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What happens when housing prices go down?

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Re: What happens when housing prices go down?

#331

Post by philipallstar »

amanaplanacanal wrote: post #140
philipallstar wrote: post #41

Earlier quoted context omitted.

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 immigratio…

Is immigration higher now than it has been historically? How did immigration impact housing prices in the past vs now?

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.

Re: What happens when housing prices go down?

#332

Post by 9rx »

ta1243 wrote: post #330
9rx wrote: post #302

Earlier quoted context omitted.

> When 98% of available homes are used that is a shortage. I anticipate that 98% of available jets are used. And I certainly can't afford one. Does that mean there is a shortage of jets? What isn't there a shortage of? > Your definition of shortage seems very different to mine so there's no point in continuing. What, then, was the point of continuing earlier? We have been discussing the technical definition since the…

You seem to ignore the technical definition of unmet demand. I respect your freedom to ignore actual definitions. > What isn't there a shortage of? Things which supply can increase to meet that demand.

> You seem to ignore the technical definition of unmet demand.

How so? I acknowledged it and even agreed that there is probably some unmet demand in houses not being able to built fast enough. But, with time, they are being built:

> [What isn't there a shortage of?] Things which supply can increase to meet that demand.

Housing supply is increasing. We build new houses every day. Now you're contradicting yourself. The folly of trying to make up your own definition on the spot. The formal definition already carefully considered these issues. Why stray from it?

But, as before, there is nothing to suggest that the unmet demand is a big problem. Having to wait a year or two for the house you want to be built, while perhaps a little frustrating, isn't the issue under discussion.

The issue we're talking about is those who are unable to join the demand group because prices are too high. That's not unmet demand. They are not demand in the first place. They can't afford to be. Demand requires desire _and willingness_. Desire alone is not demand. Desire alone is simply dreaming.

The whole concept of demand wouldn't make any sense if you counted anyone who wished to have something. The entire fundamental basis of supply and demand is that higher prices stimulates an increase in supply and a reduction in demand. The reduction in demand happens because willingness starts to disappear as the price runs higher. In other words, people start tapping out when they can no longer afford something, thus a decrease in demand.

As discussed earlier, the political will is to see an increase in demand as we have a collective dream to allow more people with only desire to join the demand group — ultimately by lowering prices such that their willingness is gained in those lower prices. We don't talk about a reduction in demand in those political contexts because that runs entirely contrary to what is trying to be achieved. High prices already reduced demand. That's the exact opposite of what the people want to see.

Re: What happens when housing prices go down?

#333

Post by nobody9999 »

tsunamifury wrote: post #126
queenkjuul wrote: post #118

Where i live, NIMBYs just killed an ADU ordinance and were screaming just as loudly and about all the same things they would have if you were replacing their grandma's cottage with a high rise. They can't be rationed with. Social housing is the only thing that will really work.

This was tried the 60s in the us and uk, which gave rise to the ghettos torn down in the 2000s. There is little appetite on any side to re do that It’s amazing how little history people seem to remember or know. I think people might be open to trying again if you could address what went wrong last time (extreme crime and poverty traps)

>It’s amazing how little history people seem to remember or know.

Yourself included.

cf. Mitchell-Lama housing[0]. It was enormously successful in creating housing (both rentals and sales) for significant numbers of people. In fact, such housing is still (70 years later) doing so.

We could use a whole lot more of that!

[0] https://en.wikipedia.org/wiki/Mitchell%E2%80%93Lama_Housing_...

Re: What happens when housing prices go down?

#334

Post by Glyptodon »

doctorpangloss wrote: post #319
Glyptodon wrote: post #287

Earlier quoted context omitted.

You seem to be ignoring that once land values reach some kind of floor it will be entirely sensible to build houses. Land values going up leads to FOMO, and going down leads to the reverse of FOMO, IE fear that the bottom hasn't been reached. Clearly it is correct to short, but short positions expire - they are definitionally short term. That said, the behavior is pretty expected: the current operators are operating…

Okay, but what actually happens is exactly what happened with the tariffs: a bunch of bold statements about policy benefits, huge market drops, followed by chickening out back to the status quo. You are talking about policy effects that would take a decade to realize, a decade of huge pain to investors… I cannot comprehend how “Rube Goldberg machine that leads to long term benefits, guaranteed short term catastrophe”…

I trend towards 3 to 5 years over a decade in my thinking, but if investors never seriously think that risks or slow or down markets like mentioned are possible the market is absolutely going to be completely misvalued until the mechanisms that prop it up get overextended or weighed down to the point of failure.

Re: What happens when housing prices go down?

#335

Post by tsunamifury »

nobody9999 wrote: post #333
tsunamifury wrote: post #126

Earlier quoted context omitted.

This was tried the 60s in the us and uk, which gave rise to the ghettos torn down in the 2000s. There is little appetite on any side to re do that It’s amazing how little history people seem to remember or know. I think people might be open to trying again if you could address what went wrong last time (extreme crime and poverty traps)

>It’s amazing how little history people seem to remember or know. Yourself included. cf. Mitchell-Lama housing[0]. It was enormously successful in creating housing (both rentals and sales) for significant numbers of people. In fact, such housing is still (70 years later) doing so. We could use a whole lot more of that! [0] https://en.wikipedia.org/wiki/Mitchell%E2%80%93Lama_Housing_...

Cherry picking singular successes does not overcome the large amounts of data going the other way.

Please do better.

Re: What happens when housing prices go down?

#336

Post by nobody9999 »

tsunamifury wrote: post #335
nobody9999 wrote: post #333

Earlier quoted context omitted.

>It’s amazing how little history people seem to remember or know. Yourself included. cf. Mitchell-Lama housing[0]. It was enormously successful in creating housing (both rentals and sales) for significant numbers of people. In fact, such housing is still (70 years later) doing so. We could use a whole lot more of that! [0] https://en.wikipedia.org/wiki/Mitchell%E2%80%93Lama_Housing_...

Cherry picking singular successes does not overcome the large amounts of data going the other way. Please do better.

Hundreds to thousands of buildings over seventy years is a "singular success?"

I personally know dozens of people who grew up in Mitchell-Lama housing. Tens to hundreds of thousands of people still do.

But because other implementations are less successful (which is debatable, especially as you've provided zero examples), we should scrap successful ones?

Or am I missing your point? Please do elucidate.

Edit: It occurs to me that you're likely ignorant (especially given your response) of Mitchell-Lama programs. As such, I encourage you to educate yourself and to advocate for similar programs, as they create stable housing and promote community for many people -- and unless you live in a large urban area, it provides that for more folks than live in your entire county.

Re: What happens when housing prices go down?

#337

Post by sugarplant »

doctorpangloss wrote: post #241
sokoloff wrote: post #230

Earlier quoted context omitted.

Price controls work to ensure scarcity. Flooding the market with new construction (at any price level, though ideally at all sizes and quality of housing) will do more to sustainably lower prices while leaving a functioning market.

a dreary part of this conversation is, nobody wants to play the game, what does random HN user sokoloff mean by the words "functioning market," "sustainably," "flooding", "ideally", "quality", and even "scarcity"? I don't know what you are saying, because you are leaning so deeply on an internal glossary known only to you, made worse by hijacking real words that everyone can look up in a dictionary.

how high were you when you made this post?

Re: What happens when housing prices go down?

#338

Post by sugarplant »

queenkjuul wrote: post #219
ecshafer wrote: post #215

Earlier quoted context omitted.

I grew up in poverty. I worked hard to NOT have to deal with that shit as an adult and to not have my kids deal with that either. People screaming in the street at night on schizo rants, meth heads, getting your bikes stolen, people vandalizing your house, drug dealers, fights, schools being less safe and effective because of gangs/ problem children. This stuff actually sucks to live through constantly in a day by da…

You're making a ridiculous assumption that everyone that would move into social housing is a criminal and that everyone who moves into social housing is in poverty. This isn't necessarily the case and there's plenty of examples to prove it. Good hard working people are being priced out of my neighborhood. Social housing could be a huge step in stopping that process.

so you dont have these sorts of housing projects in your area and are telling the guy who grew up around them how they actually work?

people wonder why these projects get shot down so often. there's no accountability for the people that move into the units and then people just pretend junkies and dealers dont end up in these units. a lot of these affordable housing projects have "housing first" units baked into their plans which is a type of unit that houses active junkies and refuses to kick them out for any reason. thats the type of stuff people are afraid of. nobody wants to live around drug dealers and tweakers especially if they have kids.

Re: What happens when housing prices go down?

#339

Post by tsunamifury »

nobody9999 wrote: post #336
tsunamifury wrote: post #335

Earlier quoted context omitted.

Cherry picking singular successes does not overcome the large amounts of data going the other way. Please do better.

Hundreds to thousands of buildings over seventy years is a "singular success?" I personally know dozens of people who grew up in Mitchell-Lama housing. Tens to hundreds of thousands of people still do. But because other implementations are less successful (which is debatable, especially as you've provided zero examples), we should scrap successful ones? Or am I missing your point? Please do elucidate. Edit: It occurs…

Mitchell–Lama Housing Program Is specifically NOT public housing and you are calling me ignorant. JFC dude it’s a great private sector tax abatement program but this is a comment about Cabrini Green type projects.

Re: What happens when housing prices go down?

#340

Post by specialist »

andrewmutz wrote: post #168
rwarfield wrote: post #77

This article is a mess. From the third paragraph: > What happens when prices actually start to fall? Because that’s not just a hypothetical. It’s already happening in places like Phoenix, Atlanta, Miami, Dallas... Then two paragraphs later > In The Atlantic, Rogé Karma recently pointed out that housing prices are rising fastest in the very cities once seen as escapes from high-cost coasts, places like Phoenix and Dal…

It is indeed a mess. It's full of strawmen, like: > Price Drops Don’t Lead to Supply. They Kill It. No one believes price drops cause an increase in supply. They believe an increase in supply causes price drops. > If “build more” was going to bring prices down and stabilize the system, we wouldn’t be seeing these mixed signals. People believe that increasing supply will lower prices, not "stabilize the system". The c…

This is an uncharitable reading of the article.

Investors & developers are motivated by profit, lower prices reduces (expectation of future) profit, so less housing will be built.

Right?

Yes, article is too wordy and lacks focus. Typical for us progressives.

OC prescribes "bottom-up" something something. I haven't read Housing Trap, so can't comment.

My prescription would be for policy makers to work with investors & developers, figure out how to make profits more stable and predictable, figure out how to institute those reforms.

I'd also consider restructuring the housing industry. eg IIRC in Germany, developers are often also landowners. So they have longer horizons for considering profitability. Seems like an obvious reform, especially considering climate crisis. Like design & build wrt total lifetime cost of ownership, so adopting passivhaus and activhaus innovations is a no brainer. (Just trying to say when landowner is also developer, they can capture more profit by incorporating better tech.)

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