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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 g

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.
- whoknowsidont 2y ago
  >That means the buyer does not have choices in their preferred price range and must buy above what they actually want But we don't see this happening though. Even in this scenario, there would still be downward price pressure. The market should (or would, rather) reach some equilibrium here. Instead what we see is UPWARD price pressure and vacancy despite legitimate market forces and environment. I've kind of already laid it out in the previous post but the next question anyone should have is "why is that happening?" And it's not because the units don't exist or need to be built.
- pkaye 2y ago
  I know in California there are so many requirements and fees on home construction that companies are incentivized to build larger expensive homes to dilute those costs.
- vharuck 2y ago
  I've heard the theory that high-end housing still creates opportunities for lower-end housing. If a desirable neighborhood gets new expensive units, that means (1) some residents who now earn more than when they first came can "upgrade", leaving their older and cheaper units open, and (2) people who can only afford the older units don't need to compete as much with wealthier buyers.
Glyptodon 2y ago
Taxing land vacancy or lack of density seems like an easy enough solution.
csallen 2y ago
I copy-pasted this comment to my friend, who's the chief economist at a major real estate company you've heard of. Here's their response, verbatim: > "Bullshit. It's not population that matters it's household formation. Millennials are the biggest generation and they are at the age now where they are forming their own households and there isn't any housing for them near jobs. Vacancies are all in dying rust belt towns no one wants to live in. California absolutely does not have a vacancy problem. That's just a lie." This aligns with my (admittedly less-informed) knowledge as well. Your assertion that "every city" has a vacancy problem is particularly mystifying to me. I live in Seattle, and there does not seem to be a residential vacancy problem of any kind. Some quick Googling shows "a homeowner vacancy rate of 1.0% and a rental vacancy rate of 2.5%." That does not sound like a vacancy problem to me. Quite the opposite. Very, very, very few homes are available for sale, even as the city's population explodes. I also did a quick and unbiased Google search of "population growth vs housing supply." Here's what came up immediately: "In 2023, the U.S. saw 1.67 million household formations, resulting in 17.2 million household formations between 2012 and 2023. In this time period, 14.7 million housing units were started, and 13.4 million were completed." So again, household formation is outpacing housing supply, which results in more competition and thus higher prices. Both your comment and the links you included (which I perused) seem less like they're concerned with fixing housing affordability, and more like they have an axe to grind against landlords and the wealthy in general.
- whoknowsidont 2y ago
  >Bullshit Let's see the data then. Other than some "trust me bro" comment. Not sure why you expect me to engage with vague assertions of authority, especially when "he" started out emotionally unstable. EDIT: You heavily edited your comment. The stats you are referencing do not say what you think they say, they are not a force for increasing prices. There are already houses that were previously built, they do exist. Not sure why you would pretend otherwise? Look at vacancy vs availability rates. Additionally, you seem to want to ascribe motivations instead of addressing the fact that collusion is most assuredly happening in every major city in America: https://www.vice.com/en/article/ak3vek/landlord-software-is-making-life-hell-for-renters-report-says https://www.vice.com/en/article/ak3vek/landlord-software-is-... Stick with the facts, not emotional fallacies.
danking00 2y ago
Unless I’m misreading, the first two references support the idea that vacancy rates are too low but don’t comment on why. The last reference indeed argues in favor of too much financialization of housing units but that blog is also tripping a lot of my crackpot alarms. Can you succinctly explain why you believe the low vacancy rates in major metros (which I think we agree is the cause of high rents / purchase costs) are caused primarily by units which are intentionally held empty despite demand? In partial defense of your assertion, the FRED data does show that 1/4 to 1/3 of vacant units are for sale or rent at any given time. https://fred.stlouisfed.org/graph/?g=1oeIe https://fred.stlouisfed.org/graph/?g=1oeIe Total vacancy rate seems to hover around 10%? Rentable and buyable unit rates are an order of magnitude lower. I’m not convinced that the Fed owning a bunch of mortgages is evidence that private companies bought homes and aren’t renting them. Wasn’t that a bail out to prevent people from losing their homes (because the companies owning the homes weren’t solvent and I guess if the company fails maybe you get foreclosed? I’m not sure why we did things the way we did in 08) Could not the explanation also be that a lot of homes are in places that lack demand and therefore the owners don’t bother putting them up for sale or rent? https://fred.stlouisfed.org/graph/?g=1oeII https://fred.stlouisfed.org/graph/?g=1oeII

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.
whoknowsidont 2y ago
>That means the buyer does not have choices in their preferred price range and must buy above what they actually want But we don't see this happening though. Even in this scenario, there would still be downward price pressure. The market should (or would, rather) reach some equilibrium here. Instead what we see is UPWARD price pressure and vacancy despite legitimate market forces and environment. I've kind of already laid it out in the previous post but the next question anyone should have is "why is that happening?" And it's not because the units don't exist or need to be built.
pkaye 2y ago
I know in California there are so many requirements and fees on home construction that companies are incentivized to build larger expensive homes to dilute those costs.
vharuck 2y ago
I've heard the theory that high-end housing still creates opportunities for lower-end housing. If a desirable neighborhood gets new expensive units, that means (1) some residents who now earn more than when they first came can "upgrade", leaving their older and cheaper units open, and (2) people who can only afford the older units don't need to compete as much with wealthier buyers.

Glyptodon 2y ago

Taxing land vacancy or lack of density seems like an easy enough solution.

csallen 2y ago

I copy-pasted this comment to my friend, who's the chief economist at a major real estate company you've heard of. Here's their response, verbatim: > "Bullshit. It's not population that matters it's household formation. Millennials are the biggest generation and they are at the age now where they are forming their own households and there isn't any housing for them near jobs. Vacancies are all in dying rust belt towns no one wants to live in. California absolutely does not have a vacancy problem. That's just a lie." This aligns with my (admittedly less-informed) knowledge as well. Your assertion that "every city" has a vacancy problem is particularly mystifying to me. I live in Seattle, and there does not seem to be a residential vacancy problem of any kind. Some quick Googling shows "a homeowner vacancy rate of 1.0% and a rental vacancy rate of 2.5%." That does not sound like a vacancy problem to me. Quite the opposite. Very, very, very few homes are available for sale, even as the city's population explodes. I also did a quick and unbiased Google search of "population growth vs housing supply." Here's what came up immediately: "In 2023, the U.S. saw 1.67 million household formations, resulting in 17.2 million household formations between 2012 and 2023. In this time period, 14.7 million housing units were started, and 13.4 million were completed." So again, household formation is outpacing housing supply, which results in more competition and thus higher prices. Both your comment and the links you included (which I perused) seem less like they're concerned with fixing housing affordability, and more like they have an axe to grind against landlords and the wealthy in general.

whoknowsidont 2y ago
>Bullshit Let's see the data then. Other than some "trust me bro" comment. Not sure why you expect me to engage with vague assertions of authority, especially when "he" started out emotionally unstable. EDIT: You heavily edited your comment. The stats you are referencing do not say what you think they say, they are not a force for increasing prices. There are already houses that were previously built, they do exist. Not sure why you would pretend otherwise? Look at vacancy vs availability rates. Additionally, you seem to want to ascribe motivations instead of addressing the fact that collusion is most assuredly happening in every major city in America: https://www.vice.com/en/article/ak3vek/landlord-software-is-making-life-hell-for-renters-report-says https://www.vice.com/en/article/ak3vek/landlord-software-is-... Stick with the facts, not emotional fallacies.

danking00 2y ago

Unless I’m misreading, the first two references support the idea that vacancy rates are too low but don’t comment on why. The last reference indeed argues in favor of too much financialization of housing units but that blog is also tripping a lot of my crackpot alarms. Can you succinctly explain why you believe the low vacancy rates in major metros (which I think we agree is the cause of high rents / purchase costs) are caused primarily by units which are intentionally held empty despite demand? In partial defense of your assertion, the FRED data does show that 1/4 to 1/3 of vacant units are for sale or rent at any given time. https://fred.stlouisfed.org/graph/?g=1oeIe https://fred.stlouisfed.org/graph/?g=1oeIe Total vacancy rate seems to hover around 10%? Rentable and buyable unit rates are an order of magnitude lower. I’m not convinced that the Fed owning a bunch of mortgages is evidence that private companies bought homes and aren’t renting them. Wasn’t that a bail out to prevent people from losing their homes (because the companies owning the homes weren’t solvent and I guess if the company fails maybe you get foreclosed? I’m not sure why we did things the way we did in 08) Could not the explanation also be that a lot of homes are in places that lack demand and therefore the owners don’t bother putting them up for sale or rent? https://fred.stlouisfed.org/graph/?g=1oeII https://fred.stlouisfed.org/graph/?g=1oeII