laws limiting supply.
      • AmVess 2y ago
        Where I used to live, it cost $7k to get a plot of land ready to build on. Today, that cost is $70k and 6months to 1y to get past all the permits and paperwork. And then having to deal with a governing body that doesn't understand how money works, and it is no surprise no one builds affordable houses anymore.
      • dogcomplex 2y ago
        Or increase planning department funding with higher emphasis on throughput. It's the bureaucratic delay (nearly a year for approvals or revisions in many places) that causes much of the pain, not the regulations themselves.
• Chris2048 2y ago
  > look at the numbers for each of the countries I mentioned in the first chart The number is irrelevant - people want to live in desirable areas where's there are jobs, and are constrained as such. Rebuilding high density in towns and cities is an issue, as well as maintaining decent services ( hospitals, roads, public transport, post office etc). You say that houses are being treated as investments, that's why these crises happen; but then why are building materials and tradespeople also at sky-high prices (in Ireland)? Is it all competition on investment building?
  • tmnvix 2y ago
    > why are building materials and tradespeople also at sky-high prices (in Ireland)? Similar issue in NZ. Cost of building materials was getting extreme. There's an argument to be made that these are linked to profitability of building and so increased during the speculative boom. Helped along by the fact that many suppliers are monopolies. Cost of building materials has however started falling considerably since the property market crashed here. Likewise the cost of labour and building quotes overall.
• dan-robertson 2y ago
  > do Canada, Australia, New Zealand, the US, Britain, Ireland, etc, all have the same inability to build …? Sort of? See eg https://www.ft.com/content/dca3f034-bfe8-4f21-bcdc-2b274053f0b5 https://www.ft.com/content/dca3f034-bfe8-4f21-bcdc-2b274053f... for some graphs that show Europe vs anglophone countries in an obvious way. Obviously there are lots of differences between the countries, eg the specifics of their planning systems and economies. The US is different because of the big diversity of local governments – housing is more affordable lots of people outside of desirable cities, and places like Austin and Houston do build lots of homes and that seems to be a possible reason they haven’t grown like prices in California. Credit costs have followed similar trends everywhere (obviously there are differences, especially in the US) and yet house prices have not followed similar trends but rather behaved differently in different places. I agree that when interest rates are lower you should expect to see higher prices, but that’s because interest rates change the price that a given income can afford. I don’t think interest rates are good at explaining the changes to affordability over time, or why affordability is different in different places. Also, in your linked chart, you see something like 20% more dwellings per person in developed EU countries vs English-speaking countries, which doesn’t feel like no difference at all. The issue in the article of affordability becoming worse across the US recently is probably interest rate related – prices change more slowly than interest rates, 30-year fixed rate mortgages mean rates change more slowly, and the higher rates mean existing mortgage-payers don’t want to move as they’ll lose their low rate, which reduces supply. I don’t know why prices are still up though – if interest rates being high was making housing unaffordable, one would expect prices to be down.
  • tmnvix 2y ago
    > you see something like 20% more dwellings per person in developed EU countries vs English-speaking countries, which doesn’t feel like no difference at all. I was attempting to highlight the change in numbers for those countries I mentioned and how they are clearly inadequate when trying to explain the change in prices over the same time. In NZ there was little change from 2011 to 2022 but median house price went from NZD350k to NZD900k. I agree with regard to demand being different in various locations within a country, but those localised demand differences would have had to shift pretty dramatically over the same ten year period to explain much I imagine.
• Wytwwww 2y ago
  > take a look at the numbers for each of the countries I mentioned in the first chart here: https://www.oecd.org/els/family/HM1-1-Housing-stock-and-cons https://www.oecd.org/els/family/HM1-1-Housing-stock-and-cons... (Total number of dwellings per thousand inhabitants, 2022 and 2011). The statistics are skewed because the demand varies a lot between different regions .e.g there are towns in Italy selling houses for $1 (well sort off...) that doesn't mean that housing is affordable in Milan or other major cities. Same Applies to US, Canada, Ireland etc.
• WalterBright 2y ago
  Two more causes: 1. People have mortgages with very low interest rates. If they sell the home, they give up that cheap mortgage for a much higher mortgage interest rate with the next home. So, they stay. 2. The capital gains tax exemption of $500,000 has not risen with inflation. Selling your appreciated home will result in a large tax bill. It makes sense to sit in the home until you die, then it gets a basis boost when transferred to the heirs.
  • tmnvix 2y ago
    With regard to (1), I would have to agree, though I think this is only the case in the US? For (2), absolutely. Tax advantages play their part (adding to investment demand relative to other investment options). Is it not also the case that interest payments on a residential mortgage are tax deductible in the US?
    • WalterBright 2y ago
      Taxes cause all kinds of distortions and inefficiencies as people adapt their behavior to them.
    • lotsoweiners 2y ago
      > Is it not also the case that interest payments on a residential mortgage are tax deductible in the US? They are only if you itemize your taxes nowadays. During the Trump administration the tax law changed so that the vast majority of Americans now take the Standard Deduction. I received the mortgage interest deduction for about 15 years but haven’t received it for 5-6 years now.
  • AlexandrB 2y ago
    > 1. People have mortgages with very low interest rates. If they sell the home, they give up that cheap mortgage for a much higher mortgage interest rate with the next home. So, they stay. This may be true only in the US. In Canada, for example, the maximum term a mortgage rate is fixed for is 5 years, after which you have to "renew" your mortgage and renegotiate the rate. So a lot of people are already being forced into higher interest mortgages here.
• biophysboy 2y ago
  The price of a home in an area is strongly related to the aggregate income divided by the total number of housing units. Even if the numerator is significantly affected by the artificial credit pumping you mention, that does not mean changing the denominator wouldn't help.
• ForHackernews 2y ago
  > Ask yourself, do Canada, Australia, New Zealand, the US, Britain, Ireland, etc, all have the same inability to build or is there maybe some other common cause? Yes! Yes they all do! None of them are producing housing at anywhere near the rate required.
• ajsnigrutin 2y ago
  Yes, it's lack of building. Half of my city and many other cities around my country were built during the communist 70s and 80s... and then we stopped building and maybe built 5, 6 apartment buildings in the last 30 years. Then urbanization came, centralization, everyone wants to live in a city.. but we're not building more housing. We can look around europe.. how many apartment projects were done in the 70s and 80s, and how many are being built now.... we built whole new neighbourhoods back then, and now we have 4 people sharing a two bedroom apartment.
  • cyberax 2y ago
    On the other hand, Moscow got densified to hell and back during 2000-s. Guess how it affected the housing prices?
• Glyptodon 2y ago
  I agree higher rates are likely to help with prices, and that low rates drove asset price inflation, and purchases of non-primary residences, as well as rental properties, but I also think there's also an element of nobody being willing to stomach a loss leaving supply constrained. And it seems like maybe that can only be loosed by more supply coming from somewhere, while in the meantime, it means prices only get higher. One thing that's surprised me is that I'd expected this situation to lead to building being relatively cheap compared to buying. But land + labor + materials price increases seem to have left building less competitive in most areas meaning new supply can't actually undercut the market much, if at all. Or seemingly won't. It really feels like there's nothing that can give at the moment, like it's some kind of doom loop.
• whydid 2y ago
  Rare perspective, and I totally agree. Building more homes is like expanding roads. It doesn't solve the root problem.
• itake 2y ago
  While I agree building housing is a symptom, and not the core problem. But I'm skeptical that increasing building or density would actually lower housing costs. If that were true, high dense cities like Beijing, Tokyo, Singapore, or Hong Kong would have much lower cost housing. Housing more people in a concentrated area creates more demand for services, which creates more demand for housing which jacks up prices. Packing 1,000 people into an apartment build creates extremely high demand for plumbing, house cleaning etc, services, which jack up housing prices. But if cities were low-density with commerce centers decenteralized across many neighbhorhoods or towns, you don't create location demand hotspots (e.g. cities) that jack up prices. Property taxes and interest rates are a forcing function to keep unoccupied properties in check, as long as the appreciation doesn't dramatically exceed the risks of being a LL. For Tier 1-3 markets in the USA, you can't cash flow properties as rent is drastically lags property ownership costs.
  • rcpt 2y ago
    Beijing, Tokyo and Singapore are not that expensive to live in. Especially if you're renting. Hong Kong has all sorts of crazy building restrictions and is a different story
    • itake 2y ago
      The article is specifically about purchasing homes. Even the USA, it also is cheaper to rent than to buy. Buying a home in Singapore has a 6 year waiting list to access public housing with properties exceeding $1m SGD. Taxes, Transportation and food costs are cheap, but property is not.
      • lostemptations5 2y ago
        Singapore is not really typical of anything anywhere, it's a small island nation with insane population pressure with regards to housing. Almost any other Asian city from Bangkok to Ha Noi has room to expand. In fact speaking of Bangkok buying a condo there is widely considered a bad investment because there is so much supply.
• chiefalchemist 2y ago
  > In my view this is symptomatic of a more fundamental issue - global asset price inflation driven by a broken financial system (i.e. a system being artificially pumped up with cheap credit). Spot on. You're not alone. For a more thorough and clinical review of how we're f'ed and why see Lyn Alden's "Broken Money". To your point, ppl are fond to talk about the economy. That's a distraction. It's a false god. Fact: the economic system and the sociopolitical system both side on a foundation. That foundation is the financial system. Full stop. https://www.lynalden.com/broken-money/ https://www.lynalden.com/broken-money/
• rcpt 2y ago
  Higher rates don't do anything because incumbent owners simply pull houses off the market to wait it out. You need to increase carrying costs. Land value tax is the best way but it's about as far as you can get from what's implemented anywhere
  • tmnvix 2y ago
    I have a feeling that those hoping to wait it out in the hopes of a return to low rates might be caught out this time around. The past few decades (coinciding with the property price boom) have been all about ever decreasing interest rates. What is happening now looks a lot like a paradigm shift. I wouldn't bet on rates falling substantially anytime soon.
  • matwood 2y ago
    > Higher rates don't do anything because incumbent owners simply pull houses off the market to wait it out. You need a recession.
    • abenga 2y ago
      Do lower house prices in a recession matter if no one has money, and everyone is being laid off from work? I feel like no one, except the very rich, benefits.
      • matwood 2y ago
        Unfortunately recessions and job losses are how you get lower prices. You need forced selling. As long as we're labor constrained with a hot GDP, people with a house and low rate will continue living their best life.
• johngladtj 2y ago
  >Ask yourself, do Canada, Australia, New Zealand, the US, Britain, Ireland, etc, all have the same inability to build or is there maybe some other common cause? Do they all have zoning, urban planning requirements, and restrictions on what landowners can do with their property? Yes? This isn't a complicated issue, this is 100% a self inflicted "problem" that can be solved with the stroke of a pen. Pro-tip: abolish all restrictions on what landowners can build in the property. No licensing requirements, no filings, no nothing. The sum total requirement for someone to build something anywhere should be them asking themselves "do I have permission from the landowner to do this?" And getting to work.
  • Arainach 2y ago
    That's not a winning formula at all. When my neighbor's DIY grow farm in a shed burns down, the fire spreads and affects me. When my neighbor decides to open a diesel engine repair business, the noise and fumes affect me. Most people don't want that.
    • estebank 2y ago
      Segregating housing from industry makes sense, and is what's done everywhere, but segregating housing from services, like coffee shops or day-care, is a very uncommon thing globally.
    • h12nz 2y ago
      We still have tort law. No need to impose the equivalent of years of average income on buyers, to entertain people’s neuroticism
  • dukeyukey 2y ago
    I _wish_ the UK had zoning. Instead, there is no by-right development, everything has to get it's own individual permission.
• sydd 2y ago
  IMO the main issue are zoning laws and urbanization. You can find lots of articles about rural areas, small villages elsentially dieing out, while large cities just (try) to grow larger. Also there is a shift from people living in families to living single or just with one person which is more inefficient and requires more space.
  • Aerroon 2y ago
    We're definitely in some kind of next stage of urbanization where people are moving into the big cities even from smaller ones. It's very noticeable in the former Soviet states, but I believe it also happens elsewhere.
• JumpCrisscross 2y ago
  > do Canada, Australia, New Zealand, the US, Britain, Ireland You picked culturally-similar countries with common law systems and a history of local zoning.
• cgh 2y ago
  Yes, at one time it was estimated that roughly 1/3 of Vancouver’s condo supply was vacant. So the city implemented an empty homes tax [0] and promptly raised $115,000,000 in tax revenue [1]. However, the tax is still far too low and it contains various loopholes that allows developers to hold condos empty for years until deep-pocketed buyers show up [2]. Vancouver isn’t unique. Housing is being traded like poker chips everywhere, often but not always by ultra-wealthy foreign nationals with zero regard for the local consequences. [0] https://vancouver.ca/home-property-development/empty-homes-tax.aspx https://vancouver.ca/home-property-development/empty-homes-t... [1] https://dailyhive.com/vancouver/vancouver-empty-homes-tax-statistics-2021 https://dailyhive.com/vancouver/vancouver-empty-homes-tax-st... [2] https://vancouversun.com/news/local-news/dan-fumano-some-new-vancouver-condos-held-empty-for-years-internal-city-memo https://vancouversun.com/news/local-news/dan-fumano-some-new...
  • ZoomerCretin 2y ago
    Vancouver has obscene housing prices because the city and the politically connected spend tens of thousands of hours fighting against any new housing, and any new supply. Just look at what happened when the Squamish Nation decided they were going to build high rises on the land they were given: https://reason.com/volokh/2024/03/14/canadian-indigeneous-nations-use-exemptions-from-zoning-rules-to-build-affordable-high-rise-housing/ https://reason.com/volokh/2024/03/14/canadian-indigeneous-na... The entire city and all of the NIMBYs cried about their "neighborhood character" and tried every legal trick they could to block the development: threatening to not connect it to utilities. Vancouver literally has single family homes within half a mile of downtown! Clearly there is room for growth.
    • seanmcdirmid 2y ago
      I think a lot of people still feel burned by the property crash in the 1990s, when you saw billboards on I5 driving up offering flats for $100k in 1997.
      • seanmcdirmid 2y ago
        (Note I actually remember seeing those billboards and pointing it out to my gf at the time on how affordable Vancouver housing was, when she just spent $200k on a two bedroom in Issaquah)
• dzhiurgis 2y ago
  > is there maybe some other common cause? Immigration. It's not that immigrants buy up the houses (opposites, we tend to live cramped up in flat shares). It's that they support landlords profits (with cream on top of not knowing your rights) and have overall pressure on market. Building should at least match immigration/population growth. Also not building dense enough. Kiwis always tout "I wouldn't wanna live in a house without a backyard" - well I don't wanna rent forever either. Given choice of no housing and shitty housing I choose shitty housing.
  • estebank 2y ago
    I reject the idea that not having a backyard means that that property is shitty.
    • dzhiurgis 2y ago
      It's not my sentiment, but I do see it why it's a big part of culture and life here. Flats tend to be horrible here. Townhouses are ok and are growing, albeit too slow and too far from public transport. There was some news yesterday about new row of townhouses around Auckland being classified as rural and unable to receive mail (rural mailboxes must be grouped in one spot, not on each house).
  • cjbgkagh 2y ago
    I think people have the causality the wrong way around, the immigration is to prop up the economy. Price is set at the margins and even relatively small amounts of new immigration keeps pushing the margins up. Any successful attempts to fix the housing market, by reducing immigration or any other means, will implode the Ponzi economy. Absolutely no politician is going going to do that - you might as well hand them a grenade at ask them to pull the pin. It's my view that this implosion will happen, just later, with less control and with more devastation.
    • dzhiurgis 2y ago
      It's one of many factors. NZ already becoming unattractive partly due to expensive housing and somewhat low wages - immigration is slowing down. Also new law allows import of foreign-certified building materials so that might help too. Thing with politicians is (depending on party) something like 90-100% of them are property owners and 30-70% are also property investors [0] so I just can't see how they would be willingly taking a haircut. (Cherry on top - most of them couldn't even afford to buy their homes now on MP salary) 0: https://www.newshub.co.nz/home/politics/2021/12/the-full-list-of-how-many-properties-new-zealand-mps-own.html https://www.newshub.co.nz/home/politics/2021/12/the-full-lis...
• ZoomerCretin 2y ago
  This is akin to denying the existence of climate change or evolution, or that the Earth revolves around the Sun. Yes, housing prices are determined by supply and demand. This was found to be true by a California Circuit of Appeals: https://x.com/CSElmendorf/status/1774115015551074434 https://x.com/CSElmendorf/status/1774115015551074434 This is found to be true by Blackstone, who frequently notes that shortages and low increases in new supply are fundamental to their strategy of buying and building housing for rent: https://x.com/RikAdamski/status/1643477536695803904 https://x.com/RikAdamski/status/1643477536695803904 https://x.com/IDoTheThinking/status/1378737834824060931 https://x.com/IDoTheThinking/status/1378737834824060931 "We could also be adversely affects by overbuilding or high vacancy rates of homes in our markets, which could result in an excess supply of homes and reduce occupancy and rental rates." There are plenty of sources which show a strong correlation between new supply and housing prices: https://x.com/sam_d_1995/status/1762597879154123241 https://x.com/sam_d_1995/status/1762597879154123241 https://x.com/JeremiahDJohns/status/1761205726230216943 https://x.com/JeremiahDJohns/status/1761205726230216943 https://x.com/ArmandDoma/status/1770961181093859375 https://x.com/ArmandDoma/status/1770961181093859375 https://x.com/jayparsons/status/1761028332781478227 https://x.com/jayparsons/status/1761028332781478227 (STRONGEST:) https://x.com/JeremiahDJohns/status/1761205728356802806 https://x.com/JeremiahDJohns/status/1761205728356802806 There is plenty of unused space in our cities for new housing: https://x.com/ftw_cool/status/1779228107754623084 https://x.com/ftw_cool/status/1779228107754623084 Texas vs California; Texas builds a lot and has lower housing price growth, California builds little and has high housing price growth: https://x.com/jburnmurdoch/status/1760995124690231526 https://x.com/jburnmurdoch/status/1760995124690231526 This effect holds regardless of if the new housing is "affordable", "below-market rate", or "luxury": https://x.com/jayparsons/status/1712110658601255211 https://x.com/jayparsons/status/1712110658601255211 That supply and demand applies to housing has been reported repeatedly in the news: https://x.com/AlecStapp/status/1757939504126832802 https://x.com/AlecStapp/status/1757939504126832802 Lots of new apartments have been built lately. The effect on rent growth is obvious: https://x.com/mnolangray/status/1755818637750161540 https://x.com/mnolangray/status/1755818637750161540 Landlords themselves acknowledge the difficulty of finding tenants and getting high rents when there is a glut of housing inventory: https://x.com/sam_d_1995/status/1752346758254887132 https://x.com/sam_d_1995/status/1752346758254887132 Surprisingly, supply and demand also affect housing prices in the Midwest: https://x.com/StatisticUrban/status/1752008654734147718 https://x.com/StatisticUrban/status/1752008654734147718 Real estate investors and landlords acknowledging that new construction lowers rents and increases vacancies in their properties: https://x.com/SmackTrout/status/1652396524389961731 https://x.com/SmackTrout/status/1652396524389961731
• Cheer2171 2y ago
  Seattle is building far more than many other cities and rents are lowering as a result. Rents are up nationally, but down over 7% in Seattle. If you've visited recently, the amount of new construction and cranes is immense. https://www.forbes.com/sites/hyunsoorim/2024/05/20/here-are-the-cities-where-rents-are-rising-and-falling-fast/?sh=3b1ce2a45278 https://www.forbes.com/sites/hyunsoorim/2024/05/20/here-are-...
  • Kephael 2y ago
    There were cranes everywhere back in 2017, now the cranes are mostly gone. My rent increases every year, generally by 10%.
    • happyraul 2y ago
      Your rent has doubled since 2017?
  • lazyasciiart 2y ago
    Ten years ago people talked about how much Seattle was building and how many cranes were everywhere as well - then as now, it’s because all that building is in the same ten square yards of “urban villages” across the city where you are allowed to build densely.
    • Schiendelman 2y ago
      And now we are running very short of buildable volume. There are not many places left you can build a tower. We need to allow a lot more. Also, in the meantime, we have added more time to the permitting process, all in the name of aesthetics/design, not safety.
    • karma_pharmer 2y ago
      ... which are also the same ten square yards where all the butt-in-the-air folded-in-half fent zombies hang out. Sorry but it's true.
  • devindotcom 2y ago
• api 2y ago
  I agree that there's more than one factor, but not building enough is absolutely a major one. There's tons of data to back this up. Another one is the hyper-concentration of high paying jobs and other opportunities in a small number of cities. There's always been a power law distribution for cities and opportunity with larger cities tending to win out, but since roughly 2000 it seems like it's greatly intensified. I've asked this question to many older people and have looked up some stats and both back up the sense that this has gotten significantly worse in the last 2-3 decades. In the USA if you are not in one of maybe six cities you are second-tier, and it's much harder to find high paying and upwardly mobile jobs. The very top tier cities of SF Bay, NYC, Seattle, and LA are of course fantastically expensive. Telework helps a bit but generally you still have to do time in one of those cities to establish yourself enough to get good high-paying telework jobs. Telework is often a senior-level thing or something you need a strong network to land.
• digbybk 2y ago
  > This is a problem of underutilisation in my view. Too many properties are being used as investments and not as a primary residence. I hear this argument a lot and always wonder if the causal direction is flipped: people use housing as an investment because it’s scarce, not that it’s scarce because it’s used as an investment. If there weren’t so many restrictions on building, the supply would grow to meet the demand and parking your money in property wouldn’t be such a hot idea.
  • dogcomplex 2y ago
    Tbf many of those restrictions are there for good city planning reasons - and important to keeping a city livable and not outgrowing its infrastructure. But the cost of enforcing those is quite often a ridiculously bogged-down planning department that often takes months or a year to process applications and revisions, significantly inflating the risk and thus costs of construction, and relegating it to big firms that can handle all of the legalese and scheduling turmoil. Now, why dont governments better fund those departments and emphasize faster throughput? Well, let's ask their main constituents - who are largely homeowners and companies in the industry - whether they'd like to dedicate more taxes to a service that would speed up construction and drop their housing prices.
    • AnthonyMouse 2y ago
      > Tbf many of those restrictions are there for good city planning reasons - and important to keeping a city livable and not outgrowing its infrastructure. I don't believe this to be true. If someone wants to build a single multi-story building in an area, no additional infrastructure should be required. It's one building, the existing infrastructure shouldn't have so little slack in it that this could be a problem. If lots of people are building lots of buildings, the city government can notice this taking place and while the buildings are going up they expand the capacity of the infrastructure in that area. It's no excuse to refuse the construction, it's just something the city has to do as a result, because that is a city's job. Their job is not to decide what can be built, it's to allocate the property tax on the new buildings to paying for the things the new buildings need.
• dools 2y ago
  I don’t know about those other places but Australia definitely has a horrendous under supply of homes
  • tmnvix 2y ago
    Check out the Speculative Vacancy Reports (https://www.prosper.org.au/speculative-vacancy-reports/ https://www.prosper.org.au/speculative-vacancy-reports/) to shed some interesting light on that. It is for the Melbourne market only, but their methodology of relying on water usage to determine occupancy reveals some interesting results.
• joe_the_user 2y ago
  Lack of building can play a part but even the interests that want housing as investment naturally want to limit supply. The main thing is that the US has been printing dollars for several decades - primarily to deal with or prevent periodic financial crises. Ben Bernacke's "Helicopter Dollars" speech was infamous but nothing has changed but the (increasing) scale (and, yes, all the central banks of the developed world are doing it too). Effectively, the modern order has come to involve an endless hand-out to those who already have money while "market discipline" prevails against those who don't. Of course, this has long term problems aside from its immorality.
• breatheoften 2y ago
  Other strategies to discourage the usage of properties as investment have existed at various times ... Things like squatters rights laws have been deployed for this purpose in some parts of the world at various times (Netherlands for example had quite large movements where the youth would occupy empty homes owned by rich investors in order to take advantage of favorable (to the squatters) laws -- which discouraged folks from sitting on unoccupied investment properties home at least at some historical points in time
• SV_BubbleTime 2y ago
  Ugh. Another “it’s not X” post… Yes, it is. It’s everything. It’s inflation. It’s that none of the countries you mentioned built anything during the covid craze (word selected specifically). It’s regulation and complexity and permitting and zoning. It’s AirBNB. It’s remote work. It’s manipulated stock markets and poor returns on other investments. It’s blackrock and VCs and MBAs. It’s out of country investors. It’s everything. So why these reductionist “well, I know it isn’t X” posts are supposed to be insightful, I have no idea. Who told you it needs to be one thing, or can be disproven as one thing?
• flog 2y ago
  NZ is maybe a poor example, as we do not have capital gains taxes on houses (or most things), and do tax foreign investments (via a ~1.5% annual wealth tax, so house flipping is tax-free money)
  • tmnvix 2y ago
    This is true, but I wouldn't underestimate the tax advantages property investment has relative to other investments in many countries. Take Australia for example. People in NZ often say a CGT won't help because AU has one and it doesn't seem to make a difference. What they forget is that there is 50% discount on CGT there, so the relative advantage of property investment remains. Also negative gearing. In the US I believe there are two obvious advantages given to residential property investment - 30 year fixed mortgages and tax deductions on interest payments. I think it wouldn't be too much of a stretch to guess that all of those countries I mentioned earlier have different reasons for residential property investment being favoured relative to more productive investments.
• FuckButtons 2y ago
  The worlds population has doubled since 1974. In every country listed the rate of new building construction has stayed roughly constant or declined since then. You can explain this phenomenon with an Econ 101 supply and demand curve without need for any further elaboration.
  • AlexandrB 2y ago
    That's contradicted by the provided OECD link that shows that in many countries the housing stock per capita has stayed the same or slightly increased since 2011. Yet prices continue to increase.
    • ImJamal 2y ago
      Are the houses equal though? If houses 20 years ago averaged 1500 square feet and 10 years ago averaged 2000 square feet it would increase the price even if they stock increased.
    • lotsofpulp 2y ago
      But people per household has plummeted. Going from 6 to 4 to 2, see page 9. Combined with population pyramid flattening out, that is a lot of increase in demand for housing, until the population pyramid is upside down and more people are dying rather than being added to demand for housing. https://genus.springeropen.com/counter/pdf/10.1186/s41118-024-00211-6.pdf https://genus.springeropen.com/counter/pdf/10.1186/s41118-02...
• King-Aaron 2y ago
  Lack of available dwellings is currently a huge problem here in Australia - the building industry is collapsing due to cost blowouts and most available builders are snapped up by a vastly more lucrative mining industry.
• cyrillite 2y ago
  Prices are increasing for a few reasons, some you named and others I think you underweighted: 1. Asset price inflation generally 2. Population growth (incl. immigration) 3. A lack of building (housing stock is inflexible, e.g.: if we need more two beds, then no number of 1 beds or 4+ beds is sufficient, really). 4. We are changing our ways of living (see 3), that’s partly social norms and partly demographic 5. Working from home changed the market. If the economic hub of your country is priced well above the national average excl. the hub, then WFH will see prices move towards the average incl. the hub, if not higher.
• scubadude 2y ago
  >do Canada, Australia, New Zealand, the US, Britain, Ireland, etc, all have the same inability to build I don't know about the others, but we're building about 50% of what we need for Australia's population growth. Neo-liberalism has resulted in decades of de-funding of public education, which trains tradespeople, and now we have a shortage of tradespeople. And we're getting another tax cut in a few weeks so I guess that problem, plus all the others with same cause, is just going to get worse.
• dangus 2y ago
  > By definition, only investment properties can be underutilised - owner occupied homes are occupied! I think this part is what kills the anti-investment argument. If we hypothetically got rid of all the property investors we’d have only owner-occupied units. So then where do you find a vacant house when you want to move out of your folks’ place? Everyone has to find land, buy it, and build? (I won’t even get into the fact that single family homes aren’t really a sustainable use of land) As long as there are enough vacant units investors will lower rent enough to fill them to an equilibrium. Nobody makes money on apartment buildings that are 50% empty. Let’s not forget that low financing rates allows companies like homebuilders to build homes and subdivisions on credit that are intended to be owner-occupied. These developments are never intended to be rentals. I think it’s a little funky that, especially in the US, nobody really had a problem with apartment buildings being apartments until landlords started owning single family homes. Now everyone has pitchforks over it and want to ban investors from owning homes - which seems kind of insane when you think about how cities with skyscrapers work. It would make condo and apartment buildings impossible. There’s nothing different about a single family home compared to an apartment besides form factor. The thing that all those countries have in common is low supply in the tradespeople. Those are all countries where you’re better off learning to do a desk job rather than working for a construction company. In addition, a bunch of home builders went bust in 2008 in the United States. In the case of Canada and the US they also have some horrible bad habits when it comes to city planning. Single family home building causes the growth Ponzi scheme raising the cost of city services per capita and pushes affordable housing crazy far from the city center and strains single occupant car highway infrastructure. You’ve got to own one car per person in the US in Canada in addition to your mortgage. Then load up student loans on top of that.
• AnthonyMouse 2y ago
  > Total number of dwellings per thousand inhabitants, 2022 and 2011 The issue here is that demand shifts regionally over time. Dwelling units in Detroit don't satisfy demand in San Francisco. The result is that you continually have to increase supply in the places demand currently is. To keep prices flat, the number of units per thousand inhabitants has to increase over time, because the number of empty units in areas that have fallen out of demand will increase, but the high prices you're trying to avoid will be somewhere else. > By definition, only investment properties can be underutilised - owner occupied homes are occupied! This is also not true. You can have e.g. a 3-bedroom home with one occupant, even if the occupant is the owner. You can also certainly have underutilized land -- any single family home in an area where there is demand for more housing but zoning prevents it from being constructed on that piece of land. Because then you have that acre of land providing housing for one family when it could have been two or twenty. > global asset price inflation driven by a broken financial system (i.e. a system being artificially pumped up with cheap credit). This can only happen when supply is artificially constrained. If it cost $200,000 to add a housing unit and suddenly everyone can get a bigger loan than before, the instantaneous effect would be for housing prices to increase -- but once they're above the construction cost, construction occurs until they no longer are, i.e. until they fall back below $200,000. At that point cheap credit might cause people to buy bigger houses, or use the loan money to buy things other than housing, but long-term you can't get the price of the same housing unit to increase above the cost of creating more of them, or supply would just increase until it fell back to that cost. What you can do is increase the cost of creating supply, e.g. by restricting where it can be done, so that the cost of doing it goes up and with it the price of a given housing unit. Which is what has happened.
  • ericmay 2y ago
    > Dwelling units in Detroit don't satisfy demand in San Francisco. They do help though. Individuals need to realize they can’t afford to live in a place like California and have to give up that luxury if they want more affordable housing arrangements.
    • A4ET8a8uTh0 2y ago
• deleted 2y ago
  [deleted]
• Hammershaft 2y ago
  A land value tax would fix this. https://www.gameofrent.com/ https://www.gameofrent.com/
• nytesky 2y ago
  It does seem like we run the risk that if we expand building, especially low cost, nearly turn key rentals, that all the excess supply will be mopped up by corporate landlords like Blackerock etc. it’s a twofold advantage to prop up value of existing property portfolio, and rents have been high for so long with so much demand they may be a good return on capital over a very long term. To counter this may be impossible; there are limits to how small you can build a SFH, and there is only so much land commuting distance from job centers. Condos and apartments are generally a very bad investment, have huge disadvantages of high fees and lack of green space, so are a poor substitute. It’s sometimes better than renting, but it can swing wildly based on build quality of building, the maintenance, and competence of the board — very hard to evaluate or hedge against versus a SFH where you have autonomy. And in the US we rarely build family focused condos — so few have playrooms or playgrounds or 3 bed room units (outside NYC)
• kazinator 2y ago
  Speaking of Canada; here the problem is the unwillingness to build, coupled with rampant immigration, fueling a real-estate bubble that is compounded by speculators (foreign and domestic). Cheap money throughout the 2000's didn't help either. I've been told that immigration isn't a driver for the housing problems in the USA though, interestingly.
• Rury 2y ago
  Yeah, too many people think supply/demand is all there is to prices, when that is just economics 101. What many people seem to not even know, is that the theory only holds true under competitive free market conditions and falls apart under captive/uncompetitive markets. Many also assume trade volume is necessarily representative of a supply shortage, when that isn't always the case, as "supply" and "supply for sale" are two different things. But yeah, the root of the problem is because governments are subsidizing housing/costs, and the problem with subsidies, is that the money for them has to come from somewhere, meaning they come with a burden (ie cost) placed elsewhere. In the US this is primarily done via the government backing mortgage debt. It creates a vicious circle where homeowners raise their prices, the Fed ensures the funds for the mortgages, and the buyer is on the hook for paying it. This is also why college prices are high. The government offers student loans to help people afford college, but colleges see this and raise their prices to capture that additional funding, and the student ends up on the hook for paying the price. Rinse and repeat...
  • randomdata 2y ago
    > What many people seem to not even know, is that the theory only holds true under competitive free market conditions and falls apart under captive/uncompetitive markets. Why would the law of supply and demand fall apart under captive/uncompetitive markets? A captive or uncompetitive market may impact the quantity of a good or service available and/or the quantity of a good or service willing to be purchased at a given point in time, but that doesn't change the law. > Many also assume trade volume is necessarily representative of a supply shortage, when that isn't always the case, as "supply" and "supply for sale" are two different things. Huh? Supply is characterized by being "for sale". Of course, a shortage occurs when price is prevented from rising. Housing certainly doesn't have that problem. The so-called "housing shortage" is really an issue of latent demand – people desire homeownership but can't afford it.
    • Rury 2y ago
      > Why would the law of supply and demand fall apart under captive/uncompetitive markets? For the law to hold perfectly and describe prices, everyone in the market (both buyers and sellers) must be a "price taker". That is, the amount anyone supplies(sells)/demands(buys) is entirely a function of the going market price of whats being traded, and no one believes they will influence prices. (If anyone isn't a "price taker", then supply/demand of the good being traded are no longer the only variables in the function of price). So, typically under competitive market conditions (that is there are many buyers/sellers), as prices rise demand from buyers will drop and selling increases from sellers, whereas the opposite happens when prices fall. However, in captive markets such as one consisting of a monopoly seller, the seller can test demand to find the most profitable price for them specifically. At which point the seller is no longer operating as a "price taker", as they will reduce selling as prices rise to find that optimal price point for themselves (as they have input costs which have their own price curves that buyers don't know or care about). Remember, a "price taker" cannot influence the price, but must take or leave it depending on price. Thus price is no longer determined purely by the market supply/demand of the good, but also profit margin of the monopolist. > Huh? Supply is characterized by being "for sale". It often is, and there is nothing wrong with it being defined that way. But the idea which is being expressed here is what is important. For hyperbole, if I hoarded all of the worlds water, but only listed 2 liters of it for sale (much less than the population needs), would that indicate the world has a water shortage? One would argue yes, if you defined supply as "for sale", but no if differentiated in the way I did.
• smsm42 2y ago
  Most buyers would require mortgage or another kind of loan. For a loan holder, the question is monthly payment, not price. Higher interest means higher payments, thus negating the decrease in prices. Of course, for cash buyers high interest rates are good, but I suspect people worrying aboug being priced out of the market aren't cash buyers.
• starbird3000 2y ago
  Where I am there’s been a huge increase in houses being bought for cash by equity hedge funds, like 25% of houses going on the market. Nearby Kushner bought hundreds of houses in Baltimore. The impact of this is that house prices soared because no one can compete against a multi-billion-dollar company to buy a house, which artificially pushes up prices. Secondly, I’ve done a lot of engagement with policy makers and builders and you are not going to get affordable housing being built if you relax zoning laws (which I’m in favor of across the whole city). Instead, what is supposed to happen is that the older properties become less attractive and hence their prices (or rent) are supposed to fall. That’s the theory anyhow. Anyway, the builders all say there is no financial incentive for them to build affordable housing, they make so much more on luxury buildings. You’ll only get it if the local government does it themselves and most in America are reluctant to get involved (it’s why they like saying 15% of a complex should be ‘affordable’ because they don’t have to do anything about it, the builders do, and it’s too small an impact to fix the issue).
  • Detrytus 2y ago
    > Where I am there’s been a huge increase in houses being bought for cash by equity hedge funds, like 25% of houses going on the market. Is this increase in absolute number of sales, or increase in the percentage? Because, if the house affordability due to high interest rates goes down, one of the only buyers with money that remain are hedge funds. So, in the past you had 1000 homes selling per year, 100 of those going to hedge funds, now you have 400 total sales, with 100 going to hedge funds. The relative percentage of houses bought by hedge funds increases from 10% to 25%, even though the absolute number remains flat.
    • WorldMaker 2y ago
      It seems to be an increase in both absolute number of sales and increase in the percentage. Some signs indicate hedge funds purchasing consumer real estate (houses/apartments) is working towards an all time high thanks to the bottom falling out of the commercial real estate market in 2020 and it being far less reliable an investment post remote-work culture. A lot of commercial real estate investors have flipped to consumer real estate in a way they hadn't before. It may be a while before a new equilibrium happens. (This is where investments in risky things like flipping various cities' "downtown' commercial real estate into additional consumer real estate are starting to look really interesting, especially in some of the cities that had massive corporate tower investments just pre-2020. It's also where you see some cities directly and indirectly pressuring major corporations into RTO policies in the hopes of it releasing some of the pressure on the consumer real estate market in those cities by encouraging hedge funds to reinvest in corporate real estate. It's hard not to feel those pressures are somewhat futile long term, but to feel sympathy for why they seem like necessary short term sandbagging projects.)
• ben_w 2y ago
  I think it's a different problem entirely. I've been looking at getting a house built, and that starts at about €200k*, but the land in Berlin is at least another €200k on top of that (and usually more). If I was willing to live in the back end of nowhere, I can get the land for almost nothing, halving the total cost. But then I'd be living in the back end of nowhere, and turning that into an interesting town (let alone city) would need some very expensive infrastructure to be built, just to support that many residents. Make the infrastructure cheap, and you can build New Towns. Most of the developed world seems to struggle with infrastructure during my lifetime, be it major roads, railways, sewage, electricity networks, or anything else. * list price €100k but that's a cheat as it's the outer shell only, no plumbing or interior plastering
  • tossandthrow 2y ago
    EUR 400k for a newly build home in the greater Berlin area seems like extremely affordable in my opinion. Houses, like other goods, decrease in value over time. A new house should be significantly more expensive than a 50 year old house - just like a car.
    • ben_w 2y ago
      > EUR 400k for a newly build home in the greater Berlin area seems like extremely affordable in my opinion. I was picking the absolute lowest cost for an example, so on one hand it should have. On the other hand, what's that in "years of average income", and does it seem reasonable that half of this is the land itself?
      • tossandthrow 2y ago
        I think the rule of thumb is that you should not buy at more than 4x household income. I know that the salaries in Berlin are in the lower end, but 100k EUR a year in household income seems like a reasonable expectation for people wanting to live in attractive areas.
        • ben_w 2y ago
• asdefghyk 2y ago
  RE "problem is caused by a lack of building" In my opinion there needs to be more houses built so the vacancy rate rises from the present extremely low ( round 1%) to the long term average of around 3% house vacancy rate. This 3% vacancy rate is recognized as a fair equilibrium between renters and property owners. Furthermore such a rate helps stop property owners raising rents as much , as happened in recent years. This is in Australia, do not know about other countries. Alos with record low interest rates, my opinion is lots people over commixed to loans, without proper consideration if they could afford the loan when interest rates rise to the long term average of around 7%
• AnimalMuppet 2y ago
  > In my view this is symptomatic of a more fundamental issue - global asset price inflation driven by a broken financial system (i.e. a system being artificially pumped up with cheap credit). Maybe? 2008 happened. At that point, there was a policy choice: allow a deflationary collapse, or prevent it. If we allowed it, there would be a lot of ruined businesses and ruined people. There would have been a lot of people who lost their houses. Instead, we chose to prevent the collapse, and we wound up here, where people can't afford houses. That's almost the same place, except that 1) the numbers are higher, and 2) it happened gradually rather than in a shock. That is, people didn't lose their existing houses, but new families can't buy their first homes. So is this better or worse? My impression is that, for all the problems, it's still better than a collapse in 2008 would have been. But given the situation in 2008, some damage was inevitable. This amount of damage 16 years later is actually pretty good, considering.
• xyst 2y ago
  It’s a multitude of factors - limited supply in certain (most?) markets, “cheap money”, supply chain factors with certain common building materials, “corporate owned homes”. One thing that has definitely not helped is hostile building codes that prevent density. In some cities in the US, building height is constrained by the nearest single family home. Then there’s the parking minimums for buildings that allocate more space for parking than for building space for people. In Austin, TX (USA), you frequently see buildings with massive amounts of multilayered parking but a smaller fraction of the building used for residential or commercial space. Some “clever” developers have tried to disguise the parking structures as part of the building itself to hide this fact from public view. Problem with America is that we think this is 1950 and we can scale by building more deadass suburbs, expensive regional highways, and further strain our limited pool of resources (water, sewage, electrical infra) to support suburban living without any consequences.
  • rayiner 2y ago
    > Problem with America is that we think this is 1950 and we can scale by building more deadass suburbs, expensive regional highways, and further strain our limited pool of resources (water, sewage, electrical infra) to support suburban living without any consequences. That doesn’t explain why it’s so hard and expensive to build things. We built those suburbs in the first place when we were much less rich as an economy. Indeed, we built all the water and sewage and electrical infrastructure all over the place too.
    • lazide 2y ago
      For one - all the easy places to build now have things in the way. Because they had things built there. In the 50’s these were mostly empty range land, or timberland, or farms, or swamp, or whatever. One (or just a few) owners, low property values, little to no political/environmental resistance - relatively easy to buy someone out and develop. Now? HOAs, tons of urban zoning rules and environmental rules, thousands of stakeholders for any sizable project. Which also now means more stakeholders, more political resistance, more BS if you want to increase density there. Or building in not-so-easy places, like steep hillsides, more remote locations, etc. Most of the existing folks don’t want change. In 1950, especially out west, there essentially were no ‘existing folks’. Even the natives had been wiped out. And as an economy, we were used to building things at a war economy pace, and had reasons to continue to want to do so. Now everyone would rather blame someone else (or ensure they get their sizable cut) rather than do anything about it. As the boomers slowly die out and assets change hands, the momentum will change. Eventually. But we’re talking about a decade plus. Then it will be the millennials turn to be the ‘bad guys’.
• jfoster 2y ago
  Put it this way: if over-supply were a problem, what would happen?
  • lotsofpulp 2y ago
    Depends if property tax was appropriately high to encourage productive use of the land (rather than letting it sit empty).
    • jfoster 2y ago
      That's true. Property tax can help, but at some other level of over-supply, it doesn't even matter what the property taxes are. Once there is far too much supply (perhaps to the extent that it would be a bubble), pumping millions of dollars into housing that will sit empty or rent at a low yield will not be a good use of capital.
• bArray 2y ago
  > Ask yourself, do Canada, Australia, New Zealand, the US, Britain, Ireland, etc, all have the same inability to build or is there maybe some other common cause? In the UK, we have an issue with immigration that nobody wants to speak about. The birth rate in the UK is 1.49 in 2022 [1], meaning that housing demand should be going down. We build houses to last, and yet there is a massive shortage - why? In 2023 the ONS reported we had a net migration of 685k people [2], where 9% of the population do not have a British nationality at all. The demand for housing in the UK (and related infrastructure) can be entirely explained by net migration. The reason the housing market is bubbling is because the demand is so insanely high. We need to build 340k houses a year to keep up with demand [3]. The fundamental issue in the UK is that we borrowed too much from the future, in terms of loans, but also pensions. They think that increasing the population dramatically will solve the problem, but it's actually destroying the UK. We are building on farmland, the infrastructure (water, gas, electric, roads, schools, etc, etc) is failing under the weight of the new housing. The interest on the debt owed [5] I believe is projected to exceed spending on the NHS (national healthcare system) by 2035. The question we need to ask is whether large net migration is worth it, or whether we should largely reduce it. It seems clear to me that the UK is currently trying to grow too fast. It'll be a bitter pill to swallow, but at some point you need to deal with the spiralling situation. > This is a problem of underutilisation in my view. Too many properties are being used as investments and not as a primary residence. In NZ and many other Countries they put bans on foreign buyers exactly to stop this investment [4]. I know many, many professionals living in NZ that cannot afford to buy a home. They are all stuck renting, despite all earning in the top 25%. [1] https://www.theguardian.com/uk-news/2024/feb/23/birthrate-in-uk-falls-to-record-low-as-campaigners-say-procreation-is-a-luxury https://www.theguardian.com/uk-news/2024/feb/23/birthrate-in... [2] https://commonslibrary.parliament.uk/research-briefings/sn06077/ https://commonslibrary.parliament.uk/research-briefings/sn06... [3] https://commonslibrary.parliament.uk/research-briefings/cbp-7671/ https://commonslibrary.parliament.uk/research-briefings/cbp-... [4] https://www.pittandmoore.co.nz/publications/foreign-buyer-ban-on-purchasing-residential-property-in-new-zealand-is-now-law/ https://www.pittandmoore.co.nz/publications/foreign-buyer-ba... [5] https://www.bbc.co.uk/news/business-50504151 https://www.bbc.co.uk/news/business-50504151
  • deleted 2y ago
    [deleted]
• dleslie 2y ago
  Under utilization can be measured as a factor of the vacancy rate; which influences both home pricing and rental pricing. Here in Canada, the desirable places to live all have relatively low vacancy rates for residential housing, and have for quite some time. Ie, it's rare to see cities with vacancy rates for apartments exceeding 3%, let alone a healthy 5%.[0] The CMHC estimates that by 2030 we will need 3.5M additional homes beyond the expected number to be produced.[1] The PBO has come up with similar numbers; roughly speaking, Canada needs to complete a new home every 50 seconds just to maintain current price levels. There's much gnashing of teeth up here over our housing crisis, and it's clear to me that it's a multi-factor concern[2]. While there simply exists much more demand than the supply can service, the reasons for low supply are many and complicated. There are the obvious zoning and infrastructure issues; we don't build for mid and high density nearly enough, and we rely too heavily on cars. There's the labour supply issue the politicians focus on. But most unnerving, to me, is the suggestion that we simply do not have the capacity to produce or source the raw materials necessary in construction. 0: https://www150.statcan.gc.ca/t1/tbl1/en/tv.action?pid=3410012701 https://www150.statcan.gc.ca/t1/tbl1/en/tv.action?pid=341001... 1: https://www.cmhc-schl.gc.ca/blog/2023/estimating-how-much-housing-we-need-by-2030 https://www.cmhc-schl.gc.ca/blog/2023/estimating-how-much-ho... 2: https://thoughtleadership.rbc.com/the-great-rebuild-seven-ways-to-fix-canadas-housing-shortage/ https://thoughtleadership.rbc.com/the-great-rebuild-seven-wa...
  • Retric 2y ago
    Vacancy rates should be lower where the total inventory increases and people’s ability to predict the market increases. That’s also going to be places people want to live. Consider a city of 10 million people vs 1,000 small towns of 10k people. The variability for demand in those small towns is higher and vacancy rates can’t drop below zero. So some towns hit 0 while others might be 20%. But in a city if some apartment complex is full people just go to the apartment down the street.
    • derlvative 2y ago
      This is a lot of mental gymnastics to pretend people don't need places to live. More people are born, hence more housing is needed.
• __MatrixMan__ 2y ago
  The solution is to make the property-as-an-investment a less lucrative perspective by occasionally sabotaging the property value of (but not the ability to safely live in) houses that are not being used to house people. A few high profile jury nullifications would probably be sufficient, but we gotta be the rational economic agents that the theories think we are and work together on this.
  • lazide 2y ago
    The issue is it takes significant pressure over time for any real effect to occur here. Think San Francisco or New York in the 70’s type of ‘urban decay’. [https://amp.theguardian.com/cities/2015/may/18/welcome-to-fear-city-the-inside-story-of-new-yorks-civil-war-40-years-on][https://en.m.wikipedia.org/wiki/San_Francisco_in_the_1970s] https://amp.theguardian.com/cities/2015/may/18/welcome-to-fe... A one-off broken window, or never cutting your grass isn’t going to do anything. Realistically? High central bank rates for awhile does the same thing. 1974 had a fed rate of 10.74%, 1975 5.82%, etc. [https://www.macrotrends.net/2015/fed-funds-rate-historical-chart https://www.macrotrends.net/2015/fed-funds-rate-historical-c...]
    • __MatrixMan__ 2y ago
      But we don't control the fed. The degree to which these investments are risky is our only lever.
      • lazide 2y ago
        Unless you’re forming your own street gang (or conspiracy in the city planning dept.), my point is that you aren’t meaningfully influencing how risky the investment is either.
        • __MatrixMan__ 2y ago
          I was going to go with "union", but I suppose "gang" does the same thing, just so long as it's a significant percentage of the population, organized and acting with restraint and purpose. Because I agree, a random act here and there wouldn't do the trick.
• 015a 2y ago
  IMO takes like this are problematic. The problem is not enough building. That's it. All the other stuff you said is just noise that confuses people into believing this is some hyper-complicated modern-financial-system problem that's going to end the world due to its intractability. Its not any of that. Its just not enough building. There are problems which feed into there not being enough building; the biggest one is definitely that property represents a major portion of Americans' investment portfolios, and thus our democratic system is filled with people (and companies) (and their representatives) who are heavily biased toward any decision that will raise property values. But its not that low building causes this; its just NIMBYism. This causes low building; it causes weird municipal rules about density; it causes expensive permitting; etc. People also say "well, there's not enough land in the place people want to live so of course house prices are insane". Also bullshit. The "place people want to live" changes and expands all the time. Exurbs that were forests 15 years ago are now extremely hot. Why? BECAUSE WE BUILT. That's it. That's all it takes. Build housing. Build parks and sidewalks. Allow cool businesses to open. Everyone, including and especially local governments, has made this so freakin complicated when its seriously not. Its freakin MBA prediction brain all over again. They're so afraid they don't understand the full problem, or the implications of their decision, that they refuse to act (build) and instead blame the lack of action (building) on intractably large problems like "interest rates" or "blackrock".
  • newyankee 2y ago
    Not enough building, and also the inequality in ownership of land and houses. May be tax every third or later house owned higher and plug loopholes that allow you to own an extra house under trust or other structure to rent. But where will this end for a lot of investors (which in Canada seems like a lot of the influential population) ?
    • 015a 2y ago
      > Not enough building, and also the inequality in ownership of land and houses. Its really just building. I grew up in a somewhat rural part of the US, basically just farm land and forests, but a few dozen miles from a city of ~100,000 people. The amount of NIMBYist "we gotta protect the farm" "we'd never sell to some big developer (spits on the ground)" you hear day to day was extreme, to say the least. Ten years later, that city of 100,000 people is 115,000 people, a half-dozen miles closer to the rural farming community, and they just opened a strip mall outside of town. In another ten years they'll likely have a Starbucks and a luxury apartment complex. In thirty years that small community won't really exist; it'll be called an "exurb" of a city of 250,000 people. My point in saying this in response to your comment is: Density brings money; and money trumps everything else. It trumps NIMBYism. It trumps Good Ole American Values. It can also trump inequality, weirdly enough; because density (aka money) increases the efficiency of our land use. The issue is: We aren't building enough. > where will this end for a lot of investors Constant-ish property asset values relative to baseline inflation. Its really not the end of the world. There's so many places to park money in the US economic system, its weird that we're so caught up in something so real and ugly as residential real estate. Go park your money in Nvidia. Here's my take: the government should back low interest rate and high eligibility loans specifically for the purchase of housing which has never been lived in before. There should be some provision which allows the loans to be used in the case of initial development, or redevelopment if the new development has a higher density than the previous development on that lot (e.g. the lot had 1 unit before, now it has 4 units, you're good). These loans should be made available to individuals; two per person, some reasonable market-dependent limit per loan. That's it. If the specifics are correct, a program like this would fix an extreme number of problems the US housing system has. It would create a few problems, for sure, but critically: a program like this would create liquidity in the housing system, and its far, far easier to fix problems in a liquid system versus an illiquid one.
• temporarely 2y ago
  The obvious answer is predatory finance capitalism.
• throwitaway222 2y ago
  Absolutely agree. Everyone else that replied seems to disagree probably because they are landlords. Which is fairly high in HN. Oh I'M not the problem it's someone / something else. The reason "not building" is not the issue, is because even brand new homes are being scooped up in investments. Raise property taxes for all non-occupied, airbnbs, and fuck even rentals, and while it might cause rentals to temporarily go up, housing prices will drop like a brick. Make it unreasonable to rent out a home. Heck make it unreasonable to own a second home unless you're Bill Gates.
  • xivzgrev 2y ago
    Raise property taxes? Those are usually a rounding error in a rental P&L (and it’s tax deductible) The only way I see out of this mess is to ban ownership of SFH by anyone other than…single families as primary owners. Corporations, foreign owners, secondary homes, etc. But we need to address other issues too: zoning (make Houston’s approach nationwide) and construction costs.
  • lief79 2y ago
    First two make sense ... rentals is really complex. How long are you willing to hurt those with the least amount of money. Maybe a home owners break, and a second weaker first rental/vacation home break would match the current approach (and dodge more of the individuals who'd kill the legislation for for your idea. Alternately, a discount for occupied properties. I was initially thinking corporate owned rentals or anyone with more than 2 properties, but the above seems cleaner.
    • oneeyedpigeon 2y ago
      Housing is such a unique thing that I think it should be treated differently when we talk in terms of 'capitalism', 'public services', etc. Everyone needs a house. Nobody can use more than one house simultaneously. Houses are incredibly expensive, but most of that cost is purely market-driven. Housing is, essentially, a zero-sum game.
• piltdownman 2y ago
  Ireland are a complete outlier, as the government incentivised itself not to deliver on housing as a result of IMF/Troika bullying. It set up National Asset Management Agency in 2009 to clean the property crash related debts from the balance sheets of the main Irish banks. https://en.wikipedia.org/wiki/National_Asset_Management_Agency https://en.wikipedia.org/wiki/National_Asset_Management_Agen... As per the usual government mouthpieces, it was a roaring success - "NAMA's overall contribution of €10.5 billion to the State, comprising its projected surplus €4.9 billion and recoupment of the €5.6 billion of state aid it paid to the participating institutions, represents a significant outperformance relative to expectations at inception in late 2009" https://www.rte.ie/news/business/2024/0306/1436280-nama-ibrc-wind-down-dates/ https://www.rte.ie/news/business/2024/0306/1436280-nama-ibrc... Sadly it has resulted in arguably the worst housing crisis in the EU. 68 per cent of people aged between 25-29 in Ireland still live at home. This figure is nearly 26 per cent higher than the EU average of 42.1.
  • returningfory2 2y ago
    What is the connection between the Irish housing crisis and NAMA?
    • piltdownman 2y ago
      The tl;dr version is encapsulated here; can't post an archive link as on the work VPN https://thecurrency.news/articles/86599/we-had-our-chance-to-stop-the-housing-crisis-it-was-called-nama/ https://thecurrency.news/articles/86599/we-had-our-chance-to...
  • Supernaut 2y ago
    NAMA is not in any way responsible for the housing crisis. Its purpose was not ever to fund or incentivize homebuilding and in any case, if I think back a decade, to a point where NAMA had been in operation for five years, there was no housing crisis. Neither NAMA nor the Troika ever discouraged housebuilding. Even if it had been a policy of theirs, there wouldn't have been any need: a sizeable proportion of the building companies here went bust after the 2008 crash and their employees had to emigrate or retrain. Furthermore, none of the local banks were in the financial position (or the mood) to fund property development. The Irish housing crisis has very simply and abruptly come about because of the massive growth in population that has occurred here over the last nine or ten years. Due to the catastrophic implosion that occurred in the indigenous building industry after 2008, speedily ramping homebuilding up to a level that can keep pace with inward migration is essentially impossible. We may eventually be able to build fifty thousand dwellings a year, but the shortages will persist until then. There are other factors that exacerbate the problem, most notably our sclerotic planning system, but the fundamental issue is the hollowing out of the private construction sector that occurred at the start of the last decade.
• psychlops 2y ago
  Refreshing to see other voices out there who get it, thanks for posting. The financialization of housing and guarantee of an increasing asset price allowed global wealth to pile into purchasing as much real estate as they can. Not only does the pump of money increase housing purchases (it's a short against the currency), but unstable currencies also cause real estate to go up as wealth looks for safety.
• gaoshan 2y ago
  Higher interest rates and/or regulations against excessive (however that is defined) ownership. Any regulation should focus on the bigger players as a priority. The person with the second vacation home isn't a priority but the fund with hundreds or thousands (or 10s of thousands as is the case in the US) should be a focus.
• wodenokoto 2y ago
  I think it is a question about the area of central locations grows much slower than the amount of people who wants to live in a central location. Dubai is expanding like there is no tomorrow, and the price of down town and marina just keeps increasing, regardless of how many new high rise areas the emirate undertakes. China has hundreds of literally empty cities, yet people are being priced out of living in Beijing. The question is not about a lack of new buildings, or under utilization of current buildings but simply you cannot built _dense_ enough to follow demand.
  • DenisM 2y ago
    The empty cities are interesting. People don’t want to live there because there are no jobs and no services. There are no jobs or services because there are no people. Sounds like an opportunity for the government to step in and create employment, e.g. move a big military contractor there to “bootstrap” the city.
    • mcmoor 2y ago
      Several countries in Asia are/were not only making new cities, but new Capital cities (Malaysia, Egypt, Indonesia, etc) and they have mixed results. Old city pull and inertia is so strong.
• adra 2y ago
  Interest rates in Canada have doubled and were only seeing a trickle of investors selling. I do agree that we have way too much investment in finished real estate, which is only hurting consumers trying to get into a market. We've been a lot more strict with ownership transparency and clamping down on short term rentals, which is still too soon to see how significant the effects will be, but the big tldr here being that rates doubled and there's still not a high push to reduce prices (yet), so both sides of the market are holding out for better.
  • tossandthrow 2y ago
    In December there was an expectation that the FED would do 7 interest rate reductions this year. Now we are down to 1 - maybe. I think a lot of people in the market are still holding on with a strong expectation that the interest rates will go down. Personally, I think high interest rate environments are better for most people - it compresses asset prices and adds more value to a salary. But it will take some years for that compressions to kick in again.
    • adra 2y ago
      There's a huge difference in rates and how it affects markets between Canada and the US. I'd assume most US based loans have a lock in period of 25-30 years, but is basically unheard of to have Canadian rates locked in longer than 5 years for fixed mortgages. That means there's a bunch of mortgage renewals that will dramatically affect the amount of disposal income for these individuals that locked in low rates a few years ago. In the US, it's more about potential buyers holding out for cheaper rates. In Canada is more about owners that "suddenly" have dramatically higher servicing rates. It's not unlikely that people are paying 1000/mo extra post renewal.
      • tossandthrow 2y ago
        My guess is that Canada, like the ECB, are also influenced by the FEDs rates because, you know, FX.
• csomar 2y ago
  But you have to admit that no one could have guessed that increasing the money supply (ie: printing money) would have led to higher asset (including real estate) pricing.
  • A4ET8a8uTh0 2y ago
    This, and certainly no one has warned about this type of policy being inflationary by default. Granted, it is just a part of the equation, but not a small one by any means.
  • sib 2y ago
    Are you missing a /sarc tag?
    • csomar 2y ago
      Do I really need it?
      • sib 2y ago
        Well, not for me...
• hedora 2y ago
  In the US, it's a combination of lack of building, increased materials costs, and (in places like California) government policies that block new construction. Note that Trump's tariffs on Canadian lumber increased the cost of new construction by 20% over a period of a few months (the article mentions the cost of materials, but not the root cause, which was this tariff, and some climate disasters, like when the Texas storms took out 20% of global PVC production for a year or so). Biden has been aggressively increasing tariffs, so they are both directly to blame. The interest rate spike and high inflation were predicted by pretty much all economists when Trump decided to needlessly keep rates low during his first term, so blaming Biden never made much sense to me Anyway, lots of studies have been done looking for root causes for homelessness and unaffordable housing. Every theory I've heard (drugs, mental health, nice weather for tent encampments, joblessness, etc, etc) has been shot down by such studies except the idea that if you have fewer houses per capita, then you will have more homeless people and more expensive houses. Assuming global financial stuff changed radically but we didn't build more houses, where would these people with lots of money in the bank live, exactly? Also, wouldn't that cause the price of housing to increase (increased demand, constrained supply, and inflation from the increased money supply)? The graph you cite says the US has 0.4 houses per person. That means that, on average, we don't have enough houses for people that are single, couples without a live-in kid, or single parents. It goes on to say that 7% of US houses are vacant, but that wouldn't make up the gap. Also, many houses in the US are vacant because there are in places where the economy has dried up, and there aren't adequate utilities, schools, groceries, etc. Even if those houses were somehow renovated, many people would still be better off financially if they chose to live on the street instead of in those places.
• EasyMark 2y ago
  It's more likely a correction on interest rates combined with lack of supply. It will even out, it's not a failure of the system. If more houses are build then value gets diluted, private capital can't keep buying up all the "extra" supply. Rates will also need to drop and more people can buy, as people include "that payment is more than I can afford" every bit as much as "this house costs $X"
• bunderbunder 2y ago
  At least in our city, another big thing that seems to be tied to cheap credit is the rise of house flipping. Fueled by cheap interest rates and low capital gains taxes, it's easy for a decently capitalized speculator to buy up older houses, do quick, cursory updates to the interior modeling, and then put them back on the market again at a significant markup. This is a quadruple whammy for people who just want somewhere to live. It means people who only have budget for an older home need to be hasty with purchases so they can get ahead of the speculators. It directly reduces the supply of homes by extending the period in which they aren't occupied. It reduces the supply of more affordable housing by quickly converting it all into more expensive housing. And it robs people who might want to fix up their own home of the opportunity to choose their own decor. It's not actually front running, but it still feels like a similar kind of problem.
• marcosdumay 2y ago
  > Ask yourself, do Canada, Australia, New Zealand, the US, Britain, Ireland, etc, all have the same inability to build Yes, everybody does. The population exploded everywhere, and rent-seekers enriching themselves out of land price increases popped out everywhere. All at about the same time.
• rndmize 2y ago
  No, lack of building _is_ the main problem. It doesn't matter if the demand for homes is "artificial" or not - the easiest solution is to build more. > Ask yourself, do Canada, Australia, New Zealand, the US, Britain, Ireland, etc, all have the same inability to build or is there maybe some other common cause? This is something I've wondered, and I'm of the opinion there's two reasons that are rarely discussed. One is the great recession/sub-prime crisis, which, at least in the US, caused a collapse in housing construction - I'm not sure how much this is true for other countries. The other is the coming of age of millennials, leading to a "bump" of people in their 20-30s trying to get their first home - I'd expect this to apply to most of the countries listed.
  • mattgibson 2y ago
    You really need to provide data to make that assertion. Shortages of buildings are not the only reason that property prices can be high. Properties are made up of a building and a plot of land that it's attached to. Whilst we can nake more buildings, we can't make more land, so the land in a given location is by definition going to be in a permanent state of shortage. If more poeple want to live in that location OR (the main driver of this crisis) if more money is chasing the same fixed supply, then the prices rise. The land component is the part that has become more expensive recently, not the buildings.
    • bobthepanda 2y ago
      Land price is inherently tied to buildings though, in the sense that the cap of value one can realize from land is the maximum square footage you can build by zoning. Land that you can develop into multifamily that still has capacity is getting ever rarer. If you poll Americans the preference split is 60-40 suburbia for suburbs vs dense walkability, and yet in metropolitan regions the residential land allocation looks more like 93-7. This shows up in square footage prices, where dense walkability is priced much higher per square foot.
    • rndmize 2y ago
      > Shortages of buildings are not the only reason that property prices can be high. It pretty much is - everything else is window dressing. Pretty much every single city in China is 3-10x more dense than any area in the US, so lack of land is a reason I find continually uncompelling. Our lack of density, zoning practices, NIMBY attitudes and car dependency all contribute to this, with the result being a lack of construction. Tokyo has been and continues to be affordable for anyone who wants to live there by building: https://www.nytimes.com/2023/09/11/opinion/editorials/tokyo-housing.html https://www.nytimes.com/2023/09/11/opinion/editorials/tokyo-... Here's a grad student on tiktok who does good, well-sourced analysis on this front (he has an entire playlist on the issue of vacancy rates given how frequently it comes up): https://www.tiktok.com/@divasunglasses?lang=en https://www.tiktok.com/@divasunglasses?lang=en Article on zoning law changes in CA and how municipalities have put out estimates for how much they should build and then consistently, for decades, not even come close to meeting them: https://darrellowens.substack.com/p/ca-cities-to-lose-all-zoning-powers https://darrellowens.substack.com/p/ca-cities-to-lose-all-zo... There's endless amounts of info on this front - look up strongtowns, YIMBY, parking minimums and associated issues (https://www.youtube.com/watch?v=OUNXFHpUhu8 https://www.youtube.com/watch?v=OUNXFHpUhu8), japanese vs. american zoning policy (https://urbankchoze.blogspot.com/2014/04/japanese-zoning.html https://urbankchoze.blogspot.com/2014/04/japanese-zoning.htm...)...
• richrichie 2y ago
  > In my view this is symptomatic of a more fundamental issue - global asset price inflation driven by a broken financial system (i.e. a system being artificially pumped up with cheap credit). Housing is just where the rubber hits the road and regular lives are directly effected. Just look at the tight correlation between the increase in the money supply and property prices. Prior to covid, the global economy was booming. US and UK had low unemployment rates. the US especially was remarkably doing well, with lowest unemployment rate for minority communities. There is a price to pay for completely disregarding long-term economic costs of reckless responses to a what was a moderately severe flu epidemic. We went nuts and shut ourselves down. And on top of that, we helicopter dropped 4-6 trillion dollars of freshly printed cash. And the reckless governance continues in the name of flaming conflicts in Europe and ME. A lot of what happened in the recent years is attributable to just atrocious governance.
• mariodiana 2y ago
  I agree. Inflating the money supply (for example, via cheap credit policies) distorts the economy and creates malinvestment. Unadulterated consumer demand is eclipsed by the artificial demand created by the newly created money. The new money isn't distributed uniformly and immediately in an economy. It starts out somewhere. So, in this case, one of the distortions is in the housing market. Working people are perfectly willing to purchase homes they can afford. In fact, it is safe to assume that it is one of their top priorities. If affordable housing isn't being created, something is amiss. See above!
• carom 2y ago
  >Too many properties are being used as investments and not as a primary residence. Following this logic it would be a net positive to buy an apartment building, move everyone out, and live in it as a single family home.
  • ajkjk 2y ago
    That makes no sense.
  • vsuperpower2020 2y ago
    How do people even think of these things? You're not a computer. You have the ability to intuit when people are not talking about some stupid edge case that literally never happens.
• boppo1 2y ago
  I try to explain the ills of interest rate intervention to people all the time and they act like I'm a conspiracy theorist. The problem will likely not get better.
• QuarterReptile 2y ago
  >Cheap credit causes an increase in demand. This is not demand for homes but additional 'artificial' demand for properties as investments. Think short term rentals, second homes, land banked properties, etc. By definition, only investment properties can be underutilised - owner occupied homes are occupied! So in an environment that encourages property investment you will see more underutilisation. An important nitpick: cheap credit intensifies the search for returns. You need to consider why those races end in real estate. In the US, at least, the answer is that the American single family house is the single most privileged asset class in the history of the world. The entire economy assumes that housing prices will grow at a rate that outpaces inflation. You cannot, in that system, be a person who calmly watches to evaluate the correctness of the hypothesis. No, you shut up and push. Whether you're the President or the Fed or some affordable housing commission, you shut up and push for housing as an appreciating asset.
  • ethbr1 2y ago
    That's comingling a few things, because a lot of the privileges around holding a home as an asset don't extend to investment properties. E.g. the easy availability of competitive mortgages and individual tax breaks. Personally, I think we should lean into that -- make single family homes completely unattractive as an investment. Rental units are more debatable, because of the density argument, but I think we should probably disincentize it as an asset class too. In favor of offering townhomes for sale.
    • QuarterReptile 2y ago
      I didn't mean even tax advantages or favorable financing. The heart of the issue is that we have a national policy of not letting housing prices go down because that would crush too many people's equity and with it their financial stability. The longer it goes, the more we ratchet up the tension between affordable housing and housing as investment. There's probably a lot to be said about the secondary market for conforming mortgages, but I'm not the knowledgeable person to do so.
• xenadu02 2y ago
  People really want there to be "one reason" for skyrocketing housing prices. Real life is not so accommodating. The problem is multi-faceted. Is there asset price inflation due to cheap money? Yes. Have foreign nationals been parking their cash in real estate in certain western countries? Yes. Has restrictive zoning and NIMBY-ism reduced the incoming supply of new homes? Yes. Multiple things can be true at the same time, all contributing to the current state of affairs.
  • ethbr1 2y ago
    Exactly! And important to recognize the interest groups behind preventing progress on each. Fixing the issue has been stymied for too long by each pointing at the others and saying "They're the real problem!" to justify inaction / rolling back fixes on their pet interest. All need to be addressed.
    • ffsm8 2y ago
      These aren't all issues though. Another contributing factor is that home/lands ownership can be inherited. That's going to be the biggest contributer as time goes on (not right now though), as eventually all desired land will have been bought by what amounts to an oligarchy. Honestly, land/homes should never be inheritable, and companies should never be able to own land altogether. Not that this would ever happen. The status quo is too profitable for the land/home owners.
      • eszed 2y ago
        >land/homes should never be inheritable Eh, nah. But, there should be inheritance taxes set at a level which prevents the formation of a "landed gentry". Unfortunately, the issue has been demogogued to the point that middle-class people (who won't have anywhere near the assets to be taxed, as in not by an order of magnitude) treat the idea as anathema.
        • AnimalMuppet 2y ago
          "Bracket creep". The middle class is afraid of taxes that are "for the rich" being extended to tax them. And not without some reason - income tax was sold as "only for the rich".
• JOnAgain 2y ago
  do Canada, Australia, New Zealand, the US, Britain, Ireland? Yes they do. This is exactly the problem. Specifically in big cities. Zoning and nimby-ism holds back building. Even Toronto which builds a lot doesn’t build enough housing units to keep up with growth. And they only build as much as they do because the province is constantly overruling the city. Every western major city is blocking building on any meaningful scale. This leaves cities at effectively net 0 increase in supply. In major US cities, new builds are more expensive to own due to changing property taxes. And California is just a huge F U to young people by making new owners have to pay higher taxes than the old ones.
• lkrubner 2y ago
  "Ask yourself, do Canada, Australia, New Zealand, the US, Britain, Ireland, etc, all have the same inability to build or is there maybe some other common cause? ... a broken financial system." You claim that these countries do not have the same system of building but they do have the same financial system. That is a large claim to make. You should try to offer at least some kind of argument for why you feel the variations in the financial systems are less significant than the variations in their systems of construction.
• wolpoli 2y ago
  > Too many properties are being used as investments and not as a primary residence. When properties are being used as an investment, they are rented out. If that's true, it should show up as higher rental vacancy rate and low/stagnant rent. That's not the case in Vancouver, BC as we have low vacancy rate and rising rent. Homes could be left as left empty as well, but we have multiple annual taxes, ranging from 0.5% to 3% of the total property value targeting these underutilized home, and that hasn't driven price down. In additions, these taxes essentially provide an one-time only increase in the number of homes available. They can be easily absorbed by population growth. With the population increase in Canada, building more is the only way out.
• BeFlatXIII 2y ago
  > Housing is just where the rubber hits the road and regular lives are directly affected. The reason why we didn't see rampant consumer product inflation in the wave of irresponsible money-printing meant to soften the 2008 crisis was that the stimulus targeted at the wealthy and went into assets, such as the housing you just mentioned. However, COVID-19 stimulus checks were given to normal people, so inflation now hits normal people's daily purchases.
• hot_gril 2y ago
  It's basically this. Because there's a finite supply of land in desirable areas, home ownership is an investment, unlike renting. Same as how I got "priced out" of owning 1/10000th of Apple Inc.
• dclowd9901 2y ago
  > In my view this is symptomatic of a more fundamental issue - global asset price inflation driven by a broken financial system (i.e. a system being artificially pumped up with cheap credit). I've been crowing on this since the 2008 crash. The cycle is this: 1. A person has a job, but can't afford things 2. They get credit to buy the things they want, in lieu of demanding better pay 3. Everyone does this, so demand goes up and prices go up 4. The value of their dollar goes down 5. Go to 1. Consumer credit has _broken_ money. Broken it. We've seen this in housing prices and student loans, and now that we have online checkout buttons that say "you can have this for $17/mo!", we're starting to see it in stock-and-trade consumer goods even more now. We have to -- have to -- eliminate consumer credit if we ever want to give people a fair shake at maintaining the value of their money and purchasing things. Otherwise, prices will be determined by people who are dumbest with their money.
  • Detrytus 2y ago
    And if people start demanding a better pay the only thing that would change would be: [...] 2. They demand a better pay 3. Everyone does this, so the cost of everything goes up and prices go up. [...] Unless that better pay is somehow tied to higher productivity and overall GDP increase it would not solve the problem.
• kerhackernews 2y ago
  >Ask yourself, do Canada, Australia, New Zealand, the US, Britain, Ireland, etc, all have the same inability to build or is there maybe some other common cause? They all do though, for various reasons.
• randomdata 2y ago
  > Ask yourself, do Canada, Australia, New Zealand, the US, Britain, Ireland, etc, all have the same inability to build Of course. Remember, homebuilding continues to be incredibly labour intensive. Meanwhile, all of those countries have enjoyed "full employment" for many, many years. Which means that workers have all kinds of job options. In other words, you can't build without people. Ask yourself, why would the people choose construction? Wouldn't sitting at a comfy desk programming computers all day be more desirable? The small few who enjoy it can’t keep up. Do you work in construction as a career? If no, why not? What would it take to get you to start building houses? Higher compensation than other jobs, perhaps? But guess what high compensation brings...
• h12nz 2y ago
  It is primarily restrictive zoning. When Auckland up-zoned there was a clear relative decrease in prices. You can also see it in the massive price discontinuity on the city’s rural-urban boundary. It’s a pretty simple problem: existing owners have an interest in restricting new supply, and there aren’t many costs associated with being a nimby. Housing stops being a good investment when supply is responsive.
• martin82 2y ago
  In other words: Buy Bitcoin!
• unusualmonkey 2y ago
  > Ask yourself, do Canada, Australia, New Zealand, the US, Britain, Ireland, etc, all have the same inability to build... Why wouldn't they? They are relatively similar countries in many ways, any problem that one has could easily be replicated in others. For example I imagine zoning laws are all somewhat similar, favoring suburbs and strictly zoned areas vs market driven mixed use areas. I also suspect they all have significant migration, high labor costs and high building standards.
• name_nick_sex_m 2y ago
  "Problem is utilization" AKA, not enough buildings / lack of building..
• bratbag 2y ago
  Ask yourself if people would bother to invest in an asset that was over-supplied. You are just talking about another symptom of constricted supply.
• deleted 2y ago
  [deleted]
• entropi 2y ago
  Coming from another angle, this might not be a "problem" when you consider the greater scheme of things. Being able to obtain assets, when you don't have any is a relatively new thing, historically speaking. One could also say that we were living in a brave new world of opportunities and growth for a few centuries. And now we are returning to the historical norm. One thing that all the examples you listed is that they could be seen as "late game" economies. I might be totally wrong, though. This is just another angle.
• Ygg2 2y ago
  I liked the explanation by Gary Economics. https://www.youtube.com/watch?v=kNUNR2NZvFM https://www.youtube.com/watch?v=kNUNR2NZvFM It posits that the high prices are caused by rich people parking their money in houses. It explains many problems with a few variables. While it's not the whole picture, it explains why the middle class is getting squeezed out of house ownership. And why stimulus package didn't much help.
• deeviant 2y ago
  > What will cause prices to fall is higher interest rates. This is what has been happening in NZ. Then again, with higher interest rates, the lower prices don't mean anything unless they drop significantly faster than interest rates are raising, yes?
• ericmcer 2y ago
  A factor I don't see talked about: All those countries killed their manufacturing and offshored it over the last 40 years. Factories and manufacturing meant good jobs located far away from major cities, and towns/communities built up around those jobs. Now all the jobs are located in large cities so housing prices there are going through the roof. If you are young you almost have to move to a major city if you want to start your career. Meanwhile there are "ghost cities" and other dwindling towns where you can buy a house for pennies.
• ta1243 2y ago
  > This is a problem of underutilisation in my view. Too many properties are being used as investments and not as a primary residence. Not in London - according to a pressure group saying there are too many houses used as non-primary-residence [0] - they claim just 1 in 45 houses are either airbnb, second homes, or empty, and half of those are second homes (i.e. someone with a small flat in the city and their main house in the country) On top of that you have the hidden demand. A typical 3 bed house will house 4 or 5 30yo adults in a HMO because there simply isn't enough housing. Lower rates means House prices are higher sure, but that's because the monthly cost will always rise to meet what's affordable. If supply outweighed demand then prices would fall. [0] https://static1.squarespace.com/static/6553693f7d629a133b6a4ece/t/6556395f5ebbf5732fcbc36e/1700149600422/London+stats.pdf https://static1.squarespace.com/static/6553693f7d629a133b6a4...
• elliottkember 2y ago
  > What will cause prices to fall is higher interest rates. This is what has been happening in NZ. I hope so. But this assumes a fair market. I believe the NZ market will be pumped up through government action in order to avoid paper losses for property investors, landlords, and also for regular family property owners' unrealised gains. Case in point: reinstating full interest deductions for residential property, reducing the tax investors pay. A $2.5b kickback to landlords. 60 per cent deduction in 2023/24, rising to 80 per cent in 2024/25 and 100 per cent in 2025/26.