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Housing is at the root of many of the rich world’s problems (2020)

economist.com

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Re: Housing is at the root of many of the rich world’s problems (2020)

#601

Post by yrgulation »

kenned3 wrote: post #583
yrgulation wrote: post #568

Earlier quoted context omitted.

“the US is big” Thats what puzzles me. What changed in the dynamics of the american society in such way that new cities are no longer built? I get it in europe there barely and land left to develop, but the us and canada have plenty.

This is a great conversation as there is so much input from around the world. I can sort of paint the picture of what takes place here (Canada - also a large land mass country). we have a rather large public rail system run by the government (GO Transit: https://www.gotransit.com/en/ ) it is fairly cost effective, modern, and the trains are all new and comfortable. we also have a major problem with a population which…

Interesting.

It seems like the main issue is proximity to work and the reasonable demand for a short commute.

If that need would be satisfied then i think the resulting effect of wanting to build more in already crowded cities wouldnt be there, thus nimby’ism wouldnt be an issue because either since locals wouldnt feel threatened.

When i moved to london uk i had the same opinion as your colleague. I wanted a place to live as close as possible to work so that i would spend as little time wasted on commute as possible.

But remote work gave me the option to live anywhere and as such i chose an area outside london. Having the option to leave crowded centres i took it because it satisfies my need for work and a short commute.

So i am wondering isnt the root of all evil the fact that high paying jobs are clustered around large urban centres? Shouldnt tech have solved this issue by now? Even if people prefer office work, cant this work be done in smaller urban areas? Or at the edge of large cities such that people can easily commute from surrounding areas? I get it that in the last blue collar work had to be done in city centres so everyone can access services. But why do software engineers need to be seated in expensive city centres? Or indeed accountants, or even lawyers.

Re: Housing is at the root of many of the rich world’s problems (2020)

#602

Post by 29athrowaway »

sleepydog wrote: post #121
29athrowaway wrote: post #99

Earlier quoted context omitted.

Then each renter will become a homeowner, they will feel very comfortable, have 4 kids, and now you will need 4x more units. Then their kids will have 4 kids, and you'll need 16x more units with respect to where you started. Few generations after you have a much deeper problem that the one you started with. Now you live in a country with a population of over 1 billion, where protests cannot be controlled anymore and…

I don't understand. The population in wealthy countries is growing very slowly. https://datacommons.org/tools/timeline#&place=country/USA&st... What makes you say that housing costs are the cause? I've not heard of that argument before.

Because cost of life is high. Make cost of life lower and see what happens.

Re: Housing is at the root of many of the rich world’s problems (2020)

#603

Post by pharmakom »

supertrope wrote: post #556
pessimizer wrote: post #228

Earlier quoted context omitted.

Everybody has a place to live. Housing isn't scarce. When housing is scarce, people are homeless or living in extremely tiny spaces. They are not. The problem is that people wouldn't be able to afford to own the places where they live. Housing is only "scarce" in desirable places, and that's simply tautological. The sum of unfulfilled desires is the contrapositive of scarcity. Housing is a market in which a very tiny…

By this logic oil & gas will never run out because rising prices will incentivize new extraction technology and formerly too expensive reserves will come online. Or supply will dwindle and the price rationing system will ensure it goes to the most productive use and energy consumers will switch to cheaper substitutes.

I actually think this is what will happen to oil and gas. It will become less and less of a feature of our lives over the long run. We will have to find alternatives (hopeful!) or cut back (painful!)

Re: Housing is at the root of many of the rich world’s problems (2020)

#604

Post by reillyse »

NotYourLawyer wrote: post #539
reillyse wrote: post #426

People in the comments here seem stuck in the weeds around various laws and tax incentives. The overarching issue is that housing (something everyone needs) is being treated as an asset class. As an asset class people who own it want it to increase in price which gives the government an incentive to maintain and increase this value. Unfortunately this makes it more and more expensive for people who need housing. Deco…

Anything capable of being owned is an asset class. How would housing become not an asset class? Government owns all the land and we just rent? Seems worse.

Read my shoe example in the other thread, it's the difference between something being an asset and an investment.

Re: Housing is at the root of many of the rich world’s problems (2020)

#605

Post by yrgulation »

lotsofpulp wrote: post #570
yrgulation wrote: post #568

Earlier quoted context omitted.

“the US is big” Thats what puzzles me. What changed in the dynamics of the american society in such way that new cities are no longer built? I get it in europe there barely and land left to develop, but the us and canada have plenty.

The adjacent comment by kenned3 addresses this. > Everyone wants that 3,000 square foot house, and naturally it has to be within walking distance from work. The density that was built 100+ years ago was built pre cars. The cities that are dense are dense because they happened to develop at the right time. Now, everyone in the political process of building a new city is going to question where they are going to have s…

See my reply to kenned3.

I think the root of this issue is that we are forced to cluster in large cities for access to jobs. I think the way we approach blue collar work is wrong and tech should have solved it by now. There is no reason why we cant move most high end jobs to either small towns or in the proximity of large cities but in areas easily accessible from suburbs.

No need for a new manhattan. We need a totally new approach and it must be linked to how we work. I would be very happy to live in a small town, with narrow streets but well organised fast, cheap and reliable public transport, and work either remote or onsite but without the need to commute 2 hours a day total (24 hours of my life each 7 days).

Re: Housing is at the root of many of the rich world’s problems (2020)

#606

Post by nemo44x »

yrgulation wrote: post #548
nemo44x wrote: post #542

I'm not sure people understand how expensive it is to build what we consider a house in the West. Materials are unbelievably expensive and if you go cheap you're going to be replacing a lot of them soon. Labor is through the roof expensive. People forget that the average home was ~700 square feet 100 years ago. It's 2400 today. How many people would be willing to put a family of 4 or 5 in a 700 square foot home today…

Where in the west? In europe we use concrete and bricks, while the us something else. I believe anyone in the construction business will be able to explain that the most expensive part is the land actually. At least in europe. In the uk for instance, the exact same new house, exact same materials, can be 100k GBP less in a cheaper area. Or even half in extreme cases.

European homes tend to be much smaller than American homes and are very rarely stand alone single family homes. I get to the UK often and almost everything is connected and have small little “gardens”. This is fine and it makes for cheaper construction since there are far less materials and labor is shared across many homes. The hones are tiny by American standards too.

We don’t have this as much in the USA. People generally want single family homes that are 2000 square feet+ and 1/5 acre of land. This is a lot of roof, a lot of siding, a lot of timber, a lot of flooring, a foundation, etc. Easily 6-figures in materials and even more for labor, etc. Especially if you go with premium materials. Windows installed are $2k/window. My would cost $70k to install all new, premium windows for example.

Premium hardwood quarter-sawn flooring in a 3000 sq foot gone is another $30k, etc. You can start to see how this adds up from $100k+ in materials for trash to many hundred thousand for premium, quality materials.

Re: Housing is at the root of many of the rich world’s problems (2020)

#607

Post by rthomas6 »

A high unimproved land value tax, like 80%+, solves the problem because it prevents land cost increases due to speculation.

The profit from owning land becomes whatever use you put the land to, instead of profiting just from owning it.

I could talk about Georgism for paragraphs, but this does a better job: https://astralcodexten.substack.com/p/your-book-review-progr...

Re: Housing is at the root of many of the rich world’s problems (2020)

#608

Post by sudosysgen »

throwaway0a5e wrote: post #204
sudosysgen wrote: post #138

Earlier quoted context omitted.

This can probably be solved at the federal level using smart taxation and incentives for mixed zoning.

The hubris is astounding. You know how we got into this problem? Decades ago we used taxation and law to try and incentivize the development we wanted and disincentivize or prohibit what we didn't. And today the efficacy of that endeavor is obvious to even the most casual observer. There is no compelling reason doing the exact same thing will work better for different values of "development we want" and "development…

I think I wasn't clear. When I say incentivize mixed zoning, I meant that the federal government would incentivize local governments choosing to zone land as mixed use. Then people can build whatever they want.

It's not possible to remove zoning completely. That's severe hubris, thinking that we introduced zoning to begin with for no legitimate reason. That's not true - it's necessary to plan city infrastructure and that requires zoning. Removing zoning altogether would be an unmitigated disaster.

There is no easy clean solution like "remove all the rules". You can't get government out of the business of city planning and basic infrastructure, and that's in more words what you mean.

There is a difference between good policy and bad policy. We need good policy. The only solution is that local governments somehow make better choices.

Re: Housing is at the root of many of the rich world’s problems (2020)

#609

Post by djbebs »

huevosabio wrote: post #281
mminer237 wrote: post #192

Earlier quoted context omitted.

You don't write off your rental income. You depreciate the rental property over 27½ years and write that off against your rental income. Few rental properties will have under a 3.7% ROI where depreciation would cover all the income. At best you might be paying half tax. In your example, you'd pay no tax, but you'd lose out on the potential income you could have had with better investments (and lose about 6 years' wor…

You fix it by deprecating only the improved value. The land beneath a building does not deprecate, whereas the value of the building should. Since for most properties the majority of the value is in the land itself, your basis to deprecate would be much lower, and more realistic.

This georgist view is just plain wrong and inconsistent.

Re: Housing is at the root of many of the rich world’s problems (2020)

#610

Post by nemo44x »

lotsofpulp wrote: post #555
yrgulation wrote: post #548

Earlier quoted context omitted.

Where in the west? In europe we use concrete and bricks, while the us something else. I believe anyone in the construction business will be able to explain that the most expensive part is the land actually. At least in europe. In the uk for instance, the exact same new house, exact same materials, can be 100k GBP less in a cheaper area. Or even half in extreme cases.

It is the same in the US. While labor and materials do cost more, the greatest increase in costs is for the land. But since the US is big, there are huge disparities in land cost. While a laborer or materials might cost 2x or 3x more in a popular area than in an unpopular area, land will be 10x more. Actually, the labor and land costs invert if you go to really unpopular areas, where the land is much cheaper, but no…

It really depends on the quality you want. I could easily Alec out a 2500 square foot home that has $300k in materials alone. High end windows, flooring, bathroom materials, and kitchens aren’t cheap. A fridge and range can cost $30k+ at the higher ends. Windows $2k/each. $10/sqft premium flooring. This doesn’t include labor yet which is another $100k-$200k. All this can go on a plot of land that costs $350k. Thus isn’t uncommon in higher end developments.

Of course, vinyl windows, cheap flooring, builder grade kitchen and bathrooms bring the cost down significantly. But it still adds up. Foundations aren’t cheap.

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