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

51–60 of 198 posts

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

#51

Post by adam_arthur »

zamfi wrote: post #49
lazide wrote: post #44

Earlier quoted context omitted.

I think you’re talking past each other a bit. The demand you’re talking about in the SF Bay Area is not necessarily driven by ‘butts in seats’ (aka actual people needing a roof and willing to pay a concrete price for it), but also by the cheap money narrative the FED has been feeding for a very long time. Which is what they are referring to in their post as having changed.

I don’t think we are talking past each other. There is absolutely a housing supply crisis in the Bay Area that is not reflected in the national stats. I’m not sure why so many people believe that housing prices in high-demand markets are dominated by things like interest rates — there is certainly an effect, sure — but by far the predmoinant reason a 2br house on a small lot with a small yard costs $2m+ in Palo Alto…

Firstly, I'm talking nationally.

Secondly, the Bay Area is one of the markets subject to some of the more severe headwinds if remote work becomes the new normal, for the reasons you stated.

SF population declined ~7% over the past two years. https://www.sfgate.com/bayarea/article/San-Francisco-populat...

The concept of being forced to live in a hyper local area for work may be a thing of the past, which doesn't bode well for employment driven locales. NYC being another example.

Bay area is one of the last places in the country I'd want to own a home right now

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

#52

Post by User23 »

There is plenty of cheap or even virtually free housing available in major cities such as Detroit, Baltimore, St. Louis, and many others, as well as countless trailer parks in any of countless Nowheresvilles, USA. The unspoken dirty little secret is that affordability complaints are really about housing that is around the kind of people the buyer wants to be around and not around the kind of people the buyer doesn't want to be around.

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

#53

Post by vinceguidry »

oldgradstudent wrote: post #39
epistasis wrote: post #9

Earlier quoted context omitted.

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.

Yeah. Like, anyone who has ever tried to get anything custom out of builders these days has been confronted with the fact that none of these guys want or care to do anything even close to custom work anymore. The diversity has been squeezed out of the market ages ago, cookie cutter houses are the norm everywhere. I only read the abstract, but it doesn't surprise me in the least that this paper just asserts conclusions without justification.

Houses are already as close to factory-built as is possible to do with today's tastes. Everything is pre-engineered and merely assembled on site.

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

#54

Post by jelliclesfarm »

eesmith wrote: post #46
jelliclesfarm wrote: post #16

Unions. One of the major set backs for building more in Bay Area and San Francisco is not NIMBYism or zoning. It’s because construction unions have a big say with the counties and they have a big voice during elections. Anything that involves mortgages and the govt has to necessarily support unions and work with them. They don’t like modular homes as automation will replace union jobs.

The author doesn't single out unions like you do: > Many groups were, and still are, opposed to factory production, including building contractors, building craft unions, building code inspectors, architects, materials producers and politicians (who are supported by the traditional industry). While these groups are sometimes at odds with each other, they all join together to fight factory production of homes. They fo…

Looks like he does? There is California building and trade council as well as the separate San Francisco building and trade council..umbrella for multiple building and construction unions from trades like carpenters and plumbers and electricians to construction workers.. all of them wield tremendous clout and can deliver the vote banks to any politician standing for public office.

These are the same people who build roads and bridges and all public utilities. Their power shouldn’t be underestimated.

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

#55

Post by vostok »

adam_arthur wrote: post #51
zamfi wrote: post #49

Earlier quoted context omitted.

I don’t think we are talking past each other. There is absolutely a housing supply crisis in the Bay Area that is not reflected in the national stats. I’m not sure why so many people believe that housing prices in high-demand markets are dominated by things like interest rates — there is certainly an effect, sure — but by far the predmoinant reason a 2br house on a small lot with a small yard costs $2m+ in Palo Alto…

Firstly, I'm talking nationally. Secondly, the Bay Area is one of the markets subject to some of the more severe headwinds if remote work becomes the new normal, for the reasons you stated. SF population declined ~7% over the past two years. https://www.sfgate.com/bayarea/article/San-Francisco-populat... The concept of being forced to live in a hyper local area for work may be a thing of the past, which doesn't bode…

Density still has huge benefits unrelated to work.

I don't know much about SF as I haven't lived there as an adult, but New York is an incredible place to live for lifestyle reasons too.

It has great food, a very high concentration of smart and highly educated people, great museums, great performance arts, etc. It's also an incredibly walkable city, which is rare in the US.

Hands down it would be my choice of city if I was a remote worker.

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

#56

Post by zamfi »

adam_arthur wrote: post #51
zamfi wrote: post #49

Earlier quoted context omitted.

I don’t think we are talking past each other. There is absolutely a housing supply crisis in the Bay Area that is not reflected in the national stats. I’m not sure why so many people believe that housing prices in high-demand markets are dominated by things like interest rates — there is certainly an effect, sure — but by far the predmoinant reason a 2br house on a small lot with a small yard costs $2m+ in Palo Alto…

Firstly, I'm talking nationally. Secondly, the Bay Area is one of the markets subject to some of the more severe headwinds if remote work becomes the new normal, for the reasons you stated. SF population declined ~7% over the past two years. https://www.sfgate.com/bayarea/article/San-Francisco-populat... The concept of being forced to live in a hyper local area for work may be a thing of the past, which doesn't bode…

Sure, and I’m not making any claims about the future, either — just pointing out what the causes have been so far: demand/supply mismatch has had a far larger impact than speculation and interest rate policy or “narrative” on Bay Area housing prices.

If demand plummets, of course prices will follow.

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

#57

Post by xyzzyz »

akamaka wrote: post #28

For a good laugh, read the conclusion of the paper, which sounds like it was written in the year 1960, when inner cities were crumbing, and imagines that rural areas will get better public transit when the poor escape the cities they are “trapped in”: There is a literature that asks why the poor live in cities. One answer provided is that transportation options are much better in cities than rural areas and small tow…

The entire paper is a joke. Monopoly in the construction market? Dude, there are multiple competing contractors in every field even in smallest towns. In fact, I’d endeavor to say that construction is probably the least centralized major industry in US, certainly less centralized than, say, farming.

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

#58

Post by zeusk »

zamfi wrote: post #50
zeusk wrote: post #31

Earlier quoted context omitted.

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 aske…

> Homes should be for people to live in, not to purely speculate and grow their money Wait, if those speculating investors have “rental yield” then doesn’t that imply people are living in those homes?

The investor's objective is to maximize yield, not minimize homelessness or keep affordability in check. In that, if they don't find a renter for their jacked up rent - they "renovate" the property - get a higher appraisal and sell it to the next schmuck.

Housing can’t both be a good investment and be affordable.

You can't make economic decisions on the basis that real estate will always grow more than income or even real gdp forever. Which is what these group of investors are doing.

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

#59

Post by nostrademons »

adam_arthur wrote: post #36
nostrademons wrote: post #32

Earlier quoted context omitted.

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…

If housing is supply bound - which we know it is, because prices are rising - then rate of household growth is going to equal rate of new home construction, because you can't form those households until there's a house for them to move into. Which it does - compare your link with my census.gov link on new residential construction. Everyone who doesn't have a home has to double up with roommates or continue living with their parents

If the question is "Can I maintain the same standard of living as I grew up with?" or "Can I form a family?" or "What are housing prices going to do now?", this isn't an interesting statistic. The number you want to know is "How many people would like to form households but can't because there are no houses to be had?" And that's what I'm citing with the demographic numbers. If there are twice as many people desiring houses as houses available for them, only half the population is going to get a home, and the price that the median home sells for will be what the 75th percentile of the income distribution can support.

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

#60

Post by jelliclesfarm »

eesmith wrote: post #46
jelliclesfarm wrote: post #16

Unions. One of the major set backs for building more in Bay Area and San Francisco is not NIMBYism or zoning. It’s because construction unions have a big say with the counties and they have a big voice during elections. Anything that involves mortgages and the govt has to necessarily support unions and work with them. They don’t like modular homes as automation will replace union jobs.

The author doesn't single out unions like you do: > Many groups were, and still are, opposed to factory production, including building contractors, building craft unions, building code inspectors, architects, materials producers and politicians (who are supported by the traditional industry). While these groups are sometimes at odds with each other, they all join together to fight factory production of homes. They fo…

Where the money comes from..https://calmatters.org/politics/california-election-2020/202... (2020)

Teachers and realtors(not developers) each had contributed over 2.5 million each. Prison guard union 3.7 million. Other unions: about 3.5 million

Building industry is about a million but that’s pre 2020 numbers. It has since gone up.

The article explains who gives how much and what they want in return. There are also overlaps.

NIMBY and zoning complaints are smokescreens. Look at campaign donations. It’s all public record.

Post reply on HN