4 ms·

Sorry to focus on the greedy developers comment, but one thing I'd ask you to consider is that sometimes you need some greedy developers to balance things out a

Sorry to focus on the greedy developers comment, but one thing I'd ask you to consider is that sometimes you need some greedy developers to balance things out a bit. The US has gotten so bad at building housing supply to meet the demand that prices have obviously gotten out of whack. The past several years in Austin, TX, though, as an example, have shown that unshackling some greedy developers to come in and build is actually good for the masses because it leads to reduced rents/prices. That's not the entire story in Austin, but it is a major reason prices have come down. I feel like we've been out of balance for so long (decades and decades and decades) that it might be a good idea to swing the pendulum back to the greedy developers so that rents/prices become more affordable. Disclosure: I guess I'm sort of a greedy developer albeit at a tiny scale.

rickydroll 1y ago
Things are bad in the US for housing because we count on market forces to provide what's necessary. Market forces shut down development if housing prices drop. After all, why start a project if you have a chance of being underwater by the time you're done with it? see: https://clmarohn.substack.com/p/what-happens-when-housing-prices https://clmarohn.substack.com/p/what-happens-when-housing-pr... If you want affordable housing, it will have to be government-funded, allowing developers to continue making a profit while the government bears the loss. Another way of expressing it is the government pays for housing to be built at cost plus and then charges rent according to what people can afford, i.e., income and expense-based rent.
- harmmonica 1y ago
  What you say is true to an extent, but I think you're underestimating a couple of things. First, some real estate developers enjoy very good margins, particularly those who purchase land, entitle the land and either build the improvements themselves or sell the land to someone who follows through with the construction. That is to say that even when prices/rents compress there tends to still be opportunity for developers (I'm not talking 2008-level price drops that are existential problems for the real estate market and the world at large). Also, when you cite "market forces" it suggests that the real estate market in the US is driven mostly by market forces, but it's highly regulated (zoning, building codes, etc.). As other commenters have pointed out, even in a declining market, if you removed some of the regulation you'd offset some of the drop in market prices thereby preserving the incentive for developers to build. Lastly, if you think we arrived where we are today because of market forces I think that's largely untrue. HCOL areas (seems like the entire country is turning into one of those!) have criminally under-built for decades and that hasn't been a market problem, but a regulatory problem. Now I'm not advocating for unlimited development so please don't read it that way, but the historical forces against building have been municipalities, on behalf of their politically-active residents, erecting countless impediments to development. If that were only true for a couple of years then we wouldn't have ended up where we are, but over decades the compounding effect of that reality is the single-biggest reason we're in the situation we're in. It is likewise going to take decades to address it so if the regulatory regime changes and stuff starts getting built and you still see rising prices that shouldn't be a surprise. Funny enough the more real estate developers going bankrupt the closer we'll be to affordable housing for all (ok, for "many" because all is likely never going to happen). Btw everything above assumes you actually believe that increased supply of housing (eventually!) decreases prices. I know you, ricky, don't believe that atm. Tons of people point to places like NYC as evidence that supply/demand doesn't work in desirable places, but, as Flavor Flav once said so well: don't believe the hype; even places like NYC have under-built for decades. Man I write long-winded comments on HN. This one is the worst by far, I think.
  - rickydroll 1y ago
    The Substack article I linked in my previous post presents a compelling case for why and when builders stop building. Your position that we could fix that by removing regulations. I think that's not a wise course of action because many of the housing regulations are written in blood, and if you're going to eliminate regulations, you need to understand why they were there in the first place and how much blood is behind them. But even with regulations, developers don't care. see: https://www.youtube.com/@cyfyhomeinspections https://www.youtube.com/@cyfyhomeinspections. This bloke is a building inspector in Arizona, and he documents all the shortcomings and tricks that builders will use. You are right, I don't believe that increasing the supply of housing will decrease prices because housing is a financial instrument, and the whole system is so leveraged that it will fall apart if prices decline. One could claim that it fell apart in 2008. However, if you were to move housing out of the asset class, you would cause significant financial trauma to tens of millions of people. How would you make them whole? We have an example of oversupply not leading to price drops. Commercial real estate, such as storefronts and offices, continues to maintain a high price, even though a property has been idle for years. One would expect it to sell/lease for less due to the lack of demand, but it doesn't. The only thing I know that will decrease housing prices predictably or consistently is not maintaining the property. Let the property become worn, dysfunctional, and substandard. Some classes of landlords have made this an art form. My responses are always long-winded, but that's a side effect of using speech recognition. :-)
    - bpt3 1y ago
      Things like the soundproofing regulation you are advocating for are written in blood? And there is no example of oversupply not leading to price drops in residential construction. See every existing city with population declines as an example, or what happens in areas with growth when the increase in housing units exceeds household growth.
- Karrot_Kream 1y ago
  > Another way of expressing it is the government pays for housing to be built at cost plus and then charges rent according to what people can afford, i.e., income and expense-based rent. Does this sound like a realistic policy in any part of the US to you? Do you think the tax base in the US is eager to increase their taxes significantly to fund the creation of a government housing arm? My experience has been that even US megaprojects can't justify keeping staff in-house, let alone a housing authority. The stuff in this list is much more politically palatable.
  - rickydroll 1y ago
    My opinion is influenced by what I've seen and read about Helsinki social housing. As for the stuff on the list being more palatable, I'm not so sure. Many of the things on the list are the reasons why I don't want to live in a city. Remember, I'm a country mouse. However, I don't see them as being particularly viable either, because each one has an impact on many other items on the list. And if you're going to change one, you need to change several to make it cost-effective in terms of money and political capital.
- crooked-v 1y ago
  > Market forces shut down development if housing prices drop There's a huge gap there where building housing would still be entirely profitable, if only we didn't have the self-inflicted wound of the permitting and zoning process in most major US being extremely slow and expensive. For example, new row houses are explicitly or implicitly illegal in many cities (and thus all the old ones are extremely expensive), despite being both immensely popular for urban families and cheap to build in bulk.
  - rickydroll 1y ago
    Multifamily housing is not terribly popular here in New England, mostly because developers are cheap ass bastards and skimp on noise proofing. When my partner was renting in a two-family house, we could hear the landlord's child running, yelling, screaming, and dropping things. It was hell. It was one of the primary motivations for us to get our own house. My only experience with good multifamily housing was in Estonia, where the walls were thick and didn't pass sound at all. Row houses are an interesting solution as long as there is a 30 dB or greater sound attenuation between apartments and a 90-minute firewall between them. Row housing is also interesting because it allows for the inclusion of a garage and charging infrastructure beneath the house, as well as a space to store home-scale batteries charged by your rooftop solar panels.
    - wpm 1y ago
      Imagine though, some people might not be able to afford a place with more sound-proofing. Mandating it doesn't magically make it free. This is how we ended up in the situation we have in the first place where its too expensive to get a roof over your head because of hundreds of little rules and stipulations. Would I prefer to sleep under a highway overpass or sleep in an apartment where the bedroom doesn't have a window? Would I really care? And just because you mind living with noise doesn't mean everyone does. Why should we outright ban places like that if there are people who might not be able to afford something better, or don't care and would like to save some money? Like, your entire comment is part of the goddamn problem. Don't legislate your preferences.
      - 1y ago

rickydroll 1y ago

Things are bad in the US for housing because we count on market forces to provide what's necessary. Market forces shut down development if housing prices drop. After all, why start a project if you have a chance of being underwater by the time you're done with it? see: https://clmarohn.substack.com/p/what-happens-when-housing-prices https://clmarohn.substack.com/p/what-happens-when-housing-pr... If you want affordable housing, it will have to be government-funded, allowing developers to continue making a profit while the government bears the loss. Another way of expressing it is the government pays for housing to be built at cost plus and then charges rent according to what people can afford, i.e., income and expense-based rent.

harmmonica 1y ago
What you say is true to an extent, but I think you're underestimating a couple of things. First, some real estate developers enjoy very good margins, particularly those who purchase land, entitle the land and either build the improvements themselves or sell the land to someone who follows through with the construction. That is to say that even when prices/rents compress there tends to still be opportunity for developers (I'm not talking 2008-level price drops that are existential problems for the real estate market and the world at large). Also, when you cite "market forces" it suggests that the real estate market in the US is driven mostly by market forces, but it's highly regulated (zoning, building codes, etc.). As other commenters have pointed out, even in a declining market, if you removed some of the regulation you'd offset some of the drop in market prices thereby preserving the incentive for developers to build. Lastly, if you think we arrived where we are today because of market forces I think that's largely untrue. HCOL areas (seems like the entire country is turning into one of those!) have criminally under-built for decades and that hasn't been a market problem, but a regulatory problem. Now I'm not advocating for unlimited development so please don't read it that way, but the historical forces against building have been municipalities, on behalf of their politically-active residents, erecting countless impediments to development. If that were only true for a couple of years then we wouldn't have ended up where we are, but over decades the compounding effect of that reality is the single-biggest reason we're in the situation we're in. It is likewise going to take decades to address it so if the regulatory regime changes and stuff starts getting built and you still see rising prices that shouldn't be a surprise. Funny enough the more real estate developers going bankrupt the closer we'll be to affordable housing for all (ok, for "many" because all is likely never going to happen). Btw everything above assumes you actually believe that increased supply of housing (eventually!) decreases prices. I know you, ricky, don't believe that atm. Tons of people point to places like NYC as evidence that supply/demand doesn't work in desirable places, but, as Flavor Flav once said so well: don't believe the hype; even places like NYC have under-built for decades. Man I write long-winded comments on HN. This one is the worst by far, I think.
- rickydroll 1y ago
  The Substack article I linked in my previous post presents a compelling case for why and when builders stop building. Your position that we could fix that by removing regulations. I think that's not a wise course of action because many of the housing regulations are written in blood, and if you're going to eliminate regulations, you need to understand why they were there in the first place and how much blood is behind them. But even with regulations, developers don't care. see: https://www.youtube.com/@cyfyhomeinspections https://www.youtube.com/@cyfyhomeinspections. This bloke is a building inspector in Arizona, and he documents all the shortcomings and tricks that builders will use. You are right, I don't believe that increasing the supply of housing will decrease prices because housing is a financial instrument, and the whole system is so leveraged that it will fall apart if prices decline. One could claim that it fell apart in 2008. However, if you were to move housing out of the asset class, you would cause significant financial trauma to tens of millions of people. How would you make them whole? We have an example of oversupply not leading to price drops. Commercial real estate, such as storefronts and offices, continues to maintain a high price, even though a property has been idle for years. One would expect it to sell/lease for less due to the lack of demand, but it doesn't. The only thing I know that will decrease housing prices predictably or consistently is not maintaining the property. Let the property become worn, dysfunctional, and substandard. Some classes of landlords have made this an art form. My responses are always long-winded, but that's a side effect of using speech recognition. :-)
  - bpt3 1y ago
    Things like the soundproofing regulation you are advocating for are written in blood? And there is no example of oversupply not leading to price drops in residential construction. See every existing city with population declines as an example, or what happens in areas with growth when the increase in housing units exceeds household growth.
Karrot_Kream 1y ago
> Another way of expressing it is the government pays for housing to be built at cost plus and then charges rent according to what people can afford, i.e., income and expense-based rent. Does this sound like a realistic policy in any part of the US to you? Do you think the tax base in the US is eager to increase their taxes significantly to fund the creation of a government housing arm? My experience has been that even US megaprojects can't justify keeping staff in-house, let alone a housing authority. The stuff in this list is much more politically palatable.
- rickydroll 1y ago
  My opinion is influenced by what I've seen and read about Helsinki social housing. As for the stuff on the list being more palatable, I'm not so sure. Many of the things on the list are the reasons why I don't want to live in a city. Remember, I'm a country mouse. However, I don't see them as being particularly viable either, because each one has an impact on many other items on the list. And if you're going to change one, you need to change several to make it cost-effective in terms of money and political capital.
crooked-v 1y ago
> Market forces shut down development if housing prices drop There's a huge gap there where building housing would still be entirely profitable, if only we didn't have the self-inflicted wound of the permitting and zoning process in most major US being extremely slow and expensive. For example, new row houses are explicitly or implicitly illegal in many cities (and thus all the old ones are extremely expensive), despite being both immensely popular for urban families and cheap to build in bulk.
- rickydroll 1y ago
  Multifamily housing is not terribly popular here in New England, mostly because developers are cheap ass bastards and skimp on noise proofing. When my partner was renting in a two-family house, we could hear the landlord's child running, yelling, screaming, and dropping things. It was hell. It was one of the primary motivations for us to get our own house. My only experience with good multifamily housing was in Estonia, where the walls were thick and didn't pass sound at all. Row houses are an interesting solution as long as there is a 30 dB or greater sound attenuation between apartments and a 90-minute firewall between them. Row housing is also interesting because it allows for the inclusion of a garage and charging infrastructure beneath the house, as well as a space to store home-scale batteries charged by your rooftop solar panels.
  - wpm 1y ago
    Imagine though, some people might not be able to afford a place with more sound-proofing. Mandating it doesn't magically make it free. This is how we ended up in the situation we have in the first place where its too expensive to get a roof over your head because of hundreds of little rules and stipulations. Would I prefer to sleep under a highway overpass or sleep in an apartment where the bedroom doesn't have a window? Would I really care? And just because you mind living with noise doesn't mean everyone does. Why should we outright ban places like that if there are people who might not be able to afford something better, or don't care and would like to save some money? Like, your entire comment is part of the goddamn problem. Don't legislate your preferences.
    - 1y ago