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Priced out of home ownership

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Re: Priced out of home ownership

#571

Post by danking00 »

whoknowsidont wrote: post #338
csallen wrote: post #283

Earlier quoted context omitted.

How is restricting supply not a problem? The fewer houses there are to buy, the higher prices will get, because there are more people competing for less.

Because the U.S. doesn't actually have a supply problem, despite this often getting repeated. U.S. construction of homes has actually kept up with population growth and moves, by every conceivable metric. What IS happening though is that landlords (private and corporate) "warehouse" units constantly to artificially restrict supply and demand, and they do it in collaboration with each other. Every single city and stat…

Unless I’m misreading, the first two references support the idea that vacancy rates are too low but don’t comment on why.

The last reference indeed argues in favor of too much financialization of housing units but that blog is also tripping a lot of my crackpot alarms.

Can you succinctly explain why you believe the low vacancy rates in major metros (which I think we agree is the cause of high rents / purchase costs) are caused primarily by units which are intentionally held empty despite demand?

In partial defense of your assertion, the FRED data does show that 1/4 to 1/3 of vacant units are for sale or rent at any given time.

https://fred.stlouisfed.org/graph/?g=1oeIe

Total vacancy rate seems to hover around 10%? Rentable and buyable unit rates are an order of magnitude lower.

I’m not convinced that the Fed owning a bunch of mortgages is evidence that private companies bought homes and aren’t renting them. Wasn’t that a bail out to prevent people from losing their homes (because the companies owning the homes weren’t solvent and I guess if the company fails maybe you get foreclosed? I’m not sure why we did things the way we did in 08)

Could not the explanation also be that a lot of homes are in places that lack demand and therefore the owners don’t bother putting them up for sale or rent?

https://fred.stlouisfed.org/graph/?g=1oeII

Re: Priced out of home ownership

#572

Post by AnthonyMouse »

tmnvix wrote: post #274

People intuitively jump to the conclusion that the problem is caused by a lack of building. While more building would help, a lack of it isn't the main cause of this problem. Ask yourself, do Canada, Australia, New Zealand, the US, Britain, Ireland, etc, all have the same inability to build or is there maybe some other common cause? In my view this is symptomatic of a more fundamental issue - global asset price infla…

> Total number of dwellings per thousand inhabitants, 2022 and 2011

The issue here is that demand shifts regionally over time. Dwelling units in Detroit don't satisfy demand in San Francisco. The result is that you continually have to increase supply in the places demand currently is. To keep prices flat, the number of units per thousand inhabitants has to increase over time, because the number of empty units in areas that have fallen out of demand will increase, but the high prices you're trying to avoid will be somewhere else.

> By definition, only investment properties can be underutilised - owner occupied homes are occupied!

This is also not true. You can have e.g. a 3-bedroom home with one occupant, even if the occupant is the owner. You can also certainly have underutilized land -- any single family home in an area where there is demand for more housing but zoning prevents it from being constructed on that piece of land. Because then you have that acre of land providing housing for one family when it could have been two or twenty.

> global asset price inflation driven by a broken financial system (i.e. a system being artificially pumped up with cheap credit).

This can only happen when supply is artificially constrained. If it cost $200,000 to add a housing unit and suddenly everyone can get a bigger loan than before, the instantaneous effect would be for housing prices to increase -- but once they're above the construction cost, construction occurs until they no longer are, i.e. until they fall back below $200,000.

At that point cheap credit might cause people to buy bigger houses, or use the loan money to buy things other than housing, but long-term you can't get the price of the same housing unit to increase above the cost of creating more of them, or supply would just increase until it fell back to that cost.

What you can do is increase the cost of creating supply, e.g. by restricting where it can be done, so that the cost of doing it goes up and with it the price of a given housing unit. Which is what has happened.

Re: Priced out of home ownership

#573

Post by Aerroon »

sydd wrote: post #435
tmnvix wrote: post #274

People intuitively jump to the conclusion that the problem is caused by a lack of building. While more building would help, a lack of it isn't the main cause of this problem. Ask yourself, do Canada, Australia, New Zealand, the US, Britain, Ireland, etc, all have the same inability to build or is there maybe some other common cause? In my view this is symptomatic of a more fundamental issue - global asset price infla…

IMO the main issue are zoning laws and urbanization. You can find lots of articles about rural areas, small villages elsentially dieing out, while large cities just (try) to grow larger. Also there is a shift from people living in families to living single or just with one person which is more inefficient and requires more space.

We're definitely in some kind of next stage of urbanization where people are moving into the big cities even from smaller ones. It's very noticeable in the former Soviet states, but I believe it also happens elsewhere.

Re: Priced out of home ownership

#574

Post by Terr_ »

downrightmike wrote: post #537
NegativeLatency wrote: post #359

Earlier quoted context omitted.

I only have firsthand experience in the US but it makes a lot of sense to me that the influence of colonization by Britain would cause all of the listed countries to have similar issues related to land use.

Every state west of the Mississippi has at least 50% of all land owned by the Fed Gov and isn't used at all. We have plenty of land, that isn't a real problem.

Much of that are involves forests far away from where people would want to live anyway. Often without roads.

When people say the issue is land, that usually implies a very particular smaller subset of land which is in proximity other populations, economic centers, and with certain features and infrastructure.

Re: Priced out of home ownership

#575

Post by AnthonyMouse »

seanmcdirmid wrote: post #500
alexpetralia wrote: post #373

Earlier quoted context omitted.

Asian countries have a lot more people and build a lot more housing.

And yet housing prices in much of Asia is still insane. The only market that is sane is sort of Japan with a falling population and an aversion to property speculation due to getting burned on their last property bubble. Chinese housing market is completely messed up, with turn over almost halted since the government won’t let prices fall no matter what, while they have overbuilt like crazy.

> And yet housing prices in much of Asia is still insane.

They're generally lower than the US, despite having a higher population density.

> Chinese housing market is completely messed up, with turn over almost halted since the government won’t let prices fall no matter what, while they have overbuilt like crazy.

A place with the government policy objective of not allowing housing prices to decrease isn't much of an argument that supply and demand doesn't work in general. China is just its own kind of broken.

Whereas prices are significantly lower in e.g. India, not just Japan.

Re: Priced out of home ownership

#576

Post by JKCalhoun »

jeffbee wrote: post #134
JKCalhoun wrote: post #72

Earlier quoted context omitted.

They're building constantly here in Omaha, Nebraska. Affordable though? Apparently not. I mean if you have a lot for development are you going to build a $200K home or a $600K one on that lot?

It sounds like you have shifting baseline syndrome. Omaha last year built fewer houses than had built 25 years ago, but the city is a third larger than it was 25 years ago. So in fact it is building slower than it did in the past.

I don't doubt you have the numbers. I've only been here three years. I live on the west end of town where (seemingly) all the new construction is going on.

Re: Priced out of home ownership

#577

Post by tmnvix »

dools wrote: post #479
tmnvix wrote: post #274

People intuitively jump to the conclusion that the problem is caused by a lack of building. While more building would help, a lack of it isn't the main cause of this problem. Ask yourself, do Canada, Australia, New Zealand, the US, Britain, Ireland, etc, all have the same inability to build or is there maybe some other common cause? In my view this is symptomatic of a more fundamental issue - global asset price infla…

I don’t know about those other places but Australia definitely has a horrendous under supply of homes

Check out the Speculative Vacancy Reports (https://www.prosper.org.au/speculative-vacancy-reports/) to shed some interesting light on that. It is for the Melbourne market only, but their methodology of relying on water usage to determine occupancy reveals some interesting results.

Re: Priced out of home ownership

#578

Post by AnthonyMouse »

dogcomplex wrote: post #494
pfdietz wrote: post #439

Earlier quoted context omitted.

Eliminate regulations and laws limiting supply.

Or increase planning department funding with higher emphasis on throughput. It's the bureaucratic delay (nearly a year for approvals or revisions in many places) that causes much of the pain, not the regulations themselves.

The better solution along these lines is to give them a week to render a decision (with stated reasoning that can be immediately appealed) or the application is automatically approved. Then they can request more resources if they don't have enough to be thorough but what they can't do is delay rendering a decision.

Re: Priced out of home ownership

#579

Post by lwansbrough »

Auracle wrote: post #204
lwansbrough wrote: post #171

In my opinion, there can only be one solution to this that will come sooner or later. A great correction following simplified zoning & building legislation. Federal governments across the west need to take control of building and zoning. Planning can remain a city/state/provincial affair, but it must be done under standardized and simplified building and zoning legislation. We are wasting unfathomable economic potent…

I’ll keep shouting this from the rooftops: while it may contribute in some areas, zoning laws are not the primary cause of home prices increasing like they have. For proof, look at any rural (and I mean actual rural) area and how their home prices have also been skyrocketing. It’s supply and demand, with other things being small factors. We either need to vastly increase supply across the entire country somehow, or c…

> For proof, look at any rural area and how their home prices have also been skyrocketing.

Yes, it is supply and demand. And zoning is the largest component of the supply function. If you fix zoning, you fix supply, approximately. Outdated fire code, etc. are also important factors.

> or cut down on demand

This is called degrowth and it's how you destroy an economy.

> Japan literally has homes they’re trying to give away.

I'm not sure what point you were trying to make by invoking Japan -- Japan notoriously solved their housing crisis by abolishing the regressive zoning practices at the time and made basically everything one big mixed use zone. The reason why Japan is giving away houses these days is because everyone moved to the cities because that's where the economic opportunity is. And that's where people who contribute to the economy want to be -- where the economic opportunity is.

Re: Priced out of home ownership

#580

Post by ProllyInfamous »

orwin wrote: post #450
ProllyInfamous wrote: post #340

Earlier quoted context omitted.

I recently kayaked a stretch of the Tennessee River, between state parks, and within an hour of paddling I passed both a homeless riverside "tent city" [technically "public camping" on TWRA/state land] and then the most-expensive house for sale in our entire metro area (just around the same peninsula). These inholdings, both impoverished and not, were each having their respective parties (cheap beer in common) along…

I've lived on and off a semi-rural "squatter" community by ideological choice for around a year [0] (that experience helped _a lot_ later when i was homeless by lack of resources, while i finished my engineering degree), i've probably never had as much fun as i did at the time. Learned juggling, guitar and basic human interactions i had trouble with at the time. We shared alcohol, games and stories with everyone who…

Did you grow up in Loire-Atlantique..? or how did you discover this community?

I probably couldn't "hack it" out in the wilderness of NAD, but always regret having not joined a hippie co-op (living situation) while in college [I once dated a gal living in one... it was so neat and inexpensive, but she was a sloot].

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