Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Solving the housing crisis requires fighting monopolies in construction (2020)

minneapolisfed.org

Post reply on HN
Print view View original

31–40 of 198 posts

Re: Solving the housing crisis requires fighting monopolies in construction (2020)

#31

Post by zeusk »

zamfi wrote: post #25
adam_arthur wrote: post #14

Earlier quoted context omitted.

Population is flat over the last two years, while housing units are up and the construction rate is all time high. There is no crisis, just rampant speculation that ate through active inventory. The actual data is very clear on this (FRED), despite the word of mouth "shortage" narrative. Now that the narrative is turning, inventory is skyrocketing as you would expect, and we will be in a glut within 6 months. Look at…

All of this is true, but...housing markets are extremely regional. In the SF Bay Area, for example, despite much more new construction, there is still not nearly enough housing being built to satisfy demand, and as a result prices are driven extremely high. In other parts of the US, there is much more housing supply and relatively low demand, making housing more affordable. Nationwide stats hide a lot of regional rea…

I recently joined a real estate group, and the kinds of things I'm seeing there are beyond explanation.

People have basically come to understanding that house prices only go up, they use exotic financing and stupid leverage (BRRR method) to keep buying "assets" and jacking up their rental yield which then re-prices the asset so they can take an even bigger loan to buy more "assets".

Recently someone in the group asked how they could afford a house in Seattle and most answers resonated around buying houses in midwest/lcol areas and jacking up rent/renovating to take out further financing and keep buying properties till you can afford to buy a house in the hcol area.

This has to end, with FED inflicting pain on the stupid leveraged folks.

Homes should be for people to live in, not to purely speculate and grow their money.

Re: Solving the housing crisis requires fighting monopolies in construction (2020)

#32

Post by nostrademons »

adam_arthur wrote: post #23
epistasis wrote: post #20

Earlier quoted context omitted.

You are preventing an extremely selective and unrepresentative view of the stats.

Prove me wrong. Show me the stat for housing units per capita. Housing units per working age person is an all time high. Show me the stats for housing units per household. Hint, it's the same as the year 2000 and in line with historically normal levels. 1.1 housing units per household Show me the stat for rate of construction relative to population growth. Hint, it's at an all time high. Show me the demographic trend…

But those aren't the relevant stats. As another comment mentioned, newborns generally don't buy houses.

The relevant stats are people reaching FTHB age (roughly 25-35), minus deaths, plus new construction. And that picture looks pretty bleak:

https://countryeconomy.com/demography/population-structure/u...

There are about 45M Americans ages 25-35. There are about 21-22M Americans in peak die-off age (75+). There are about 1.2M annual housing starts:

https://www.census.gov/construction/nrc/pdf/newresconst.pdf

Sure, by 2035 or so, when baby boomers reach peak die-off age, we're going to have a housing bust. But over the next decade? Most Millennials are screwed, and it doesn't get better until today's middle-schoolers come of age.

Re: Solving the housing crisis requires fighting monopolies in construction (2020)

#33

Post by frankfrankfrank »

oldgradstudent wrote: post #5

Is there even a shred of evidence that the housing crisis is a result of higher construction costs? Or is the Fed trying to draw attention away from the catastrophic impact of its zero interest and other policies on the massive increase in asset prices?

I think what is being referred to here in typical mush mouth obtuse language is the "monopolization" that corporations are engaging in buying up massive amounts of real assets with essentially free money the fed it printing at the rate that even the "printing press goes brrrrrr" meme does not do justice.

I don't know that people are really aware of the scale of what is going on here. The big finance houses have essentially been handed over ownership and control to corner the whole housing market ... by the captured and corrupt government.

Re: Solving the housing crisis requires fighting monopolies in construction (2020)

#34

Post by Dylan16807 »

adam_arthur wrote: post #14
oldgradstudent wrote: post #5

Is there even a shred of evidence that the housing crisis is a result of higher construction costs? Or is the Fed trying to draw attention away from the catastrophic impact of its zero interest and other policies on the massive increase in asset prices?

Population is flat over the last two years, while housing units are up and the construction rate is all time high. There is no crisis, just rampant speculation that ate through active inventory. The actual data is very clear on this (FRED), despite the word of mouth "shortage" narrative. Now that the narrative is turning, inventory is skyrocketing as you would expect, and we will be in a glut within 6 months. Look at…

It's still a crisis, whether it's a shortage or not.

Or more specifically, whether it's a shortage of reasonably available units vs. a shortage of existing units.

Re: Solving the housing crisis requires fighting monopolies in construction (2020)

#35

Post by donthellbanme »

I'm a inactive General Contractor, and union electrician.

I'm not going to read a 49 page pdf today.

There are two things that really affect supply.

1. Government regulations is number one by a huge margin. We all know what that includes; zoning, persnickety council members who literally debate where a window is placed, the wood or stucco you can use, down to hedges, and even the color of your home. Look at what Bill Mahar had to go through in order to build a shack in his backyard.

(Gavin Neusome made some great changes these last few years. They arn't being used though. Why? It's still dam expensive to build anything. I've noticed a a few well off wealthy guys in my county using ADA units to increase the sq. footage of their homes. But most folks don't have the money to build.

2. The cost of constructing is high. Every-time a new code goes into building it just adds up. And I know how most of you love these safety codes.

The problem with over coding is the law is the law.

My father once got a failed final permit on the electrical Service installation. The law states you need 30" of space around the panel. The Service was in a concrete hallway. He was failed because the panel was 29". The inspector was a childhood friend of my father. Yes--it says something about my father too?

I knew a guy whom was failed a final electrical install because he didn't have the right sticker on two of his receptacle. A sticker. He didn't even know buried in the code there was a law over a missing label. The recepticals were standard 15 amp residential recepticals.

This guy said HUD, and NAHB, are not helping the situation. He is probally right. I did look up NAHB lobby monies for 2021, and it was 3.275 million. Which doesn't seem outrageous.

If this guy's thesis is we need to encourage manufactured housing; I'm all for it. Just pay the guys a union wage.

Housing, and the way we treat our Homeless, are my two big hot buttons. If you don't have a place to sleep, and shower, you are fucked. It's not a big problem. Some "Progressive" jack ass running for something in LA wants to not give a homeless person a room. He wants to house them in army barrack style housing, and using the single room as a carrot if the poor slob is a good boy.

If a guy buys some land, let him do whatever (within reason) with it. And yes, that means putting up a tent on it if he wants.

I'm disenfranchised over our lack of homes in the right economic zones, I don't see much ever happening.

One thing Russia did right during their experiment with Communism is they built those huge concrete apartment buildings. Everyone was pretty much guaranteed a room.

We need those big buildings now. We need to have hard building codes (like foundations, roofing, mechanicals, etc. We then need the soft codes. A guy should have to rip out a Service panel over a 1" violation.

If you are ever interested in what it takes to build anything, watch the community station that plays the local town meetings. I guarantee you will want to throw the remote at the tv.

Re: Solving the housing crisis requires fighting monopolies in construction (2020)

#36

Post by adam_arthur »

nostrademons wrote: post #32
adam_arthur wrote: post #23

Earlier quoted context omitted.

Prove me wrong. Show me the stat for housing units per capita. Housing units per working age person is an all time high. Show me the stats for housing units per household. Hint, it's the same as the year 2000 and in line with historically normal levels. 1.1 housing units per household Show me the stat for rate of construction relative to population growth. Hint, it's at an all time high. Show me the demographic trend…

But those aren't the relevant stats. As another comment mentioned, newborns generally don't buy houses. The relevant stats are people reaching FTHB age (roughly 25-35), minus deaths, plus new construction. And that picture looks pretty bleak: https://countryeconomy.com/demography/population-structure/u... There are about 45M Americans ages 25-35. There are about 21-22M Americans in peak die-off age (75+). There are a…

What matters above all is number of households relative to housing units, and rate of expansion/contraction of households.

Household growth was flat prepandemic https://fred.stlouisfed.org/series/TTLHH

The likely explanation for current RE market is households temporarily expanded due to the various stimulus and forbearances giving many higher disposable income, but we'll likely see this contract again as the effect of inflation takes hold.

(Expanding/contracting can be through roommates splitting/joining, kids moving out etc).

Housing is fungible. Rental units draw from buy demand and vice versa. Substitutable goods work this way on a macro scale.

The millenials who buy, move out of rentals, which drives rents down (or less growth), increasing the spread between carrying cost to rent/own. There's a limit to how far this spread can widen nationally. You can't look at these markets independently.

Number of households show the actual number of housing units demanded, everything else is an input to number of households.

Re: Solving the housing crisis requires fighting monopolies in construction (2020)

#37

Post by Dylan16807 »

adam_arthur wrote: post #23
epistasis wrote: post #20

Earlier quoted context omitted.

You are preventing an extremely selective and unrepresentative view of the stats.

Prove me wrong. Show me the stat for housing units per capita. Housing units per working age person is an all time high. Show me the stats for housing units per household. Hint, it's the same as the year 2000 and in line with historically normal levels. 1.1 housing units per household Show me the stat for rate of construction relative to population growth. Hint, it's at an all time high. Show me the demographic trend…

> 1.1 housing units per household

The number of households is significantly constrained by the supply of housing units, so that seems like a less relevant number.

Re: Solving the housing crisis requires fighting monopolies in construction (2020)

#38

Post by schaefer »

oldgradstudent wrote: post #5

Is there even a shred of evidence that the housing crisis is a result of higher construction costs? Or is the Fed trying to draw attention away from the catastrophic impact of its zero interest and other policies on the massive increase in asset prices?

Here's a shred of evidence:

Las Vegas is a city mostly surrounded by public lands. New private parcels are no longer made available as lots appropriate for single family homes. They are carved onto neighborhood sized chunks, sold to developers directly, and locked into HOA's for all eternity.

Only the big boys that can tackle multi-million dollar bids can enrich themselves by the sale of our public lands.

Re: Solving the housing crisis requires fighting monopolies in construction (2020)

#39

Post by oldgradstudent »

epistasis wrote: post #9
oldgradstudent wrote: post #5

Is there even a shred of evidence that the housing crisis is a result of higher construction costs? Or is the Fed trying to draw attention away from the catastrophic impact of its zero interest and other policies on the massive increase in asset prices?

There is an entire paper linked here that's exactly what you ask for in your first question. What about it do you find unconvincing?

It just asserts that without proof.

The paper essentially argues that construction costs can be lowered significantly using factory production methods, especially for small-modular homes. I have no problem with that part. The title has no basis in the paper, though.

It is unrelated to the massive increase in housing (and other asset) prices in recent years which are the cause of the current housing crisis.

Re: Solving the housing crisis requires fighting monopolies in construction (2020)

#40

Post by oldgradstudent »

frankfrankfrank wrote: post #33
oldgradstudent wrote: post #5

Is there even a shred of evidence that the housing crisis is a result of higher construction costs? Or is the Fed trying to draw attention away from the catastrophic impact of its zero interest and other policies on the massive increase in asset prices?

I think what is being referred to here in typical mush mouth obtuse language is the "monopolization" that corporations are engaging in buying up massive amounts of real assets with essentially free money the fed it printing at the rate that even the "printing press goes brrrrrr" meme does not do justice. I don't know that people are really aware of the scale of what is going on here. The big finance houses have essen…

The monopolization the paper refers to is how industry and government prevent the adoption of factory methods in construction, increasing construction costs.
Post reply on HN