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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

#91
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.

Property values are a small-to-none factor. I don't want more noise. I don't want more traffic. I don't want more students at my kid's schools, which are already at a 35/1 kid to teacher ratio. That's it for me. I think that's it for a lot of people, whether they live in cities or suburbs or far out in the country. Very few people want more crowding. The people who like living in dense cities already live there. Blam…

I could never understand why some people don't understand that people buy into a community because they like the community in the state when they bought into it. And that making large changes to the community would alter the community and what people liked about it will be diminished. Not to mention the practical aspects like utilities, road capacity, schools, etc. as you've pointed out.

For some reason, some people outside a community believe they should have a voice on what the actual community wants. As if a community should be expected to want to ruin what makes their space attractive so interlopers can infest it?

Some development where it makes sense - sure. But no, we aren't converting our homes and properties into multi-family dwellings.

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

#92
post #65

Earlier quoted context omitted.

Those are about rural communities. It makes perfect sense that a very low-density community doesn't generate enough demand for a robust grocery store. The 2nd article mentions that the community used the newly built grocery store for a while, before going back mostly shopping at a Walmart 30 miles away. My guess is that those people were going to that Walmart anyway for this or that in many cases. So at that point, w…

You said: > The neat thing about capitalism is that stores will be built to serve the community if there's a market for it. I am pointing out that this is not a given, magic that will just happen. Capitalism is not always efficient nor reliable, based on the evidence. > before going back mostly shopping at a Walmart 30 miles away. My guess is that those people were going to that Walmart anyway for this or that in man…

> I am pointing out that this is not a given, magic that will just happen. Capitalism is not always efficient nor reliable, based on the evidence.

I said 'if there's a market for it'.

The simple fact is that these rural communities are just not as economically viable as they used to be. Most rural communities exist around 'base input' types of industries that made money by exporting stuff extracted from the land. Farming, mining, logging, etc. The community existed because extracting those resources required a lot of labor, and that labor wanted to buy services after work. When you had 100 people who worked in the fields all day, they'd come back to town and patronize local bars, stores etc. However, farming, like mining, has continued to become less and less labor intensive because of better automation. There isn't 100 people coming back from the fields in most cases now. There's 1 dude who was driving a combine harvester all day. Or a planter, etc. And more recently, its one guy who was monitoring a dozen combine harvesters that were self-driving based on GPS.

Editing in a reply to below comments bc depth limit.

> This is why I'm very pro remote work for the broader economy. > It's much easier for remote workers who want to live in rural areas to patronize these local bars, stores, etc, when they're not already commuting to places with a much larger collection of services.

I'm also pro-remote work, but even if every job that is do-able remote becomes remote, that won't revitalize every rural community. No one is moving to North Dakota just because they got a remote job. The US is just too big and the number of remote-able jobs is too small. Sure, some rural communities, with particularly nice outdoors, etc will be winners. But you need actual 'large' numbers of people to sustain those local bars/stores. A few software developers moving to a dying mining town is just not going to be enough patrons to sustain a bar, stores, schools, etc. Even if they all keep their 500k Google paychecks, they can still only drink so much beer at once.

> In which case, that reminds me:

> The neat thing about central planning is that it can invest in things-- like rural electrification-- which are cost prohibitive for a market-based solution, if/when that need arises.

> So would you agree they are both neat in their own way?

Yes, they are both neat in their own way. I like that the post office has to deliver mail to everyone.

Central planning can react faster than the market, if the central planners have good foresight. But they can't see into the future either. If you have some rural mining community that could sustain a population of 5,000 in 1970, it made a lot of sense to electrify it. But then 40 years later, the mine is more productive than ever before, but only needs 20% of the labor because of advances in automation. It kinda sucks that you built an electric system sized for a population of 10,000, right? Cuz now you have a town of 5,000 where unemployment is extremely high.

Though I'd argue that rural electrification at this point (or in the next few years) is probably best by a home-solar-battery combo.

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

#93
I’m just not sure about this article. To me, it seems like these large homebuilders can only efficiently operate in tract housing so if you want to live in the middle of nowhere and have total uncertainty regarding the quality of the neighborhood that you live in and quality of the schools, etc because they just built it and pay through the nose for a brand new home, you can buy into tract housing, but I think many people want to live in established neighborhoods, where newly built homes are custom built and they mostly aren’t built by these new companies or they have to build large condos or apartments, because that’s the only way to efficiently add large numbers of units. High housing prices are the result of the fact that most people purchase used homes, because the risk of purchasing a used home in an established neighborhood is simply lower and there just aren’t that many used homes, because people want to live in established neighborhoods.

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

#94
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.

I feel like I need to make this point again and again: It's not about increasing the value of properties for most (after all, allowing apartments to be built in your neighborhood would increase the value of the remaining SFHs). It's about keeping the character of the neighborhood the same as it is now (SFH vibes), and all that comes with that ("family friendliness", etc).

I think people in the US overestimate how much upzoning "has to" affect most neighborhoods, especially infill development or removing default single-family home zoning. I used to live in Minneapolis, which has lots of century-old duplexes and fourplexes mixed in with single-family homes on similar lot sizes. Traffic, activity/noise, appearance, and overall "niceness" were almost the same as on single-family-only blocks -- but the bump in density supported lots of corner stores and restaurants in walking distance that made people want to live there or visit the neighborhood for the day.

Part of the apprehension might be caused by the difficulty of rezoning itself. The only people with the determination and money to get a zoning variance are big developers who need a big building to make it worthwhile. That's how you get 50- or 100-unit apartments going up in single-family neighborhoods, and a "missing middle" of density and affordability.

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

#95
post #13

This paragraph looks wrong. "In 2005, when D.R. Horton sold a record number of homes, it made $1.47 billion. In 2023, when it built roughly half as many, its profit was a little over three times as high, or $4.7 billion. " It did not build half as many homes, it was 82917 homes in 2023 vs. 51172 in 2005. Also, the profit number should be corrected for inflation when comparing across almost 2 decades.

> > In 2023, when it built roughly half as many...

> It did not build half as many homes, it was 82917 homes in 2023 vs. 51172 in 2005.

Unless my math is wrong: (82917-51172)/82917 ~= 0.38

~40% is roughly half.

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

#96
post #31

Earlier quoted context omitted.

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.

There’s a lot more to life than a job. Most jobs can’t be done remotely. How do you convince a barista to move to New Billings? Is there anything to do there after work?

There is a lot to do there, but it might not to be to your liking. If you don't like guns the fact that you can safely shoot off your deck is f no value. Meanwhile you get one musical in town per year and they expect you to be in it (that is not very high quality).

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

#97
post #20

>And I realized that to call these businesses “homebuilders” is misleading. It’s striking how little of their business has to do with, well, building. For instance, here’s D.R. Horton in 2023: “Substantially all of our land development and home construction work is performed by subcontractors.” Here’s Lennar in 2023: “We use independent subcontractors for most aspects of land development and home construction.” I sus…

The structure of neighborhoods I’ve seen pop up in the last couple decades (maybe also earlier, I dunno) is that of a neighborhood developer who farms out the work of building the houses to (usually) a few select other firms, which do the actual GC work and sell the houses, having bought the lots they’re building on from the owner of the neighborhood. The neighborhood developer is mostly in land speculation, they don…

If you're talking about developing an entirely new neighborhood, that involves a lot of work beyond just buying the land, carving it up into lots with a pencil and then selling them for a profit. They have to survey and plan and layout the neighborhood, including the lots, roads, drainage systems and any common areas. Then they have to get all the necessary approvals from the local government, which typically includes drainage studies, traffic studies, school impact studies, architectural reviews, discussions with residents who live on adjacent properties, etc. This often involves multiple rounds that requires revisiting the original design. Then they have to actually get all the infrastructure built out to the point where homes can actually be built on the lots (roads, sewers, drainage ponds, sidewalks, land grading, etc.).

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

#98

Earlier quoted context omitted.

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…

> 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, Not really a fix. When people's location becomes free from their jobs, they don't move to remote locations where land is cheap. They move to cities they want to live in, or cities where they have friends and family. The subset of people who prefer to move to the midd…

But they're a lot more willing to choose outer exurbs or nearby towns that have a lot more space, or if they really prefer city life, are more willing to consider cities with good lifestyle/affordability but second-rate job opportunities. This rebalancing is still overall good for everyone.

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

#99
post #60

Earlier quoted context omitted.

Yes, it’s called property tax, calculated by multiplying a property tax rate times assessed value of the property. Does anywhere not already have that?

A property tax is typically assessed on the value of land + property, and honestly, we don't do a good job of accurately pricing the land value aspect of it. So if you don't build anything and just own the land, your property tax will be very low.

theoreticalmal's comment seems to imply that taxes on unrealized gains are not a thing, to which I was replying that property taxes are an example of a tax on unrealized gains. Everyone whose home has gone up in market value knows this because their property tax has surely increased over the years even though they haven't sold their home.

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

#100
post #91

Earlier quoted context omitted.

Property values are a small-to-none factor. I don't want more noise. I don't want more traffic. I don't want more students at my kid's schools, which are already at a 35/1 kid to teacher ratio. That's it for me. I think that's it for a lot of people, whether they live in cities or suburbs or far out in the country. Very few people want more crowding. The people who like living in dense cities already live there. Blam…

I could never understand why some people don't understand that people buy into a community because they like the community in the state when they bought into it. And that making large changes to the community would alter the community and what people liked about it will be diminished. Not to mention the practical aspects like utilities, road capacity, schools, etc. as you've pointed out. For some reason, some people…

I'm probably one of those people you're referring to, and quite honestly it's not that I don't realize or understand - it's that I don't care. The community you love wasn't always that way - it changed to become what you enjoy, likely to the similar anger/detriment of the previous residents who like the "old" community. I imagine racial segregationists and apartheid advocates used disconcertingly similar arguments.
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