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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

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.

deleted 1y ago
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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.
- echelon 1y ago
  Demand is someone's desire to make the jump from renting to owning. Demand is someone's risk tolerance for moving. Demand is someone's appetite for a house just slightly out of budget. Demand is someone's desire for a second or third home. Demand is all of the buying forces in aggregate, regardless of the cause. You can want a house, but if you can't pay the market price then there's no demand from you at that price point. So maybe you make a lower offer or look elsewhere. Demand is simple. We're watching what low demand is like right now. Inventory has been low (people like their locked in low interest rates), but it has been inching steadily up as people move, die, change or lose jobs, etc. The minute the supply significantly outstrips demand, the pricing will collapse. Demand will stay low until the economy and housing market improves.
nemomarx 1y ago
I feel like we talk about demand a lot - Just in the form of first time home owner subsidies or etc. Subsidizing demand of course doesn't help the situation but I'm not sure how you sell reducing demand to the public exactly
- conception 1y ago
  Restricting foreign and corporate residential purchases, tax increases for multiple home ownership are a couple of ways to lower demand as well.
  - nemomarx 1y ago
    Yeah, but I think those are going to be small effects. You'd want to try and encourage people to move to smaller cities to really move the needle I think, but obviously the larger cities aren't interested in that. And the jobs have to move with in some fashion for it to work and everyone likes having access to larger pools for labor too
  - amanaplanacanal 1y ago
    I assume most people owning multiple residences are renting out the extras. What you are describing would make more houses available to buy at the expense of having fewer to rent. This wouldn't be a net gain of available housing.
- 9rx 1y ago
  > I'm not sure how you sell reducing demand to the public exactly Especially when the current political pressure is to increase demand. The populace are complaining that, because of high prices, they can't afford to be a part of the demand.
ta1243 1y ago
Are you saying that people routinely buy 5 or 6 houses to live in (thus excess demand) Or are you saying the only reason houses are expensive is because people refuse to live in cars in high enough numbers? What do you mean by demand?
- philipallstar 1y ago
  It's because it would mean looking at immigration numbers. If immigration creates far more demand than there is supply, as it does in various first world countries, then it makes house prices shoot up. But this is not a popular topic, as voters with houses don't care about their house prices going up, and voters without houses are generally younger and don't have the capacity to hear economic statements on immigration without auto-converting them into racial statements they've been warned about on CNN.
  - amanaplanacanal 1y ago
    Is immigration higher now than it has been historically? How did immigration impact housing prices in the past vs now?
    - philipallstar 1y ago
      Depends on the place, but e.g. in the UK it's massively high. Almost as high as the US. (Just talking legal immigration; I don't know how to interpret illegal immigration stats.) The UK takes in about 700k people a year net, and builds about 30k houses a year (which is probably about enough to cope with "natural" population growth. Supply and demand. Dwellings get smaller (or subdivided) because people will pay more and get less. Landlords appear to solve the problem (and make a profit from the fact) that young people can't raise the capital to buy a full house themselves any more. It's not the only factor - the jump to two-income households also raised prices massively and transferred a load of wealth to existing home owners back when that happened - but I'd say it's by far the largest factor today.
- rcxdude 1y ago
  There's two factors that have driven an increase in demand for housing above population growth: fewer people per household and a strong bias towards living in a city. Some of this is cultural: a stigma against living with your parents, for example, and higher expextations for what someone just starting their career should be able to afford, but it's also economic: cities are where the jobs are and they're often not where people grew up, so if they want any independance they pretty much must move away into a city with everyone else.
Nursie 1y ago
They know about demand and do all they can to stoke it. All the various government schemes in the UK and Australia (I have no idea about other countries) that are aimed at helping primarily young people to buy homes - low deposit schemes, part ownership schemes, tax discounts etc etc, they all masquerade as helping but they stoke demand and add to price inflation.
9rx 1y ago
Demand isn't talked about because demand is solved by high prices. But, politically, we want to increase demand (by offering lower prices).
- ta1243 1y ago
  The demand is still there, it's just restricted. Someone living in the back of a van in a gym carpark on an industrial estate is typically doing that because the cost of a 1 bed flat is too high. Lowering prices allows that demand to be seen. In the UK 8.5 million people in England are facing some form of unmet housing need. That's more than 10% of the population. https://www.housing.org.uk/globalassets/files/people-in-housing-need/people-in-housing-need-2021.pdf https://www.housing.org.uk/globalassets/files/people-in-hous... > More than 1.9 million households are hosting a ‘concealed’ household – for example, adult children still living with their parents. Even when it costs nothing, there's always a limit to demand. Just look at say a hotel breakfast. I could have 50 sausages, 20 cups of coffee, etc. I don't, despite it being costless.
  - 9rx 1y ago
    > The demand is still there It's not, though. That's the whole political contention. That demand is, because of high prices, not at the levels the population want to see. Demand is defined as having desire and willingness to pay for a good or service. High prices maintains the desire in most cases, but chases off the willingness. That's the whole point of having prices! > Even when it costs nothing, there's always a limit to demand. Now you're describing a (technical) shortage: A situation where an external mechanism prevents price from rising. In a functioning market, buyers will pay more to stave off demand. But if price is forced to remain lower than people have the willingness to pay (free, in your example) then there is no control mechanism to see people back away from demand. But that's not a problem in the housing market. If you have the desire and willingness to buy a home, you will have absolutely no trouble finding a home to buy. Price is doing its job. The problem is for those who only have desire. They are not part of the demand, but that doesn't mean they don't want their desires filled. Hence the political push to see an increase in demand. i.e. Enabling those with only desire to also find willingness by finding a way to lower prices (which means addressing supply).
O5vYtytb 1y ago
Huh? Demand is local. Where I live there's a lot of demand because it's a desirable city and leaders talk about this demand consistently.
Apreche 1y ago
Now if you want prices to go down, are you really going to do it by trying to decrease demand? What are you going to do, make your neighborhood a slum on purpose? Absolutely nobody is doing that. No matter how nice a place people live, they always want it to be nicer. They want better schools, nicer parks, clean streets, quality infrastructure. They want to attract nice businesses and cultural institutions. The problem is that doing this necessarily increases demand, and increases prices. Unless you are an owner, doing this risks pricing yourself out of your own home. So what can you do to keep rent down? Well, increase supply to match the increase in demand. Now you have a new problem. Increased density puts pressure on the infrastructure and makes it a less-nice place to live. That park sure was a lot nicer when it was half as crowded. Those new restaurants sure were a lot nicer when you could actually get a reservation. It’s a very difficult dance to keep all these things balanced. Ultimately everyone wants to make the place they live nicer, no matter how nice it is already. You can never try to manage this problem from the demand side unless you find a set of crazy people who love living in a sty.
- carlosjobim 1y ago
  > No matter how nice a place people live, they always want it to be nicer. I'm trying to make sense of your argument. No matter how nice a vehicle people have, they always want to have a nicer one. But we don't see normal cars costing 50-80 years of your life to purchase.
  - Apreche 1y ago
    Cars are depreciating assets. They can only be maintained and upgraded to a certain extent before they must be replaced. A public park, a street, a school, these also depreciate, but most of them can not be thrown out and replaced like a car. They require constant maintenance. They also have nearly unlimited capacity for upgrades. The school gym can get new equipment. The street can be repaved. The park can get new landscaping. Wherever you live, the public amenities can always be improved. There is always demand from the residents to make those improvements. Nobody ever tells their town to uglify the neighborhood. They always ask to beautify it. That means they are always asking to increase demand, and therefore to increase housing prices.
bach4ants 1y ago
Are you saying that governments should try to reduce the number of humans?
- intalentive 1y ago
  By enforcing immigration law and prioritizing your own people? Yes.

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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.
echelon 1y ago
Demand is someone's desire to make the jump from renting to owning. Demand is someone's risk tolerance for moving. Demand is someone's appetite for a house just slightly out of budget. Demand is someone's desire for a second or third home. Demand is all of the buying forces in aggregate, regardless of the cause. You can want a house, but if you can't pay the market price then there's no demand from you at that price point. So maybe you make a lower offer or look elsewhere. Demand is simple. We're watching what low demand is like right now. Inventory has been low (people like their locked in low interest rates), but it has been inching steadily up as people move, die, change or lose jobs, etc. The minute the supply significantly outstrips demand, the pricing will collapse. Demand will stay low until the economy and housing market improves.

nemomarx 1y ago

I feel like we talk about demand a lot - Just in the form of first time home owner subsidies or etc. Subsidizing demand of course doesn't help the situation but I'm not sure how you sell reducing demand to the public exactly

conception 1y ago
Restricting foreign and corporate residential purchases, tax increases for multiple home ownership are a couple of ways to lower demand as well.
- nemomarx 1y ago
  Yeah, but I think those are going to be small effects. You'd want to try and encourage people to move to smaller cities to really move the needle I think, but obviously the larger cities aren't interested in that. And the jobs have to move with in some fashion for it to work and everyone likes having access to larger pools for labor too
- amanaplanacanal 1y ago
  I assume most people owning multiple residences are renting out the extras. What you are describing would make more houses available to buy at the expense of having fewer to rent. This wouldn't be a net gain of available housing.
9rx 1y ago
> I'm not sure how you sell reducing demand to the public exactly Especially when the current political pressure is to increase demand. The populace are complaining that, because of high prices, they can't afford to be a part of the demand.

ta1243 1y ago

Are you saying that people routinely buy 5 or 6 houses to live in (thus excess demand) Or are you saying the only reason houses are expensive is because people refuse to live in cars in high enough numbers? What do you mean by demand?

philipallstar 1y ago
It's because it would mean looking at immigration numbers. If immigration creates far more demand than there is supply, as it does in various first world countries, then it makes house prices shoot up. But this is not a popular topic, as voters with houses don't care about their house prices going up, and voters without houses are generally younger and don't have the capacity to hear economic statements on immigration without auto-converting them into racial statements they've been warned about on CNN.
- amanaplanacanal 1y ago
  Is immigration higher now than it has been historically? How did immigration impact housing prices in the past vs now?
  - philipallstar 1y ago
    Depends on the place, but e.g. in the UK it's massively high. Almost as high as the US. (Just talking legal immigration; I don't know how to interpret illegal immigration stats.) The UK takes in about 700k people a year net, and builds about 30k houses a year (which is probably about enough to cope with "natural" population growth. Supply and demand. Dwellings get smaller (or subdivided) because people will pay more and get less. Landlords appear to solve the problem (and make a profit from the fact) that young people can't raise the capital to buy a full house themselves any more. It's not the only factor - the jump to two-income households also raised prices massively and transferred a load of wealth to existing home owners back when that happened - but I'd say it's by far the largest factor today.
rcxdude 1y ago
There's two factors that have driven an increase in demand for housing above population growth: fewer people per household and a strong bias towards living in a city. Some of this is cultural: a stigma against living with your parents, for example, and higher expextations for what someone just starting their career should be able to afford, but it's also economic: cities are where the jobs are and they're often not where people grew up, so if they want any independance they pretty much must move away into a city with everyone else.

Nursie 1y ago

They know about demand and do all they can to stoke it. All the various government schemes in the UK and Australia (I have no idea about other countries) that are aimed at helping primarily young people to buy homes - low deposit schemes, part ownership schemes, tax discounts etc etc, they all masquerade as helping but they stoke demand and add to price inflation.

9rx 1y ago

Demand isn't talked about because demand is solved by high prices. But, politically, we want to increase demand (by offering lower prices).

ta1243 1y ago
The demand is still there, it's just restricted. Someone living in the back of a van in a gym carpark on an industrial estate is typically doing that because the cost of a 1 bed flat is too high. Lowering prices allows that demand to be seen. In the UK 8.5 million people in England are facing some form of unmet housing need. That's more than 10% of the population. https://www.housing.org.uk/globalassets/files/people-in-housing-need/people-in-housing-need-2021.pdf https://www.housing.org.uk/globalassets/files/people-in-hous... > More than 1.9 million households are hosting a ‘concealed’ household – for example, adult children still living with their parents. Even when it costs nothing, there's always a limit to demand. Just look at say a hotel breakfast. I could have 50 sausages, 20 cups of coffee, etc. I don't, despite it being costless.
- 9rx 1y ago
  > The demand is still there It's not, though. That's the whole political contention. That demand is, because of high prices, not at the levels the population want to see. Demand is defined as having desire and willingness to pay for a good or service. High prices maintains the desire in most cases, but chases off the willingness. That's the whole point of having prices! > Even when it costs nothing, there's always a limit to demand. Now you're describing a (technical) shortage: A situation where an external mechanism prevents price from rising. In a functioning market, buyers will pay more to stave off demand. But if price is forced to remain lower than people have the willingness to pay (free, in your example) then there is no control mechanism to see people back away from demand. But that's not a problem in the housing market. If you have the desire and willingness to buy a home, you will have absolutely no trouble finding a home to buy. Price is doing its job. The problem is for those who only have desire. They are not part of the demand, but that doesn't mean they don't want their desires filled. Hence the political push to see an increase in demand. i.e. Enabling those with only desire to also find willingness by finding a way to lower prices (which means addressing supply).

O5vYtytb 1y ago

Huh? Demand is local. Where I live there's a lot of demand because it's a desirable city and leaders talk about this demand consistently.

Apreche 1y ago

Now if you want prices to go down, are you really going to do it by trying to decrease demand? What are you going to do, make your neighborhood a slum on purpose? Absolutely nobody is doing that. No matter how nice a place people live, they always want it to be nicer. They want better schools, nicer parks, clean streets, quality infrastructure. They want to attract nice businesses and cultural institutions. The problem is that doing this necessarily increases demand, and increases prices. Unless you are an owner, doing this risks pricing yourself out of your own home. So what can you do to keep rent down? Well, increase supply to match the increase in demand. Now you have a new problem. Increased density puts pressure on the infrastructure and makes it a less-nice place to live. That park sure was a lot nicer when it was half as crowded. Those new restaurants sure were a lot nicer when you could actually get a reservation. It’s a very difficult dance to keep all these things balanced. Ultimately everyone wants to make the place they live nicer, no matter how nice it is already. You can never try to manage this problem from the demand side unless you find a set of crazy people who love living in a sty.

carlosjobim 1y ago
> No matter how nice a place people live, they always want it to be nicer. I'm trying to make sense of your argument. No matter how nice a vehicle people have, they always want to have a nicer one. But we don't see normal cars costing 50-80 years of your life to purchase.
- Apreche 1y ago
  Cars are depreciating assets. They can only be maintained and upgraded to a certain extent before they must be replaced. A public park, a street, a school, these also depreciate, but most of them can not be thrown out and replaced like a car. They require constant maintenance. They also have nearly unlimited capacity for upgrades. The school gym can get new equipment. The street can be repaved. The park can get new landscaping. Wherever you live, the public amenities can always be improved. There is always demand from the residents to make those improvements. Nobody ever tells their town to uglify the neighborhood. They always ask to beautify it. That means they are always asking to increase demand, and therefore to increase housing prices.

bach4ants 1y ago

Are you saying that governments should try to reduce the number of humans?

intalentive 1y ago
By enforcing immigration law and prioritizing your own people? Yes.