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It's the land, stupid: How the homebuilder cartel drives high housing prices

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Re: It's the land, stupid: How the homebuilder cartel drives high housing prices

#21

Post by lapcat »

xnx wrote: post #5

No shortage of land in the US, but everyone wants to live in the same few places (for good reason), and those places have a lot of restrictions on what can be built where. It's satisfying to blame a big bad "them" for this, but the problem is "us". We all want our properties to increase in value so we collectively conspire to suppress supply that would make our properties less valuable.

> No shortage of land in the US, but everyone wants to live in the same few places

It's not enough to have land, though. The land needs access to water and electricity, not to mention roads, or it's a nonstarter, especially if you want to build a bunch of homes on the land. And the new homeowners will need access to food and supplies, i.e., stores. You need an entire community.

Re: It's the land, stupid: How the homebuilder cartel drives high housing prices

#22

Post by toomuchtodo »

xnx wrote: post #5

No shortage of land in the US, but everyone wants to live in the same few places (for good reason), and those places have a lot of restrictions on what can be built where. It's satisfying to blame a big bad "them" for this, but the problem is "us". We all want our properties to increase in value so we collectively conspire to suppress supply that would make our properties less valuable.

The fix is to enshrine remote work for jobs that can be remote (labor regulation and whatnot), enabling labor mobility to where housing is affordable, but the ideological challenges prevent that. So, instead, we gnash teeth and say there is no solution while we slowly build more housing stock and hope that'll catch us up eventually. It will, eventually, as immigration slows, and the death rate exceeds the birth rate and household formation (see: Japan), but that will take time.

To destroy housing values to increased affordability, you must destroy locality as a value factor.

Re: It's the land, stupid: How the homebuilder cartel drives high housing prices

#23

Post by lotsofpulp »

dachworker wrote: post #8

So basically, if you're an individual, or a contractor who reinvests their earnings into the housing market, you face two challenges: getting competitive financing, and finding a plot of land to build on. Question: is finance screwing up capitalism? Real estate is supposed to be one of the most competitive and dynamic markets. If you can turn even this very simple and basic market into a quasi-monopoly, then there is…

Real estate is not competitive nor dynamic because of the disproportionately low property (specifically land value) tax that property owners pay relative to the utility they get from society (police/military and courts to protect their land as well as myriad other policies that ensure a stable society).

Simply hoarding land should not be profitable, and yet it is one of the most profitable businesses because of subsidies (too low property taxes, 1031 exchange, various “farming” and other exemptions).

Re: It's the land, stupid: How the homebuilder cartel drives high housing prices

#24

Post by Aurornis »

I don't find this article very compelling. The core argument comes from a single 2018 paper from a single author who used IV regressions to claim that increased consolidation of homebuilders is consistent with a reduced amount of new construction.

The argument in this article is that small homebuilders got caught in the credit crunch and had to flip their lots to the mega builders, who maintained access to capital and credit that the small players didn't have. So now the big players are hoarding land and not building on it to control the market.

I can believe that a credit crunch has cooled the construction market. Nothing about that would be surprising. I have a harder time believing that the major home builders have bought up so much land that nobody else can build anything, leaving them to control the market price of houses by artificially limiting supply.

Anecdotally, the most expensive housing markets are in cities where most of the buildable land has already been used by something. This is where these supposed land-hoarding mega builders would have the least influence. In my experience there are a lot of affordable houses being built in smaller cities and in the outskirts of major cities, but the demand just isn't there. More people want to live in dense and desirable locations and they're willing to pay a premium for it.

Re: It's the land, stupid: How the homebuilder cartel drives high housing prices

#25

Post by kaibee »

lapcat wrote: post #21
xnx wrote: post #5

No shortage of land in the US, but everyone wants to live in the same few places (for good reason), and those places have a lot of restrictions on what can be built where. It's satisfying to blame a big bad "them" for this, but the problem is "us". We all want our properties to increase in value so we collectively conspire to suppress supply that would make our properties less valuable.

> No shortage of land in the US, but everyone wants to live in the same few places It's not enough to have land, though. The land needs access to water and electricity, not to mention roads, or it's a nonstarter, especially if you want to build a bunch of homes on the land. And the new homeowners will need access to food and supplies, i.e., stores. You need an entire community.

The neat thing about capitalism is that stores will be built to serve the community if there's a market for it. We don't need to centrally plan the whole community up front. We do need zoning laws that ALLOW those stores to be built though.

Re: It's the land, stupid: How the homebuilder cartel drives high housing prices

#26

Post by warkdarrior »

delichon wrote: post #16

Nearly 40% of the United States is public land, supported by taxpayers and managed by federal, state, or local governments. -- https://headwaterseconomics.org/public-lands/protected-lands/public-land-ownership-in-the-us/ Allocating a few more percentage points of that for housing could have a large effect on prices.

Yes, and nobody wants to live there.

Re: It's the land, stupid: How the homebuilder cartel drives high housing prices

#27

Post by onemoresoop »

xnx wrote: post #5

No shortage of land in the US, but everyone wants to live in the same few places (for good reason), and those places have a lot of restrictions on what can be built where. It's satisfying to blame a big bad "them" for this, but the problem is "us". We all want our properties to increase in value so we collectively conspire to suppress supply that would make our properties less valuable.

Why does everyone want to live in the same few places? Because all ways to make money and a living are there! Give people the option to work remotely and they can live wherever they want, and that is not in crowded expensive cities most of the time.

Re: It's the land, stupid: How the homebuilder cartel drives high housing prices

#29

Post by VancouverMan »

xnx wrote: post #5

No shortage of land in the US, but everyone wants to live in the same few places (for good reason), and those places have a lot of restrictions on what can be built where. It's satisfying to blame a big bad "them" for this, but the problem is "us". We all want our properties to increase in value so we collectively conspire to suppress supply that would make our properties less valuable.

It's a similar situation in Canada, but with the added problem of horribly flawed immigration policies that have flooded the country with a huge number of foreigners each year. While this has been going on for decades now, it has really intensified over the last nine years.

The equivalent of a large (by Canadian standards) city's worth of people is being added each year, but there is nowhere near that much residential construction taking place in total.

Re: It's the land, stupid: How the homebuilder cartel drives high housing prices

#30

Post by kaibee »

lotsofpulp wrote: post #19
nnf wrote: post #12

> tax the land of lot developers so they don’t hold land off the market. This is something I dealt with a few years ago. There were a few acreage lots (5-15 acres) my partner and I were considering buying and building a house on, and all of them had been in the $200k range a year or two before but had been bought by land speculators (in some cases by the same person). Prices went from ~$200k to ~$750k, which we weren…

> It seems like such an increase would benefit everyone except the speculators. Correct, a simple power law tax formula on unimproved/vacant land that forever increases the cost to hold onto land near and in the middle of population centers would do wonders.

Really we just need a Land Value Tax.

https://www.investopedia.com/terms/l/land-value-tax.asp

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