4 ms·

How is restricting supply not a problem? The fewer houses there are to buy, the higher prices will get, because there are more people competing for less.

beej71 2y ago
In my state, they're building new supply, the population has decreased, and housing prices have increased.
- shuckles 2y ago
  These aren't incompatible. Household sizes are falling and number of homes is an input to population, so you can have residents moving out on net while prices increase due to the remaining residents being more wealthy. California is an entire state of ~40 million people where this happens: low and middle income families move out; high income families move in.
- davidw 2y ago
  But household formation has increased, by a lot: https://oregoneconomicanalysis.com/2023/10/26/household-formation-in-oregon/ https://oregoneconomicanalysis.com/2023/10/26/household-form...
  - beej71 2y ago
    Which seems to imply that housing is not too expensive, if millennials are snatching them up...?
    - csallen 2y ago
      You're confusing increases in household formation with increases in homebuying. You can create a new household without buying a house. For example, if you live with your parents as a 22yo, you and your parents count as one household. If you then move out and into an apartment by yourself, you are now your own household. But you haven't bought a house. As millennials age, more of them will obviously move out from living with their parents, which means increasing household formation. In addition, you can expect homebuying to increase within a generation as that generation matures and earns more money. Of course millennials will be buying more houses when they're in their 30s than when they were in their 20s. That's to be expected. Something would be seriously wrong if that were not the case. But this doesn't automatically mean that housing is not expensive.
whoknowsidont 2y ago
Because the U.S. doesn't actually have a supply problem, despite this often getting repeated. U.S. construction of homes has actually kept up with population growth and moves, by every conceivable metric. What IS happening though is that landlords (private and corporate) "warehouse" units constantly to artificially restrict supply and demand, and they do it in collaboration with each other. Every single city and state in the U.S. has a vacancy problem. We DO have both houses and apartments that are ready and able to be rented and owned. The problem is simply the price, and the prices aren't being driven by legitimate supply and demand. You can see this effect happen where prices increase NOT to match population (and often in SPITE of it), but they increase to match the upper bounds of regional income. You need a place to live more than landlords need a few months of rent. This strategy to prevent downward price pressure from the market allows them to justify the current prices while setting up a "baseline" for the next few years. Some free reading: * https://www.construction-physics.com/p/is-there-a-housing-shortage-or-not https://www.construction-physics.com/p/is-there-a-housing-sh... * https://reventureconsulting.com/the-myth-of-the-us-housing-shortage/ https://reventureconsulting.com/the-myth-of-the-us-housing-s... * https://charleshughsmith.blogspot.com/2023/08/the-problem-isnt-housing-shortage-its.html https://charleshughsmith.blogspot.com/2023/08/the-problem-is...
- verdverm 2y ago
  What if the people building the houses are incentivized to build large, expensive homes? That means the buyer does not have choices in their preferred price range and must buy above what they actually want
  - AlexandrB 2y ago
    You see this a lot with new condos, where the only kind of condos being built are "luxury condos" with fancy amenities and features. There's some theorizing that these will eventually become downmarket units as they age, but I'm somewhat skeptical. I once lived in a condo built in the 70s and the materials used were very pedestrian - linoleum counters and flooring in the kitchen, carpet everywhere else. Ceilings were 8'. No balcony. I don't see today's granite and hardwood condos with 10' ceilings ever becoming downmarket.

beej71 2y ago

In my state, they're building new supply, the population has decreased, and housing prices have increased.

shuckles 2y ago
These aren't incompatible. Household sizes are falling and number of homes is an input to population, so you can have residents moving out on net while prices increase due to the remaining residents being more wealthy. California is an entire state of ~40 million people where this happens: low and middle income families move out; high income families move in.
davidw 2y ago
But household formation has increased, by a lot: https://oregoneconomicanalysis.com/2023/10/26/household-formation-in-oregon/ https://oregoneconomicanalysis.com/2023/10/26/household-form...
- beej71 2y ago
  Which seems to imply that housing is not too expensive, if millennials are snatching them up...?
  - csallen 2y ago
    You're confusing increases in household formation with increases in homebuying. You can create a new household without buying a house. For example, if you live with your parents as a 22yo, you and your parents count as one household. If you then move out and into an apartment by yourself, you are now your own household. But you haven't bought a house. As millennials age, more of them will obviously move out from living with their parents, which means increasing household formation. In addition, you can expect homebuying to increase within a generation as that generation matures and earns more money. Of course millennials will be buying more houses when they're in their 30s than when they were in their 20s. That's to be expected. Something would be seriously wrong if that were not the case. But this doesn't automatically mean that housing is not expensive.

whoknowsidont 2y ago

Because the U.S. doesn't actually have a supply problem, despite this often getting repeated. U.S. construction of homes has actually kept up with population growth and moves, by every conceivable metric. What IS happening though is that landlords (private and corporate) "warehouse" units constantly to artificially restrict supply and demand, and they do it in collaboration with each other. Every single city and state in the U.S. has a vacancy problem. We DO have both houses and apartments that are ready and able to be rented and owned. The problem is simply the price, and the prices aren't being driven by legitimate supply and demand. You can see this effect happen where prices increase NOT to match population (and often in SPITE of it), but they increase to match the upper bounds of regional income. You need a place to live more than landlords need a few months of rent. This strategy to prevent downward price pressure from the market allows them to justify the current prices while setting up a "baseline" for the next few years. Some free reading: * https://www.construction-physics.com/p/is-there-a-housing-shortage-or-not https://www.construction-physics.com/p/is-there-a-housing-sh... * https://reventureconsulting.com/the-myth-of-the-us-housing-shortage/ https://reventureconsulting.com/the-myth-of-the-us-housing-s... * https://charleshughsmith.blogspot.com/2023/08/the-problem-isnt-housing-shortage-its.html https://charleshughsmith.blogspot.com/2023/08/the-problem-is...

verdverm 2y ago
What if the people building the houses are incentivized to build large, expensive homes? That means the buyer does not have choices in their preferred price range and must buy above what they actually want
- AlexandrB 2y ago
  You see this a lot with new condos, where the only kind of condos being built are "luxury condos" with fancy amenities and features. There's some theorizing that these will eventually become downmarket units as they age, but I'm somewhat skeptical. I once lived in a condo built in the 70s and the materials used were very pedestrian - linoleum counters and flooring in the kitchen, carpet everywhere else. Ceilings were 8'. No balcony. I don't see today's granite and hardwood condos with 10' ceilings ever becoming downmarket.