81–90 of 250 posts
People don't understand economics, generally.
I remember when house prices doubled in the space of 3 years and it wasn't a supply shortage that caused this.
Earlier quoted context omitted.
Yup, and the kneejerk response from economists is that the housing cycle suggests that new luxury stock would be inhabited by buyers who own existing stock, and what they sell would be more affordable to those buyers, and what those buyers sell would become more affordable to the next rung down, etc. Except that’s not the reality. The reality is that a large chunk of the market (as much as 25% in some areas) is specu…
Vacancy taxes seem like a reasonable solution to this problem.
Earlier quoted context omitted.
I think it probably could be cheap enough. Part of the issue is actually just that new home sizes keep getting bigger. Like yeah, new homes are more expensive now even in relatively cheaper parts of the countries compared to decades ago, but it's also true that the homes are much larger than they used to be. A lot of the homes from the 50s and 60s that people talk about being very affordable at the time they are made…
That is quite true. Early Americans had absolutely no trouble living in their 300 sq. ft. log cabin with eight children under foot. You don't technically need the behemoths we see today (or even what we saw in the 50s, which were still huge by historical standards). But it remains, if it was cheap enough, people would already be doing it. The law sometimes gets in the way, sure, but that's another subject entirely.
- Building cost is often marginal compared to land.
- Land value is highly correlated to economic opportunities around it.
- Economic opportunities are following a power law around economic centers (highly non-linear).
- There is a density ceiling, with some variations depending on cultural traditions but still constrained by transportation technologies and psychological factors.
- The location of economic centers is not randomly distributed but constrained by geography, especially access to water transportation routes.
Financial speculation and building restrictions are second orders effects of the inherent housing scarcity, amplifying it, but not a root cause.
One thing few people take into account is that demand housing is much, much more elastic than people realize - per capita people are consuming far more square footage than they used to. Houses that were built to be house multiple generations under one roof now only hold one generation. Usually elderly empty nesters. In our area we also see people buying up lots of older duplexes or triplexes and converting them into…
Those families' kids have now grown up, and the houses have appreciated, sometimes as much as 2-3x, due to a nearby light rail development connecting the neighborhood to the city at large on cheap transit. So those families are cashing out their housing by selling primarily to out-of-market elderly wealthy downsizers, typically from California, Arizona, Nevada, Colorado, and Texas.
The result is a neighborhood of 3- and 4-bedroom homes that once housed families of 4 or more people now mostly inhabitated by 2 or fewer people (many left vacant more than half the year as these wealthy retirees frequently travel). They also refit these former starter or second homes to accommodate these elderly inhabitants' reduced mobility and/or increase the home's luxury.
When these residents die in 10 or so years, even if the market corrects prices downward, these homes will now be even less suitable for anything but wealthy elderly inhabitants. The intelligent thing for the city to do would be to tear them down and replace them with accessible and affordable density; the reality is that the wealthy elderly who haven't died yet will spend the rest of their lives blocking such efforts out of spite.
Colloquially 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 e…
Yup, and the kneejerk response from economists is that the housing cycle suggests that new luxury stock would be inhabited by buyers who own existing stock, and what they sell would be more affordable to those buyers, and what those buyers sell would become more affordable to the next rung down, etc. Except that’s not the reality. The reality is that a large chunk of the market (as much as 25% in some areas) is specu…
Earlier quoted context omitted.
Yup, and the kneejerk response from economists is that the housing cycle suggests that new luxury stock would be inhabited by buyers who own existing stock, and what they sell would be more affordable to those buyers, and what those buyers sell would become more affordable to the next rung down, etc. Except that’s not the reality. The reality is that a large chunk of the market (as much as 25% in some areas) is specu…
But (the sound) financial models that lead PE and others to this investment are built around the assumption that supply will be artificially limited. If you build enough they will see reduced returns and back off.
It’s a rigged game top to bottom. A free market would’ve fixed this years ago, but this is not a free market anymore. The difference is I advocate control of necessity markets returning to government regulations around availability and affordability, while luxury markets remain relatively untouched.
Housing is a necessity. No market god is going to fix it.
Thing is: people are correct. Central London monthly rent for a 3-bed house is around £3500, but a 1-bed flat rents for £2100. So split the house into two flats and the landlord makes more money. Hence relaxing zoning restrictions will push prices up.
Earlier quoted context omitted.
Yup, and the kneejerk response from economists is that the housing cycle suggests that new luxury stock would be inhabited by buyers who own existing stock, and what they sell would be more affordable to those buyers, and what those buyers sell would become more affordable to the next rung down, etc. Except that’s not the reality. The reality is that a large chunk of the market (as much as 25% in some areas) is specu…
Those speculative investments only make sense in a world where it is expected that supply will not keep up with demand.
They wouldn’t be buying 1 out of every 4 homes and bankrolling schemes to “unlock homeowner equity” (HEOCs, reverse mortgages, etc) if they thought this would be a resolved issue anytime soon. That’s exactly why government needs to get involved and force divestiture.
Nobody with enough money and exposure to large amounts of real-estate wants to kill the golden goose. Look at the post-Covid-migration build stories. Rents start to soften and development dramatically slows.
Like Austin - https://austinmonitor.com/stories/2024/08/as-construction-sl...
Or Denver - https://www.denverpost.com/2025/07/24/apartments-housing-rea...
You would need continued serious government investment to make sure focus continues to be on total units and consumer price instead of investor ROI.
Because even adding four fancy town-houses or condos helps if what used to be there was single-family or duplex. But it doesn't help NEARLY as much as adding 100 units by converting an old shopping center or 30-unit apartment. But there are strong incentives against developers doing "too much" of the latter if they know they can make the same ROI by selling fewer, nicer units.
Individual residential property owners take a lot of blame here but they're not even benefiting THAT much - every crazy price increase is putting any upgrade to their own situation further out of reach. And fighting low-density residential NIMBY-ism is a slow process if you still only can buy one lot as a time as it becomes available. So focus on underutilized commercial and industrial near major hubs or transit corridors where most of what you're displacing is ugly parking lots and empty storefronts that contribute to crime as well.