The Folk Economics of Housing
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The Folk Economics of Housing
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Re: The Folk Economics of Housing
#2Is it that they truly don’t believe it or they don’t want more supply (since that changes their quality of life, neighborhoods, traffic, etc) but still do want lower prices in other ways (like by price caps or other things).
One legitimate reason to not think supply reduces prices is because of big financial companies buying up lots of houses and having effectively free rein to price how they want. It removes the competitive piece. In many areas the new houses are built by a few large home builders doing a few large developments, and the new apartments are owned by a few large corporate owners. That can slow down prices reaching their market value.
Re: The Folk Economics of Housing
#3Colloquially you can see this in sentiments such as:
"All these developers are building is just expensive new luxury apartments"
And as the study mentions:
> To the extent that ordinary people form loose mental associations between “housing development” and “housing affordability,” they may well associate more development with higher prices rather than greater affordability. New housing, being new, tends to be more expensive than existing, depreciated housing.
It is just a perception bias thing. You don't really "see" everything around you aging because it happens slowly.
Re: The Folk Economics of Housing
#4You hear this shit all the time from politicians and activists. Somehow high density housing is built for corporate greed and won’t lower prices. It’s self contradictory at it’s base level but is driving the narrative. It’s maddening.
Edit: Here I am getting downvoted by people who don’t have the bravery to confront their own contradictions and realize that their own beliefs are being manipulated to ruin their own lives.
Re: The Folk Economics of Housing
#5People don’t believe that snacking after dinner right before bed everyday is bad.
Re: The Folk Economics of Housing
#6I can sort of understand that.
They’ve been building houses in my area non-stop since 2010 or so. Prices haven’t gone down.
There are other factors than supply. But most of the new supply is large houses. If you don’t want 4+ bedrooms and a 2000+ sq. ft. house the supply hasn’t changed much at all.
Re: The Folk Economics of Housing
#7Is it that they truly don’t believe it or they don’t want more supply (since that changes their quality of life, neighborhoods, traffic, etc) but still do want lower prices in other ways (like by price caps or other things). One legitimate reason to not think supply reduces prices is because of big financial companies buying up lots of houses and having effectively free rein to price how they want. It removes the com…
>In many areas the new houses are built by a few large home builders doing a few large developments, and the new apartments are owned by a few large corporate owners. That can slow down prices reaching their market value.
Because all the same voters (demographically, if not also frequently literally the same individuals) voted for a bunch of red tape that's only passable for the big vertically integrated businesses and even then it's only profitable when they're doing cookie cutter single family on .25ac or 5 over one apartments.
Re: The Folk Economics of Housing
#8Is it that they truly don’t believe it or they don’t want more supply (since that changes their quality of life, neighborhoods, traffic, etc) but still do want lower prices in other ways (like by price caps or other things). One legitimate reason to not think supply reduces prices is because of big financial companies buying up lots of houses and having effectively free rein to price how they want. It removes the com…
This is another huge myth in the US housing market, that big companies own lots of the housing and are jacking the prices up. It's simply not true. Large corporations own a tiny fraction of the market while the vast majority is owned by individuals and small landlords.
Re: The Folk Economics of Housing
#9It’s not that I don’t believe adding supply will reduce prices, rather that adding supply alone won’t reduce prices. As the paper gets into, it’s a combination of supply, and homeowner entrenchment, and government policies barring construction or teardowns, of zoning restrictions, but also of Private Equity acquisitions of housing stock and builders, of artificially manipulating supply to keep prices high and promote higher returns for builders or sellers at the expense of buyers.
The problem is that demand for housing is relatively fixed, in that every human needs a shelter, and every human wants a home. That doesn’t change outside of population statistics: in a vacuum, all things being equal, every human would buy a home.
The issue is that the supply side is so heavily gamed by existing players that the entire market is deliberately engineered for maximum extraction of wealth from new buyers to prop up valuations of existing owners and builder/landlord margins.
Relatedly, this is why I’ve stopped fighting each niche front individually and instead focused on the “nuclear option” of mandating affordable housing as a human right. That would open the floodgates to lawsuits against communities, states, and companies that hoard existing stock and bar newer, denser construction. It would add a sorely needed lever of pain to deter hostile housing practices, by threatening things like rent/price controls or forced divestitures unless the supply problem was meaningfully addressed post-haste.
Re: The Folk Economics of Housing
#10You hear this shit all the time from politicians and activists. Somehow high density housing is built for corporate greed and won’t lower prices. It’s self contradictory at it’s base level but is driving the narrative. It’s maddening. Edit: Here I am getting downvoted by people who don’t have the bravery to confront their own contradictions and realize that their own beliefs are being manipulated to ruin their own li…
It seems to be driving largely by anti-capitalist sentiment rather than understanding of economic fundamentals.