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

Household size and the housing stock

kevinerdmann.substack.com

Post reply on HN
Print view View original

111–120 of 149 posts

Re: Household size and the housing stock

#111

Post by scotty79 »

bdastous wrote: post #108
scotty79 wrote: post #65

The cause of the problem is that real estate is a good investment asset. The way to solve the problem is making it a bad investment asset. The best way to do it is to tax real estate progressively. The more you own, the higher percentage of its value you must pay every year. That taxation scheme would make investors drop millions of houses on the market like a hot potato. Prices would tank. This might cause issues wi…

A land value tax would be a more efficient way to fairly distribute the benefits of land.

Sure, but progressive land tax to discourage large ownership.

Re: Household size and the housing stock

#112

Post by scotty79 »

randerson wrote: post #99
scotty79 wrote: post #65

The cause of the problem is that real estate is a good investment asset. The way to solve the problem is making it a bad investment asset. The best way to do it is to tax real estate progressively. The more you own, the higher percentage of its value you must pay every year. That taxation scheme would make investors drop millions of houses on the market like a hot potato. Prices would tank. This might cause issues wi…

The tax change would have to be made gradually to avoid a shock to the system, and it could exclude primary residences so that middle-class homeowners aren't punished. Just incentivizing the wealthy to offload their pied-à-terres would free up plenty of housing stock.

The progression can start at zero. Even if you own up to 3 residential properties it still could be zero.

What it must do is incentivise largest owners who hold the most properties to sell them.

Re: Household size and the housing stock

#113

Post by giantg2 »

RangerScience wrote: post #109
giantg2 wrote: post #89

Earlier quoted context omitted.

"One consideration is that, from a legal rights and social inclusion perspective, places aren’t fungible." You do understand that works both ways? If you reverse the areas you're thinking of, there are people who prefer the rights or social environment in the opposite direction. Shouldn't we be trying to bring similar opportunities to all social groups? If we want to look at how this turns out, take a look at Native…

Edit 3: Originally I'd replied about population demographics and migration; @giantg2 has a good reply to that, which you can see below. In reviewing the conversation, I got mentally stuck on the comparisions to reservations, because I think it's a severely fucked up comparison. But saying that alone isn't a helpful or effective conversation, so - > Shouldn't we be trying to bring similar opportunities to all social g…

Yeah, but you generally need the money from the businesses and employment to grow the other amenities. For example, TX is almost the opposite of CA in many political areas, yet it seems they have been successful in attracting businesses and people to migrate to them. The amenities and infrastructure has been increasing in many of those cities.

"That’s (part of) why the places that are emptying are emptying, and then they’re surprised when only trying to be attractive to businesses doesn’t work out."

I'm not sure I understand you. Places like TX, FL, AZ, etc are actually growing populations while being hailed as business friendly. Yet places like CA and NY are losing population while considered being tought for business and progressive (rights, social atmosphere fron your prior comment?).

Re: Household size and the housing stock

#114

Post by scotty79 »

hackerlight wrote: post #102
scotty79 wrote: post #96

Earlier quoted context omitted.

Of course high rents are caused by the investors. After all, rents are huge part of the return on their investment and also huge factor in determining the asset price. Solution to rental crisis is the reduction of what percentage of people rent vs buy. With a flood of cheap properties on the market more people would consider buying. Also they'd need smaller mortgages so they could be easier to acquire.

> After all, rents are huge part of the return on their investment and also huge factor in determining the asset price. Yes, rents are part of their ROI. That does not mean asset prices cause rents. Rents cause asset prices by impacting investment demand. Rents provide a soft bound on asset prices because investors demand a certain ROI, else they will allocate capital in other markets. We're getting the direction of…

Higher rents inflate asset prices, but higher asset prices also inflate rents because buying becomes too expensive and rents can safely grow because people who can't buy must rent.

Direction of causality goes both ways. It's positive feedback loop that's barely contrained by any reality. That's why it seems to run away towards infinity despite only small changes in supply and demand.

There's no good solution to your example because there's simply too few properties. Some people will become homeless. The same number in each scenario. It hard to tell how much total rent will be transferred in each scenario because competition for rentals is harder in second one but 0.5N properties have zero rent.

Re: Household size and the housing stock

#115

Post by seanmcdirmid »

OJFord wrote: post #105
seanmcdirmid wrote: post #97

Earlier quoted context omitted.

We have townhomes that share walls as well. My wife wasn’t a fan although I loved one place like that. It’s mostly preference going on.

I know, it just seems like preference is much stronger against them / there are fewer of them in NA. Maybe because if you build your houses with a timber frame you need an air gap not to heat the neighbours? Also I suppose the cost saving of constructing like that is a lot less than with brick or even breeze blocks.

I would say 25% of the townhomes here in Ballard are row homes that share walls, the rest are townhomes with footpath sized spacing between them. It isn’t a matter of heat here in Seattle, heat pumps are efficient and insulation between homes is pretty good.

Besides cost savings, you can fit more in if you don’t have those foot paths between, but the market isn’t into it.

Re: Household size and the housing stock

#116

Post by arrosenberg »

hackerlight wrote: post #80
scotty79 wrote: post #65

The cause of the problem is that real estate is a good investment asset. The way to solve the problem is making it a bad investment asset. The best way to do it is to tax real estate progressively. The more you own, the higher percentage of its value you must pay every year. That taxation scheme would make investors drop millions of houses on the market like a hot potato. Prices would tank. This might cause issues wi…

But rents are also high. High rents aren't caused by investors. Rents are caused by too many people wanting to live somewhere versus a small number of dwellings. It's the pigeon hole principle, which you can't solve by reducing investors. Also, let's think about unintended consequences. A lot of housing starts happen only because of investor capital. Given the existence of a rental crisis, if you inadvertently reduce…

High rents are being caused by investors, which is why plenty of stock is sitting vacant. When the developer or PE purchaser financed the building they did so based on an estimate of what the building can generate in revenue. If average rent drops to 70% of what the estimate had, then the loan goes completely underwater. However, if the landlord simply refuses to rent those units at the market rate, they can pretend that the forecast value is still legit since they don't have a market signal indicating otherwise. When the loan comes due, they can maintain this fiction and roll over to another loan. Thus rent stays high despite market forces - the landlord can't afford to rent it at the actual market price or they won't be able to roll the loan over when it pops and they are forced to bankruptcy.

We have to unwind the low-interest financial ponzi schemes the Fed has propped up since 2007, otherwise there is a huge incentive not to fix the problem. Maintaining high interest for another 4 years will probably be enough to force the issue, since most commercial RE loans are pretty short.

Re: Household size and the housing stock

#117

Post by throwaway22032 »

philipwhiuk wrote: post #66
throwaway22032 wrote: post #57

It's always struck me that housing regulation (well, a lot of regulation really) is written by rich people for rich people. When I moved out of home I'd have been perfectly willing to live in a minimally insulated log cabin, shipping container, etc of sorts with basic running water and wiring that consisted of me running conduit up the walls. I could then upgrade it slowly over time with insulation, stud walls, etc e…

No, it's written in blood to avoid stuff like the Great Fire of London or epidemics.

Super dense urban situations are not what we are talking about here.

Re: Household size and the housing stock

#118

Post by RangerScience »

giantg2 wrote: post #113
RangerScience wrote: post #109

Earlier quoted context omitted.

Edit 3: Originally I'd replied about population demographics and migration; @giantg2 has a good reply to that, which you can see below. In reviewing the conversation, I got mentally stuck on the comparisions to reservations, because I think it's a severely fucked up comparison. But saying that alone isn't a helpful or effective conversation, so - > Shouldn't we be trying to bring similar opportunities to all social g…

Yeah, but you generally need the money from the businesses and employment to grow the other amenities. For example, TX is almost the opposite of CA in many political areas, yet it seems they have been successful in attracting businesses and people to migrate to them. The amenities and infrastructure has been increasing in many of those cities. "That’s (part of) why the places that are emptying are emptying, and then…

Ah; it looks like my impressions are /somewhat/ out of date: https://www.ppic.org/publication/whats-behind-californias-re... Although I’d say trying infer things from numbers during the pandemic is going to, uh, run into some pretty serious confounding factors. Still, looks like the trend was happening /before/ that, so.

Re: Household size and the housing stock

#119

Post by [deleted] »

scotty79 wrote: post #114
hackerlight wrote: post #102

Earlier quoted context omitted.

> After all, rents are huge part of the return on their investment and also huge factor in determining the asset price. Yes, rents are part of their ROI. That does not mean asset prices cause rents. Rents cause asset prices by impacting investment demand. Rents provide a soft bound on asset prices because investors demand a certain ROI, else they will allocate capital in other markets. We're getting the direction of…

Higher rents inflate asset prices, but higher asset prices also inflate rents because buying becomes too expensive and rents can safely grow because people who can't buy must rent. Direction of causality goes both ways. It's positive feedback loop that's barely contrained by any reality. That's why it seems to run away towards infinity despite only small changes in supply and demand. There's no good solution to your…

[deleted]

Re: Household size and the housing stock

#120

Post by hackerlight »

arrosenberg wrote: post #116
hackerlight wrote: post #80

Earlier quoted context omitted.

But rents are also high. High rents aren't caused by investors. Rents are caused by too many people wanting to live somewhere versus a small number of dwellings. It's the pigeon hole principle, which you can't solve by reducing investors. Also, let's think about unintended consequences. A lot of housing starts happen only because of investor capital. Given the existence of a rental crisis, if you inadvertently reduce…

High rents are being caused by investors, which is why plenty of stock is sitting vacant. When the developer or PE purchaser financed the building they did so based on an estimate of what the building can generate in revenue. If average rent drops to 70% of what the estimate had, then the loan goes completely underwater. However, if the landlord simply refuses to rent those units at the market rate, they can pretend…

> High rents are being caused by investors, which is why plenty of stock is sitting vacant.

Vacancies are a contributing factor, but why think it's the primary one, compared to a lack of housing? Rents are going up everywhere in the West, even in places where vacancy rates are decreasing such as Ireland. How can vacancy rates decrease while rents skyrocket?

Post reply on HN