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What happens when housing prices go down?

• focusgroup0 1y ago
  Housing prices will not go down due to inflation, unchecked immigration (ie, demand++), degrowth policies (supply--), and years of ZIRP. Be glad you got in when you did.
• vannevar 1y ago
  In a sense, housing suffers from the same identity crisis that bitcoin does. Because so many homes are now being bought for investment purposes and not by resident homeowners, housing has become speculative and the historical slow-but-steady growth in prices has been replaced by a boom-and-bust cycle typical of speculative markets. Just as bitcoin can never become a useful currency as long as speculators dominate its trade, neither can the housing market go back to being the stable economic foundation it once was for the same reason.
• eagsalazar2 1y ago
  Very good article. However I think a huge factor is being ignored. The most pernicious side effect of falling prices isn't pullback in investment and construction. It's the immense leverage lender and builder lobbies will apply through decades of regulatory capture, and the massive outcry that will come from homeowners who have bought into the idea that real estate is a great way to build wealth. Anything that results in lower prices will result in damaging the wealth of millions, of the group of Americans that probably has 99% of the wealth and political power. Yeah that won't fly. And I agree the "correction" is overdue and those wealthy boomers whose wealth has doubled and tripled since retirement just by riding that wave (and the stock market, another ponzi scheme) should transfer some of that wealth back to the masses in the form of depreciation. But it won't happen. Not in America, not without something horrible happening to make them give up that wealth.
• klipklop 1y ago
  It's pretty simple I feel. As prices drop, the elite will buy more until most/all housing stock for the lower and middle class is owned by them. Then any labor done by most people will be used to pay them tribute. When you have unlimited access to capital and at a lower rate than the average family, you "might as well" buy it up. If it goes sideways you are "too big to fail" and will be bailed out by the Federal Reserve...at the cost of the tax payer of course.
• billy99k 1y ago
  "If “build more” was going to bring prices down and stabilize the system, we wouldn’t be seeing these mixed signals." Where have we seen anything close to 'build more'? Regulations in many major cities have prevented building more for decades and I haven't seen any loosening of these regulations (they were only increased during the Biden administration). "Prices are softening. Delinquencies are rising. Builders are walking. And instead of asking what this reveals about the fragility of our system, we’re preparing to paper over it—again—with liquidity, leverage, and euphemisms. " This is the plan from the potential future mayor of New York: Builders and investors will flee as a result of price controls and home value will plummet. Detroit is a good example of what happens in the long term when investors and businesses flee the city. I lived there for 20+ years and it still has never really recovered.
  • atherton33 1y ago
    Cambridge MA just had a major shift on zoning towards "build more" in Q1. It will be an interesting natural experiment to watch. https://www.boston.com/news/politics/2025/02/11/cambridge-eliminates-single-family-zoning-in-historic-move/ https://www.boston.com/news/politics/2025/02/11/cambridge-el...
  • kasey_junk 1y ago
    It’s not just regulation either. Housing companies are not building as much as they did prior to 2008, which had substantially the same regulatory environment in most places. The idea that we’ve started building enough to bring prices down is a non-starter.
    • PretzelFisch 1y ago
      Why would the builder want to build enough to let prices drop? They seem to play a lot of games to give buyers incentives that do not lower the sales price.
      • pixl97 1y ago
        Well because they hold inventory. If homes didn't have a year long build pipeline with another 6 months+ holding for sale buffer they'd probably care a lot less. Otherwise a 10% drop in prices can lead to their bankruptcy.
• andrewstuart 1y ago
  There’s no such thing as “demand” in housing. Only supply. Housing has its own economics in which supply is the only solution ever put forward. Not a single politician or economist ever says that most dreaded and awful word “demand”. Property developers, politicians, economists, demographers, real estate agents, landlords all agree that supply supply supply will …….. errrr it will…… ummmmmm more supply will definitely……. something.
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  • ragebol 1y ago
    Demand can be affected by people living together, or encouraging that in some way. Be it having roommates, elderly parents living in, staying with ones parents longer, communes. None of them popular long term I think. Hence: supply
    • andrewstuart 1y ago
      But not the rich, right? The rich don’t need to cram more people in, everyone else does. True?
      • ragebol 1y ago
        The rich sharing their homes with many other people would reduce demand as well I guess. But they don't because they can afford not to. Some may argue that the rich help in the supply by building new houses, but that makes them even richer. If it doesn't, they don't bother (a point from this article).
    • ta1243 1y ago
      > having roommates People in cities and colleges have done that for decades. Not just "roommate" in the Friends sense where you have 2 people living in a 2 bed flat, but roommate as in sharing the same room - indeed 20 years ago I knew of some places where there where 5 people sleeping on 3 single mattresses in a single attic in London, with nuclear-dub style bunk sharing. Demand for what people want (a place to call their own without having to live with strangers) is far in excess of the supply, and has been for at least the 25 years I've been an adult.
• Eisenstein 1y ago
  You know what always happens when the status quo everyone is depending on to get money changes? People freak out and they overreact. Everyone loves it when they can keep doing the same thing and make money and they hate it when it looks like that is going to change. You what what always happens a bit later? They adjust to the new normal and make money slightly differently and then get used to that and don't want that to change. The sky is not falling. Let's keep moving towards what will benefit everyone and not get distracted by the totally predictable reactionary market signals.
  • andsoitis 1y ago
    > Let's keep moving towards what will benefit everyone And what is that?
    • Eisenstein 1y ago
      You can't think of anything?
      • andsoitis 1y ago
        People are debating different solutions, with different problems being advanced that need solving. You make it sound like you have a solution and that it is straight forward. So, what is it? OR perhaps you are actually saying that things are (largely) working well, so there's no major course adjustment necessary.
        • Eisenstein 1y ago
          Oh, I'm not saying anything except that we should a disregard a temporarily panicking market if there is a course of action that is going to be largely beneficial. The article is implying that a plan for affordable housing was working and then the market reacted negatively. The impression given was that this would be a devastating blow to this plan, and my comment was just 'let them freak out, they will get over it'.
• blitzar 1y ago
  > What Happens When Housing Prices Go Down? Government bails homeowners out and prices go back up.
  • _heimdall 1y ago
    At least in the US, the government could care less about bailing out homeowners. Banks are another story, we'll bail them out all day but tax payers and homeowners are left holding the bag.
    • andsoitis 1y ago
      During the 2008 crisis, the primary focus of the government response was to stabilize the financial system, which was seen as necessary to prevent a deeper economic collapse.
      • _heimdall 1y ago
        Sure, they wanted to stabilize the financial system but who was it exactly that they stepped in to save? Was the trigger making stabilization necessary the sudden collapse of liquidity among individual mortgage holders or the collapse of liquidity among banks?
      • dmix 1y ago
        That wasn't just a short term fix though, they changed the entire banking system and solidified the concentration of wealth into a small group of megabanks by introducing new rules that killed off most of the competition from smaller/medium sized banks while the larger ones got floated cash, so they could merge into even bigger ones instead of dying off due to their own poor decisions/misbehavior. That sort of thing always has ripple effects over the long term.
    • onlyrealcuzzo 1y ago
      If you drop interest rates to 0%, it's hard to argue you're not bailing out everyone who's in debt (which is every home owner with a mortgage). Sure, maybe you are PRIMARILY bailing out banks. But you are also bailing out everyone with a mortgage and enough brain cells to refinance and cut their by-far-largest monthly expense by 30-50%.
• Apreche 1y ago
  The problem can not be solved by trying to manage supply or demand. We must ban the concept of the landlord entirely. https://www.theguardian.com/lifeandstyle/2024/mar/19/end-of-landlords-surprisingly-simple-solution-to-uk-housing-crisis https://www.theguardian.com/lifeandstyle/2024/mar/19/end-of-... A landlord gets a loan from a bank to develop a residential property. That loan is paid by the tenants who live in that property. At the end of the day, the landlord owns the property. This is fundamentally unjust. If the tenant paid off the mortgage, they should own the property, or their portion of it. Can you imagine this for anything else? Imagine I got a loan to buy a television. The television is yours in every sense but in the legal sense. It is in your home. You are the only person that uses it. Over time you pay me back the cost of the TV, and some extra for interest. Yet, even after you have paid me back, you have to keep paying. It’s still my TV, and will be forever. If any month you don’t pay, I can come and take the TV away. Another way of looking at it is that a residential development in a high demand area is basically a guaranteed money-fountain. Banks buy them and gift them to whoever they choose. They always choose people who are already wealthy and low-risk, causing an increase in wealth inequality. A bank could choose a homeless person instead for such a low risk project. Another idea is to only allow renting when it is rent-to-own. A developer may build a large development, but over time that development will eventually become a co-op. Remove profit motive from housing entirely. When the only interest someone has in a home is living in it, prices will make sense.
  • Ekaros 1y ago
    Rental services? Any online service? What you mean you pay your development costs from my fees and get to keep them at the end? Or same with streaming services.
  • jaccola 1y ago
    Obviously the landlord offers something of value or the tenant would just do what the landlord did. Your analogy is also somewhat unfortunate since people did, in the past, rent TVs! Now that supply is far greater than demand, a quality TV can be purchased for very little money.
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• andrewstuart 1y ago
  We all know it’s just a big game of lies and charades in which the winners keep winning and control the message and the policies. Without renters there would be no housing Ponzi scheme, so gotta keep the renters renting.
  • carlosjobim 1y ago
    Even without renters, most owners would prefer being house-poor rather than selling any extra houses they own.
    • dcow 1y ago
      House poor means you can’t afford to furnish the house you live in, not that real estate is your primary asset class.
      • carlosjobim 1y ago
        What I mean is that most owners would prefer to let their extra real estate rot away and become worthless rather than sell it and using that money for more profitable investments or a more comfortable life. I see it everywhere.
  • sillystu04 1y ago
    > Without renters there would be no housing Ponzi scheme If by "housing Ponzi scheme" you mean house prices increasing then this isn't necessarily true. Even in a world where private renting was illegal and people were forced to choose between home ownership and homelessness, house prices could increase over time because of restricted supply, increased populated and wage growth.
• roenxi 1y ago
  > The theory says we should be celebrating and accelerating home production even more to get prices to levels that would actually be affordable. The reality demonstrates otherwise. Reality demonstrates the well known - the people who celebrate house prices going down don't have a loud voice in political circles and are ignored. Almost by definition they're going to be representatives of the world which doesn't have vast amounts of money and influence. > Price Drops Don’t Lead to Supply. They Kill It. And I love this one, it is the inverse of "nobody goes there any more, it is too crowded". If the price is low that means there is more supply than the market thinks it needs and more people who want a house are finding a house to live in. That may well cause less new builds, but more builds probably aren't necessary if the price is dropping. More people are being homed. At some point prices drop low enough that new builds should cease altogether.
  • zesterer 1y ago
    Right, and if the original statement is true - that price drops are killing supply (without providing houses at a sufficient level) - then that implies that housing does not work like a traditional commodity. Which it doesn't.
    • AnimalMuppet 1y ago
      Could you expand a bit on "which it doesn't"? How does it not, and why does it not? I strongly suspect that 1) higher housing prices make builders more likely to build (or at least to max out their ability to build), and low prices (at least below some threshold) cause them to be more hesitant to do so, 2) high prices make people less willing to buy, and low prices make them more willing (or at least able). So far, so much "working like a traditional commodity". Where do you see it working differently?
    • epistasis 1y ago
      That's faulty reasoning. If the price drops stop new production, but there's still "demand", it means that the cost of providing new production is higher than what this demand can afford to pay. But a big problem is that people try to view housing as not a commodity. They think that people don't move, don't change housing, don't need different things at different stages of their life. If instead we actually view housing as the commodity it actually is, we would realize that the reason old cars are cheap is because we build new cars that are more expensive. That day old bread is only cheap because new bread was made today. Houses fall apart, the housing itself is actually going down in value every day. The land is the only part that rises in value, because we restrict its use so much. New housing is nicer and more expensive than old housing, yet for some reason we are saying those with the least ability to pay should only be allowed to buy new housing. There are a ton of aging people in gigantic old houses that would like to downsize into something newer and smaller so that they don't have to walk as they age, yet that sort of non-car-dependent community is largely banned.
• btbuildem 1y ago
  This is because the overtly stated goals and the actual incentives are not aligned at all, they're closer to diametrically opposed. The stated goal is "build more housing so everyone can have a place to live", but the current incentives are "bundle these materials and labour under guise of another product so you can sell it for a profit". Of course developers walk away when prices drop -- their objective is to make money, not housing. The fact that they build homes people live in is purely incidental.
• projektfu 1y ago
  I usually like Chuck Marohn, but it is a glaring problem when you claim that housing prices are falling in Dallas, and then talk about housing prices skyrocketing in Dallas, within a couple of paragraphs.
  • vel0city 1y ago
    Both concepts can be true, just at slightly different times. As someone in Dallas, let me share what I've seen in housing prices. DFW was seen as a pretty affordable place a while ago. In 2015 could get a 2,200sqft 4-bedroom house with a larger lot and a pool for $250k pretty easily. By 2020 that price was $320k, still decently affordable, still seen as a pretty cheap place to buy a home. By 2022 the valuations had exploded. Houses down the street of similar quality were selling days after listing at $550-600k. This then leveled off, settling around $550k. Houses around that price were still seeming to move pretty quickly. Now I have neighbors cutting prices. A neighbor trying to sell has had their house on the market for months. They've already cut about $70k from their original listing price. Three more houses nearby have also entered the market and have been around for a few weeks. Compared to just a couple of years ago where the average house was on the market for maybe a couple of weeks.
  • gota 1y ago
    Yes, that read weird to me, too, but it's because the 'lowering prices' are a snapshot, or recent trend (evidenced by the source being an index for April 2025 [1]) The 'sharpest rises' are from a long-term trend of a decade [2]: > Over the past decade, the median home price has increased by 134 percent in Phoenix, 133 percent in Miami, 129 percent in Atlanta, and 99 percent in Dallas. (Over that same stretch, prices in New York, San Francisco, and Los Angeles have increased by about 75 percent, 76 percent, and 97 percent, respectively). Here's my pictorial illustration of the curve because I like drawing silly plots in txt | | ____ | ___/ \ } Jan-April 2025 | ___/ | ___/ |_/____________________ | | | 2015.....2020.....2025 [1] https://www.realtor.com/news/trends/dallas-home-prices-case-shiller-index-april-2025/ https://www.realtor.com/news/trends/dallas-home-prices-case-... [2]https://www.theatlantic.com/economy/archive/2025/06/zoning-sun-belt-housing-shortage/683352/ https://www.theatlantic.com/economy/archive/2025/06/zoning-s...
• spicybbq 1y ago
  > Price Drops Don’t Lead to Supply. They Kill It. Is anyone arguing that price drops "lead to" (i.e. happen before) increases in supply? It seems to me that it's the other way around: supply increases "lead to" price drops. This is what supply advocates hope to see in HCOL cities with expensive housing. The author is concerned that builders will stop building when prices fall, but that's rational. Suppliers should respond to changes in prices. Other policy goals are possible. For example, instead of "affordable housing", your goal might be to help the home building and financing industries never experience a down year.
  • maplant 1y ago
    Right, these effects seem to lag each other. If prices are affordable, there's no reason to build more housing. We've achieved the goal of making affordable housing. Then, more people move in, prices go up, and the cycle repeats.
  • aprilthird2021 1y ago
    100%, supply leads to price drops. If it's not profitable to build anymore because housing costs have sunk, then there's much less demand for housing that needs to be met. The biggest political issue is that Americans have been led to believe their homes are assets which appreciate in value. The abundance mindset threatens the net worth of many such people, but they are not the landed gentry of a democratic society. And the people who have nothing and can barely afford rent outnumber them and should vote for their interests.
    • andsoitis 1y ago
      > And the people who have nothing and can barely afford rent outnumber them and should vote for their interests. my sense is they, too, want to buy free-standing homes with nice amenities that are not really necessary (not rent an apartment or buy a condo) and that appreciates in value.
  • crazygringo 1y ago
    > The author is concerned that builders will stop building when prices fall, but that's rational. Suppliers should respond to changes in prices. Exactly this. Once you've built enough new housing and so the price has dropped to the point where it's not economical to build anymore, you're done. It's mission accomplished. The goal was achieved. But the whole point is that you have to actually build all that housing to get there. Which is what we want. The author seems to be deeply confused about basic economic principles.
• VWWHFSfQ 1y ago
  > You’re not the homebuyer; you’re the mortgage payer. The product that matters isn’t the home; it’s the decades of payments you have promised to make. A very succinct way of describing the actual relationship. New homeowners are not "buying a house". This is a misconception. They are agreeing to pay _double_ the home's present value for the next 30 years and then get it.
  • andsoitis 1y ago
    > New homeowners are not "buying a house". This is a misconception. They are agreeing to pay _double_ the home's present value for the next 30 years and then get it. New homeowners, who take out a mortgage, are: a) buying a home (they get it immediately, not 30 years later; their name is on the title, they can make changes to it, they can sell it, etc.) b) borrowing money because they don't have the cash to buy outright (or prefer to borrow because it is cheaper than liquidating another asset that is increasing in value) c) the loan is secured by the property (the lender saw a large sum of cash flowing out and there's a risk the borrower will default)
• ajsnigrutin 1y ago
  As long as people are willing to pay above land cost + government cost (taxes,...) + material cost + labour cost, houses will be built. Land and government costs are well.. decided by the government, some by regulation (where can you build, what can you build there) some by direct taxation. Material + labor costs depend on the labour and material markets directly. Everything else is just excuses not to build more housing, that would bring prices down. Yes, the financial markets and investors may suffer, but that their problem. Sadly, (at least over here in a small EU country) the government is focused on them.... the solution both banks and parts of our government see is based on getting easier credit and not bringing the prices down... but the problem is not in "It's hard for young people to get loans", but that the apartment that was 120k eur 20 years ago is now 450k eur, and that young people don't need a 70k loan anymore but a 350k loan (with a higher deposit).
• yoden 1y ago
  > Price Drops Don’t Lead to Supply. They Kill It. It really depends on how much you reduce costs. If you reduce costs enough, you can have increasing supply even in the face of falling prices. This argument sounds like one made by a hedge fund protecting its real estate investments. The reality is that the housing market in the US (and most countries) is heavily distorted by government NIMBY regulations. Because of this, it's reasonable to expect that there is actually a lot of room to reduce the $/sqft if the market can build housing in general. Current costs are inflated by being forced into specifically prescribed solutions designed to grow the wealth of developers and landowners.
  • rossdavidh 1y ago
    Different states are very different in this regard; Austin Texas is considered the NIMBY-est city in Texas, and it's still building lots of houses even as prices drop, and have been for a couple years now. Other states do (mal)function as you describe, but not all of them.
  • cameron_b 1y ago
    Price reduction against builder margins would be a more reasonable way to look at it than raw price change, and additionally factoring in the degree of financing vs cash and the cost of financing would possibly shed more light. Stable firms, not out over their skis, can afford to entice buyers while still making a profit. Just like in a startup, the cost of money and the degree of leverage sets the [minimum] speed limit on the runway.
• rwarfield 1y ago
  This article is a mess. From the third paragraph: > What happens when prices actually start to fall? Because that’s not just a hypothetical. It’s already happening in places like Phoenix, Atlanta, Miami, Dallas... Then two paragraphs later > In The Atlantic, Rogé Karma recently pointed out that housing prices are rising fastest in the very cities once seen as escapes from high-cost coasts, places like Phoenix and Dallas... So which is it? There is truth to the fact that the way the housing market is intertwined with the financial markets creates some risk, but those risks are manageable - a nationwide downturn in housing prices is exactly the kind of scenario addressed by the Fed's stress tests for banks. The article is full of bizarre logic. An increase in housing supply leads to a fall in prices, which leads to a fall in supply? No, in fact the conclusion contradicts the premise. The author is making the classic econ 101 mistake of confusing the supply curve (which is supply as a function of price) and quantity supplied. And finally the author explains his own solution which is... an increase in supply! But only the kind of supply he approves of ("small scale, incremental development"). Left unexplained is why this type of supply, if carried out on sufficient scale, wouldn't have the negative financial effects he worries about.
  • mcv 1y ago
    Oh, come on, man. Read the sources he points to before you invent imaginary contradictions. > The Phoenix housing market exploded briefly during the pandemic, when demand skyrocketed amid a housing supply shortage. Remote workers relocating to the relatively cheaper city brought up home prices and values. Between February 2020 and February 2025, home prices were up 53 percent in Phoenix and 56 percent statewide in Arizona, according to Zillow. During the same five years, prices grew by 45 percent nationally. > But the city has been experiencing a price correction in recent years, as demand slowed significantly with return-to-office orders and buying properties in the city became unaffordable for many—especially locals. "There's a mass sell-off occurring, as pandemic investors and snowbirds sell out," Did you know that prices can vary over time? They can go up first, and down later. That's what the article is referring to. > An increase in housing supply leads to a fall in prices, which leads to a fall in supply? You mean basic free market reacting to a disruption and looking for a new balance? High prices make supply go up, high supply leads to more competition and lower prices. This is basic economics, man.
• eviks 1y ago
  The whole article is a mess of basic misunderstanding and conflation of cause and effect and reasoning from a price change instead of understanding what caused it. > When prices actually go down, builders get nervous, lenders get cautious, financing dries up, and projects disappear. No, it depends on the causes that drove the prices down. Some of those will get builders nervous, while others will make them giddy. > New construction has collapsed not because of a lack of land, permits, or even demand but because the financial risk has become unmanageable. High interest rates, shrinking margins, labor shortages, volatile materials costs… none of these are softened by falling home prices. They are: if you can build a house in 1 day instead of 1 year waiting for some permit, your costs of capital goes down, so it can offset some of the other costs going up. If your permit doesn't force you to limit the size/number of units, you can spread your fixed costs over more units, raising your margins, which directly softens ... shrinking margins
  • tsunamifury 1y ago
    I find it funny how confidently hners criticize perceived incoherence with their textbook prognostications of how simple the models are when even the Fed and world renowned economics can’t give such confident solutions.
    • ecshafer 1y ago
      What do "Gamers" have to do with anything?
  • hattmall 1y ago
    Permits and licensing is a huge factor, most of the southeast didn't even have licensing boards until the late 90s. If you wanted to build a house you could just do it. Now it's functionally impossible unless you are capitalized enough to spend a considerable amount of time and money on the permitting and approvals process. One of the reasons there's so much gentrification is that it's much easier for builders to take a falling down house and replace 99.99% of it than to get approvals for completely new construction.
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• stego-tech 1y ago
  Ultimately, there is no solution in which the core groups will all be appeased: * If prices keep going up, then home ownership remains a luxury of the wealthy and an exploitation of the poor. Asset holders will be thrilled with returns, but the majority struggling to get or stay on the proverbial property ladder will grow increasingly angry at sky-high rents and prices with stagnant wages * On the other hand, if prices come down then the broader economic engine will grow ornery and stagnate. Large home builders will cut back on builds, purchases, and labor, in an effort to push margins back up. Existing asset owners will be angry at losing (illusory/on-paper-only) money, and cut back on spending, purchases, or renovations until they see their valuations rise again. Only a small subset of prepared buyers will be able to take advantage of these lower prices before investors snatch most of them up and raise prices again anyway. Housing is not a standalone crisis, but a symptom of a larger dysfunctional economic engine that simply does not work for the majority. Higher prices on core necessities should be met with a mixture of rising wages and price controls to reflect broader economic growth or support, but neither happens because of monied interests: if wages rise, companies will outsource and the problem perpetuates, while price controls prevent asset holders from maximizing their return on investment, a sin equivalent to murder in the eyes of the propertied class. And so we have a group who benefits from nothing changing (asset holders, mega-builders, financiers), and a group that benefits from an all new engine design built for modern problems (the working classes, smaller employers, and - increasingly - insurance companies), fighting for the next century of housing policy. I’m hoping the latter wins, despite the pain it would cause the former. Housing is a necessity first, and an asset class last.
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  • almosthere 1y ago
    Simple to make people sell, make property tax near Infinity if you rent it out in the first 5 years of property purchase. Old rentals stay rentals, new construction is for people.
    • postalrat 1y ago
• Workaccount2 1y ago
  Transpose the problem into a Taylor Swift concert and the problem becomes clearer: Everyone* wants to go see Taylor Swift. She comes to a stadium and the sell out is instant, the aftermarket is bloody and ruthless. The stadium has 90,000 seats, 2,000 floor spots, and they are gone before you can reload the ticket page. Taylor Swift is the embodiment of "good jobs". The stadium is the local housing market. Those VIP booths side stage with room to move around? The mega mansions. The lower tier seats? Upper-middle class. Nose bleeds? Upper lower class/bottom middle class. Now solve the problem of the true value of these seats being so expensive. You can add more seats (this stadium happens to be extremely modular) but the experience for everyone becomes worse in a multitude of ways. You can add seats above the nosebleed, but it doesn't really do much to affect the closer seats. So how do you solve this? How do you handle people who want to sell their ticket? Is it even possible to give people who can hardly afford nosebleed a shot at mid tier seats? *Yes, I know you have no interest in seeing Taylor Swift.
  • mcv 1y ago
    The real problem driving up prices, both in housing and concerts, is scalpers. They create artificial scarcity. If you want to fix these sort of problems, you have to do something about scalpers.
  • baggy_trough 1y ago
    There is nothing to solve; this is the best overall outcome.
  • postflopclarity 1y ago
    > the experience for everyone becomes worse in a multitude of ways. your analogy requires the assumption that the stadium is already "at capacity" for the maximum comfortable number of seats 99% of American municipalities are nowhere even close to this capacity.
    • Workaccount2 1y ago
      Taylor Swift (and other super stars) don't play shows in 99% of American municipalities. Companies want top talent for their workforce. They naturally will set up shop where they have easiest access to this talent (hence why you get industry hubs in different locales). The companies move to the spots for workers, and the works move to those spots for the jobs.
• zeroCalories 1y ago
  If cities won't make themselves more affordable, then people will simply stop coming. Maybe that's the goal. Who wants immigrants, right? Not gonna be so great when large companies decide that SV and NYC are no longer worthwhile to expand in, compared to Bangalore or Poland(sound familiar?). Prices must come down, and we've seen places that have successfully done it. Just because red cities are now falling into the same trap as blue cities doesn't mean that supply / demand doesn't apply. Yes people tied into the financial system will be hurt, but that's a price we need to be willing to pay to keep our economy healthy.
• rossdavidh 1y ago
  While there is a problem in how we treat shelter as a financial product, the basic thesis (lower prices aren't allowed to happen) is incorrect, at least in some states. Florida and Texas (including Austin, my hometown) already have prices going down, substantially. Colorado and California seem to have started to follow suit. This did actually happen post-2008, nationally. There are places where we don't let housing prices drop, but there are plenty of others where we do.
• queenkjuul 1y ago
  Where i live, NIMBYs just killed an ADU ordinance and were screaming just as loudly and about all the same things they would have if you were replacing their grandma's cottage with a high rise. They can't be rationed with. Social housing is the only thing that will really work.
  • tsunamifury 1y ago
    This was tried the 60s in the us and uk, which gave rise to the ghettos torn down in the 2000s. There is little appetite on any side to re do that It’s amazing how little history people seem to remember or know. I think people might be open to trying again if you could address what went wrong last time (extreme crime and poverty traps)
    • nobody9999 1y ago
      >It’s amazing how little history people seem to remember or know. Yourself included. cf. Mitchell-Lama housing[0]. It was enormously successful in creating housing (both rentals and sales) for significant numbers of people. In fact, such housing is still (70 years later) doing so. We could use a whole lot more of that! [0] https://en.wikipedia.org/wiki/Mitchell%E2%80%93Lama_Housing_Program https://en.wikipedia.org/wiki/Mitchell%E2%80%93Lama_Housing_...
      • tsunamifury 1y ago
        Cherry picking singular successes does not overcome the large amounts of data going the other way. Please do better.
        • nobody9999 1y ago
          Hundreds to thousands of buildings over seventy years is a "singular success?" I personally know dozens of people who grew up in Mitchell-Lama housing. Tens to hundreds of thousands of people still do. But because other implementations are less successful (which is debatable, especially as you've provided zero examples), we should scrap successful ones? Or am I missing your point? Please do elucidate. Edit: It occurs to me that you're likely ignorant (especially given your response) of Mitchell-Lama programs. As such, I encourage you to educate yourself and to advocate for similar programs, as they create stable housing and promote community for many people -- and unless you live in a large urban area, it provides that for more folks than live in your entire county.
• Akranazon 1y ago
  > When prices actually go down, builders get nervous, lenders get cautious, financing dries up, and projects disappear. I think this is putting the cart before the horse. The entire reason that building/lending/etc should exist, it's raison d'être, is to make housing more affordable. If that is achieved - mission accomplished? I don't care about these parties otherwise.
  • CrimsonCape 1y ago
    Isn't the point of the article to show that you "don't care" about the other parties, but nevertheless they control the market?
• JJMcJ 1y ago
  The usual solution to the paradox of lower home prices and the political need to not have home prices decline seriously is to tell people "a 70 mile commute is good for you". In the Bay Area that means Stockton, Gilroy, and the like. At least we aren't in a situation like 2009 where people walk away from mortgages without making a single payment because they expected to be able to flip within weeks and had no cash at all.
• Bluescreenbuddy 1y ago
  Here in Chicago some Aldermen are trying to get more builds in their neighborhoods but some the boomer homeowners that go to the meetings always cry about it. oh and bike lanes. People hate bike lines. They're insane
• TrackerFF 1y ago
  Monotonically increasing housing prices is a privilege not everyone has. TONS of people, even in the rich western world, own houses that essentially lose their value due to inflation. Me and my siblings inherited a house in a rural town, which sold for less than what it was purchased for 30 years ago. Most houses in that town have seen stagnating prices, even brand new ones. People still pour money into them every 10-15 years. But have to invest their money in other assets.
  • bandofthehawk 1y ago
    That doesn't sound like a problem of inflation. I think it's related to people migrating out of rural areas and into big cities. When you have a decreasing local population, home prices tend to fall.
  • psunavy03 1y ago
    It's amazing the difference between different areas. I grew up in a single-family home in Ohio. Parents moved to New York when I went to college. I ended up in Puget Sound. They bought their NY house by selling the Ohio one. Price was roughly equal, maybe a little higher. Now the NY one is double what the OH one is worth, and I couldn't afford to buy my own house today. Conversely, I could pay cash to buy the house I grew up in, despite the lot being 4 times the size of mine. There's definitely haves and have nots real-estate wise in different parts of the country.
• dismalaf 1y ago
  Prices going down doesn't automatically mean building stops, and prices going up doesn't mean building automatically happens... Whether or not a homebuilder builds homes depends on whether or not there's enough demand at a price point that's profitable. And markets aren't entirely localized, people will move for affordable housing if there's also enough jobs. So lots of things affect whether or not homes get built: cost of building supplies, cost of land, cost of labour, growth rate of the municipality, demand for the specific unit type, zoning laws (which affect a bunch of the above), etc... Remember, a house can cost as little as $100k to build, but nowadays costs $500k-$1M+. Price of land is a huge determining factor, cost to hook up utilities (if a new neighborhood, the builder often pays for it), interest rates (the homebuilder incurs a bunch of expenses before homes are sold and whole projects are financed, then it also affects the price buyers will pay), insurance, regulatory costs (the whole permitting process is $$$) etc...
• aurizon 1y ago
  Any buffer vanishes as prices fall = buyers pull back and wait for the dust to settle = a downwards cascade that can consume all equity= underwater, and buyer does not want to bail out a sunken ship. Lenders have recourse to whatever other assets the buyer has(depends on fine print, LLC etc) and some lenders sell at auction right away, some set a reserve below which they rent the home and the banks usually have management departments to manage that, but each case differs.
• Glyptodon 1y ago
  Home builders being very short term doesn't seem related. If they won't build because they can only make mc mansions on tiny lots while land values inflate wildly, they're part of the issue and blasting land prices along with home prices to reset the cost of building should benefit them in the long run. But it does mean that they're paralyzed until land values stabilize at a lower value.
  • doctorpangloss 1y ago
    by all means, go invest in a REIT whose logline is, "We make money when land values go down!" How exactly would they be building housing in such a scenario? And why wouldn't an investor interested in this simply short real estate instead? Does this illuminate for you that you are right, short term isn't related, but you are wrong, and the truth is surely prices dropping is bad for investing in building houses?
    • Glyptodon 1y ago
      You seem to be ignoring that once land values reach some kind of floor it will be entirely sensible to build houses. Land values going up leads to FOMO, and going down leads to the reverse of FOMO, IE fear that the bottom hasn't been reached. Clearly it is correct to short, but short positions expire - they are definitionally short term. That said, the behavior is pretty expected: the current operators are operating on in inflated land value cost because the market has become distorted due to lack of supply. Altering the market by injecting supply will drive down land value and cause operators with money stuck at the current equilibrium to lose money or fail. But it poses no issue to operation or new entrants at the new market equilibrium. If it operates like a market should operators should be happy to begin providing houses on land at the new equilibrium as soon as it's reached. However fear of not knowing when it's been reached will mean that it does to take time settle.
      • doctorpangloss 1y ago
        Okay, but what actually happens is exactly what happened with the tariffs: a bunch of bold statements about policy benefits, huge market drops, followed by chickening out back to the status quo. You are talking about policy effects that would take a decade to realize, a decade of huge pain to investors… I cannot comprehend how “Rube Goldberg machine that leads to long term benefits, guaranteed short term catastrophe” is a policy idea.
• ken47 1y ago
  Those wealthy enough to invest or speculate in real estate incur a write-down they can likely afford - as Warren Buffett once said, don’t swim naked. The person of average or below-average means gets a chance at a standard life.
• scotty79 1y ago
  I guess we need a lot of research into limits of what free markets are good for. Non-perishable, essential, high-priced, non-fungible goods are probably one of the worst applications imaginable.
• mlsu 1y ago
  Quite simply, housing has to be either affordable, or an investment. Those two things are literally, by definition, mutually exclusive. If something is an investment it means that it must appreciate in excess of inflation over time. That means, by definition, that it will become unaffordable over time. This is why, whenever you hear terms like "affordable housing" you can safely shut your brain off. There will never be affordable housing, the whole idea is preposterous. Saying "we're going to build affordable housing" is putting the cart before the horse: it is the building that causes the affordable, not the affordable that causes the building! So to understand this we look to the supply-side. Basically, scarcity causes the investment mindset. This is very very complex and interlocks with much broader structural changes to the economy that have taken place since houses were considered affordable, structural changes that are much larger even than housing. Used to be, you worked for a company for 10+ years. A company would move into a town (by building a big factory, say), and work with the town to build housing for its employees. Think the Kodak plant in Rochester, for example. In the 20s and 30s, Kodak's employees were having trouble finding places to live. So, they formed the Kodak Employees Realty Corporation and built a couple thousand houses for their employees in Rochester. There are many examples of this in cities all across America. Nobody would think to do this any more, because the economy has changed structurally. There are less people involved in building stuff and generally we have all decided that changing our physical environment is simply a thing that we don't do any more. Our entire economy has moved to one that's based on physical things (building things, producing things, moving things, in the physical world), to one that is based on information. You can move bits around and make profit without ever needing to touch the physical world *. We created financial capital to accomplish the actual important thing, moving atoms around in the real world. Now, financial capital has in some sense "taken over" -- moving bits is no longer a thing that you do to make moving atoms around easier, but a goal in and of itself. Financial capital has taken the head of the table, pushing out physical capital. In essence what has happened is that the United States has gone from being a complete organism (lots of muscle, a little bit of brain to move that muscle around) to being a subset of a much larger organism (all brain). That we're "all brain" is why we can't move atoms here; our inability to move atoms here causes scarcity in housing; scarcity in housing causes investment mindset in housing; housing appreciates. Causality of all of this, I think, is far more complex than some simple economic explanation. It's deeply cultural and involves the reorganization of the entire global economy. This is why you're never going to lose money on your house. * this, of course, is _not actually true_, but rather a geographic illusion. The physical world is touched more than ever, its just that the changes to the physical world (which are often horrific) happen in other places besides the USA. Southeast Asia, China, Africa etc.
• mlhpdx 1y ago
  The universal agreement that “we need to build more housing” baffles me. I see persistent vacancy rates, so the raw capacity is there. High commercial vacancy means more will come without new builds. If the issue is ownership versus renting (which is very important), building new will lead to more overcapacity in the system at large, won’t it? That won’t serve new owners well (or existing ones). It’s a difficult problem without painless solutions.
  • kjkjadksj 1y ago
    There is always some level of vacancy rate by virtue of people moving out or in and renovations. Even keeping a unit off the market if you don’t want to have to let it out at lower rent and devalue your asset which is priced in part on rent prices. And further in terms of inventory. What does it suggest to you in high demand cities when we see e.g. in socal virtually all available space already built to the limits of the zoned capacity? No real room to add inventory based on zoning laws, job growth continues to happen, and prices are rising. Do you believe this is a sufficient amount of inventory, todays zoned capacity with no avenue to meaningfully add housing inventory? This is why the situation is fundamentally different in socal than anywhere else such as texas. Dallas metro region has farms on all sides to continue to digest to create regional inventory without making large changes to zoned capacity. Socal has mountains and the pacific ocean.
    • mlhpdx 1y ago
      Isn’t that a bit of an aside? Folks not being able to afford to own a home is different than folks not being able to afford a home where they want. I’ve been in both situations and one is considerably more unpleasant (and difficult to escape).