I'm sorta convinced we need to strongly discourage homeownership (of homes you live in) if we want to fix our housing issues. It just seems like once ~50% of the electorate are owner occupiers homes are treated like collectibles instead of normal productive assets.
The Folk Economics of Housing
221–230 of 250 posts
Re: The Folk Economics of Housing
#222Earlier quoted context omitted.
I've never understood the induced demand argument. Yes, when goods get cheaper demand increases. Or, to put it another way, when we make our cities more affordable more people want to live there. What's the problem? Sure, induced demand means that the marginal increase of affordability is less than it may have been if demand remained constant, but a. affordability still increases, and b. the solution is just to keep…
It's push and pull. If your goal is to decrease costs, the amount of supply needed may be surprising of latent / induced demand is very large. If NYC cost 1/4th the price to live there it would probably triple in population, so you'd need 40 million new units to get the costs down that much, and the price of the penthouse looking at central park would probably increase even if mean and median costs go down a lot. If…
But the ultimate goal is never to decrease costs; it's to provide people housing.
Re: The Folk Economics of Housing
#223One problem that’s unaddressed is that there isn’t a house building, pricing and mortgage model for people making 50K or less. One piece of data I’ve found is that 65% of Americans are homeowners (meaning American families, not rentals or investments), which is also about the percentage of Americans who make $50K or more per year (~68%). For people with a middle class networth (not income, I mean networth, which is a…
In the past, people were able to buy a small piece of land and develop it themselves. Literally build the house themselves. Over a long period time if necessary to spread out the cost. They also built 2-4 family homes so they could bring in some rent or house a family member.
None of this is really allowed anymore and it's very hard to find a piece of land to do it with. Enabling this sort of construction and forcing or incentiving small plots of land might open up options for people on the lower end.
Re: The Folk Economics of Housing
#224I think that what contributes to this view is that new construction always seems to be at the high end of the market. This makes sense, it doesn't cost the builder a lot more to build a $500k house than to build a $250k house, and building two $250k houses will take twice the time and close to twice the costs. So builders/developers are going to build what is most profitable, which is the most expensive houses that t…
New construction is kept expensive mostly through complex rules that often exist to protect the interests of those doing the construction work, those owning existing houses and property, etc. It's a form of artificial scarcity. This scarcity is crucial to justifying real estate prices, propping up mortgages and the banks that provide them, etc. There's no technical reason why building some shelter that keeps the rain…
I would not use RVs as a good benchmark. They are super cheap for a reason. The biggest reason not to live in one full time is that they quickly degrade under that kind of use. They are not built for anything other than occasional use. That is on top of their steep operating expenses, even if you can keep it held together.
A better benchmark would be a manufactured home. Transported on wheels, built in a factory, but intended to be used full time indefinitely.
IIRC, stick-built homes are only like 15% more expensive than the equivalent manufactured home, and you have a lot more flexibility in the design. Probably this is most of why manufactured homes are only popular in particular niches.
Re: The Folk Economics of Housing
#225Earlier quoted context omitted.
how does renting out old stock not increase supply? Renting and buying are relatively fungible. People buy fewer houses when renting is cheaper.
> how does renting out old stock not increase supply? Raw and overall housing numbers can be misleading by their nature. That is, they can be technically true while being false for many/most people. Declaration: Housing supply is increased! Actuality: Increase is only in homes for >$100k income earners. The declaration is true for >$100k. It is not true for most Past that, there is a challenge in tossing around $250k…
> Past that, there is a challenge in tossing around $250k and $500k houses as examples of anything. Those numbers are 4x & 8x over what typical-wage households can afford.
Is that true? A median household (with ~80K income) should be able to swing a 250K mortgage, probably a $325K house with down payment.
Re: The Folk Economics of Housing
#226Earlier quoted context omitted.
You know it is also possible to build houses people buy and then live in, right? House prices are so high because some people own too many of them. A home shouldn’t be an investment strategy
The consequences of your policy are that people without a million dollars are sleeping in tents.
...How do you figure that?
No one's trying that policy. It's certainly not what's led us to this point. Building is nowhere near fast enough to keep up with demand, especially in the areas with lots of homeless people, and especially in the affordable price ranges.
Seems to me the policy that has the consequences you describe is, in fact, the policy you described in the GP.
Reminds me of all the posts I've seen with photos of things happening in America—a country which is, quite famously, under capitalism—with captions saying "this is what socialism gets you!"
Re: The Folk Economics of Housing
#227Earlier quoted context omitted.
The political system is particularly susceptible to capture and unfair policy when the public is disengaged and poorly informed (as the paper describes). It makes it very easy to business to get their way. The solution is the (hard and slow) work to engage and educate voters.
> The solution is the (hard and slow) work to engage and educate voters. It is indeed hard work, especially if you want to influence people who aren't engaged in politics to vote. I find that people who aren't engaged with politics are most receptive to extreme messages that discourage them further. They're all ears if you tell them that the system is rigged and it's impossible for people to defeat the corporations o…
IMO, the best long term strategy is to improve the basic infrastructure of democracy. Non-partisan districting, single election rank choose voting, etc.
Re: The Folk Economics of Housing
#228Earlier quoted context omitted.
> how does renting out old stock not increase supply? Raw and overall housing numbers can be misleading by their nature. That is, they can be technically true while being false for many/most people. Declaration: Housing supply is increased! Actuality: Increase is only in homes for >$100k income earners. The declaration is true for >$100k. It is not true for most Past that, there is a challenge in tossing around $250k…
> Past that, there is a challenge in tossing around $250k and $500k houses as examples of anything. Those numbers are 4x & 8x over what typical-wage households can afford. Is that true? A median household (with ~80K income) should be able to swing a 250K mortgage, probably a $325K house with down payment.
> Is that true? A median household (with ~80K income) should be able to swing a 250K mortgage, probably a $325K house with down payment.
80k is 3-4 typical wages. That is, the wages of jobs that are most obtainable make 25k-31k.
The folks in those income brackets are 25% of the population (and 35% of minority groups).
Housing stats are commonly presented as if they don't exist. However until few administrations, they had a long history of home ownership.
Re: The Folk Economics of Housing
#229Earlier quoted context omitted.
> how does renting out old stock not increase supply? Raw and overall housing numbers can be misleading by their nature. That is, they can be technically true while being false for many/most people. Declaration: Housing supply is increased! Actuality: Increase is only in homes for >$100k income earners. The declaration is true for >$100k. It is not true for most Past that, there is a challenge in tossing around $250k…
It's still an increase. Rich people always have a house. If they can buy a rich person house it means they aren't outbidding normal people for non-luxury housing.
What figure divides luxury and non-luxury housing?
Asking for the 25% of Americans who make <$40k/yr.
Re: The Folk Economics of Housing
#230I think that what contributes to this view is that new construction always seems to be at the high end of the market. This makes sense, it doesn't cost the builder a lot more to build a $500k house than to build a $250k house, and building two $250k houses will take twice the time and close to twice the costs. So builders/developers are going to build what is most profitable, which is the most expensive houses that t…
Supply and demand requires thinking about equilibria and intersecting curves and is out of the reach of a largely innumerate population. Most Americans don’t even really have a strong grasp on millions versus billions versus trillions. Americans also think in terms of stories with actors, and supply and demand doesn’t have any obvious actors. “Prices are high because bad people are choosing to keep them high” is an e…
People prefer a teleological explanation. It has the allure of a simplistic solution. Having a direct and complete solution out there is emotionally satisfying. Just like how subduing the villain saves the day, why not tax/ban landlords/immigrants/Wall Street/your favorite outgroup here? If there’s no simple solution available that’s not nearly as hopeful of a message. Politicians and marketers peddle simplistic “solutions” to a willing audience.