Priced out of home ownership • Hacker News Board

Re: Priced out of home ownership

#901

Post by jjav » Tue, May 28, 2024, 10:11 PM UTC

AnthonyMouse wrote: post #583

the_gipsy wrote: post #512

Earlier quoted context omitted.

Lack of building is not the problem - on the contrary. You cannot realistically build enough so that the rents decrease. And when you build you just fuel the vicious cycle of people -> opportunities -> people.

> You cannot realistically build enough so that the rents decrease. I'm curious what makes you think this. Suppose you built twice as many housing units as you had residents. Rents wouldn't decrease? Why not? Or do you think that a sufficient amount of housing wouldn't fit? For reference, the San Francisco metro area has ~7.5M people in an area of ~3500 square miles. With housing at the population density of Manhatta…

> > You cannot realistically build enough so that the rents decrease.

> I'm curious what makes you think this.

> Suppose you built twice as many housing units as you had residents. Rents wouldn't decrease? Why not?

It seems entirely logical that rents should decrease.

Not the OP but I do always question this, despite sounding logical. Why? Because it has never worked that way in practice. Can you think of a city that built so much housing that rents became cheap (relative to local income)?

It's easy to say "built twice as many housing units as you had residents" and I agree if you could do that overnight, rents would free-fall. But in practice it would take years to build so much housing. Meanwhile, more and more people and jobs are moving in, attracted by all that new housing. The area becomes ever more popular and more expensive. So you end up with a city that is more vibrant, with a lot more people and a lot more jobs and economic activity. All good things, but rents don't go down, given all this success rents go up.

Re: Priced out of home ownership

#902

Post by nickfromseattle » Tue, May 28, 2024, 10:20 PM UTC

jmrm wrote: post #531

tcgv wrote: post #266

Earlier quoted context omitted.

Portugal had a golden visa program that granted citzenship if you bought real state of at least 500k EUR. That drove home prices up signficantly in Lisbon, specailly units in that price range. Under new law, the Portuguese Golden Visa no longer provides Residency status through Real Estate investments. [1] https://www.portugalhomes.com/golden-visa-portugal

They also have to remove that "golden visa" in Spain due to the same problem. I wonder if Italy, Greece, and Malta will also remove/reform their law due to the same problem...

>They also have to remove that "golden visa" in Spain due to the same problem

Found this article that indicates Golden Visas account for 14,500 of approximately 600,000 home sales per year in Spain. [0]

[0] https://www.idealista.com/en/news/luxury-real-estate-in-spai...

Re: Priced out of home ownership

#903

Post by AnthonyMouse » Tue, May 28, 2024, 10:23 PM UTC

cycomanic wrote: post #772

AnthonyMouse wrote: post #589

Earlier quoted context omitted.

> Tbf many of those restrictions are there for good city planning reasons - and important to keeping a city livable and not outgrowing its infrastructure. I don't believe this to be true. If someone wants to build a single multi-story building in an area, no additional infrastructure should be required. It's one building, the existing infrastructure shouldn't have so little slack in it that this could be a problem. I…

Nobody is talking about building a single multidwelling building. But you can't make rules just for a single building (what are you going to do for the next building... And the next). There are plenty of examples where local governments have removed lots of restrictions and essentially created Airbnb wastelands, a good example is the southbank in Melbourne. The last time I looked into it (admittedly some years ago),…

> Nobody is talking about building a single multidwelling building.

Then why is that the level at which the decision is made?

> But you can't make rules just for a single building (what are you going to do for the next building... And the next).

The point is that you can respond to demand rather than legislating it. If four high rises are going up in a neighborhood, the city officials can notice this and use the new tax revenue to build infrastructure those new buildings need, and then go on the MLS and find a local property for sale in the area which is in a good location to turn into a park etc. None of this requires restricting the construction.

> There are plenty of examples where local governments have removed lots of restrictions and essentially created Airbnb wastelands

This is really the opposite problem. If you have restrictions that heavily constrain where you can put short-term rentals, and then you set aside an area where they're permitted, of course that area is going to be saturated with them -- you're still prohibiting them from being anywhere else, so they all end up there.

This is the fatal flaw in the zoning board. "You can build anything here" should be the default, and then if you want to set aside 20% of the land in the area to be exclusive for e.g. single-family homes for the people who want that, that's fine. But we do the opposite -- 80+% of the land is required to be single-family homes and not even the entire remainder is allowed to be multi-unit buildings.

Monocultures are shitholes. Nobody wants to live in a place which is exclusively short-term rentals, or exclusively office towers. It even sucks to live in a place which is exclusively single-family homes, because then you're isolated from the community and have to spend half your day sitting in traffic to get anywhere.

What you need is the majority of the land area to be mixed-use zoning. Which is the opposite of having an area set aside which is predominantly short-term rentals.

Re: Priced out of home ownership

#904

Post by h12nz » Tue, May 28, 2024, 10:31 PM UTC

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…

It is primarily restrictive zoning. When Auckland up-zoned there was a clear relative decrease in prices. You can also see it in the massive price discontinuity on the city’s rural-urban boundary.

It’s a pretty simple problem: existing owners have an interest in restricting new supply, and there aren’t many costs associated with being a nimby. Housing stops being a good investment when supply is responsive.

Re: Priced out of home ownership

#905

Post by lupire » Tue, May 28, 2024, 10:36 PM UTC

NoobSaibot135 wrote: post #889

dan-robertson wrote: post #351

Earlier quoted context omitted.

> do Canada, Australia, New Zealand, the US, Britain, Ireland, etc, all have the same inability to build …? Sort of? See eg https://www.ft.com/content/dca3f034-bfe8-4f21-bcdc-2b274053f... for some graphs that show Europe vs anglophone countries in an obvious way. Obviously there are lots of differences between the countries, eg the specifics of their planning systems and economies. The US is different because of the…

> I don’t know why prices are still up though – if interest rates being high was making housing unaffordable, one would expect prices to be down. We printed ~25% of all money in existence since 2020 so that obv means more diluted money chasing scarce housing (applies to everyone worldwide) High real estate prices might be the new norm :(

Why would money printing increase housing prices but not wages?

Why would money printing postpone its effect on prices until after interest rates increased?

Re: Priced out of home ownership

#906

Post by h12nz » Tue, May 28, 2024, 10:41 PM UTC

mattgibson wrote: post #808

rndmize wrote: post #796

Earlier quoted context omitted.

No, lack of building _is_ the main problem. It doesn't matter if the demand for homes is "artificial" or not - the easiest solution is to build more. > 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? This is something I've wondered, and I'm of the opinion there's two reasons that are rarely discussed. One i…

You really need to provide data to make that assertion. Shortages of buildings are not the only reason that property prices can be high. Properties are made up of a building and a plot of land that it's attached to. Whilst we can nake more buildings, we can't make more land, so the land in a given location is by definition going to be in a permanent state of shortage. If more poeple want to live in that location OR (…

It’s a shortage of floor space that is the issue. The problem is the Anglo countries have mostly made it illegal to supply it, in both dimensions. Auckland clearly showed this when it upzoned.

https://workresearch.aut.ac.nz/__data/assets/pdf_file/0010/5...

Re: Priced out of home ownership

#907

Post by tmnvix » Tue, May 28, 2024, 10:41 PM UTC

robertlagrant wrote: post #635

tmnvix wrote: post #430

Earlier quoted context omitted.

> The problem is lack of supply vs demand. My point elsewhere in this thread is a that demand is not entirely a function of demand for homes (what I would call 'natural' demand). Finance and tax incentives play a large part too - encouraging demand for investment properties that are often not used as homes (what I would call 'artificial' demand). This is not to say that addressing supply through more building is not…

> demand for investment properties that are often not used as homes Could you elaborate? How often is "often" in the context of the whole country? > This is not to say that addressing supply through more building is not helpful, just that there are other things to consider that may not require as much effort and can have broader economic benefits (e.g. changes to the tax system to encourage productive rather than unp…

> Could you elaborate? How often is "often" in the context of the whole country?

According to this document (https://www.oecd.org/els/family/HM1-1-Housing-stock-and-cons...) 10% of dwellings in the US are 'vacant dwellings and seasonal/holiday homes'. In other words these are not owner-occupied - and what I would classify as investment properties. Now these are not all the investment properties, obviously. There are many investment properties that are permanently tenanted.

Assuming that about 65% of homes in the US are owner-occupied, then we should be able to assume that the remaining are investment properties (remember I include holiday and second homes here). That means about 30% of investment properties are not used as homes (i.e. the 10% mentioned earlier).

Investors are removing a lot of dwellings from the permanent housing stock.

It is worth keeping in mind that when you hear references to a 2% or 3% vacancy rate, this usually means the percentage of dwellings in the permanent rental market that are currently vacant - not the percentage of total dwellings that are vacant.

Re: Priced out of home ownership

#908

Post by AnthonyMouse » Tue, May 28, 2024, 10:45 PM UTC

jjav wrote: post #901

AnthonyMouse wrote: post #583

Earlier quoted context omitted.

> You cannot realistically build enough so that the rents decrease. I'm curious what makes you think this. Suppose you built twice as many housing units as you had residents. Rents wouldn't decrease? Why not? Or do you think that a sufficient amount of housing wouldn't fit? For reference, the San Francisco metro area has ~7.5M people in an area of ~3500 square miles. With housing at the population density of Manhatta…

> > You cannot realistically build enough so that the rents decrease. > I'm curious what makes you think this. > Suppose you built twice as many housing units as you had residents. Rents wouldn't decrease? Why not? It seems entirely logical that rents should decrease. Not the OP but I do always question this, despite sounding logical. Why? Because it has never worked that way in practice. Can you think of a city that…

> Can you think of a city that built so much housing that rents became cheap (relative to local income)?

Most cities with a declining population. They built more housing than they needed, then people moved out, so now housing costs there are low.

It's hard to find other examples of places that have built too much housing, because there is no market incentive to do that. In practice the best you can do is prevent there from being too little.

But the areas with less restrictive zoning do have lower housing costs.

Houston metro, not very restrictive zoning:

  Per capita income: $68,344
  Median home price: $192,500

Riverside metro, California zoning:

  Per capita income: $50,407
  Median home price: $393,000

> Meanwhile, more and more people and jobs are moving in, attracted by all that new housing. The area becomes ever more popular and more expensive.

It isn't the housing that attracts them, it's jobs etc. The housing is then needed to give them somewhere to live, or you get California.

In some ways having more people will create more jobs and attract more people, but the idea that it's not possible to keep up with demand is just defeatism. You can't build a million new units overnight but neither do a million new people move in overnight, and even if they did, you would then be better off to build a million new units over five or ten years than to not do this.

Whereas the argument is simply that building the units should not be prohibited. You obviously don't need a law against it if your actual problem was people not doing it fast enough, right?

Re: Priced out of home ownership

#909

Post by pdonis » Tue, May 28, 2024, 10:57 PM UTC

formerly_proven wrote: post #636

pdonis wrote: post #186

Earlier quoted context omitted.

The GP didn't say "subsidize demand". They said "increase supply". They're different things.

It's a response to his summary of the article, not a contradiction. > the measures mentioned in the article — lower interest rates, lower transaction fees, down payment subsidies

Ah, got it. Sorry for the mixup on my part.

Re: Priced out of home ownership

#910

Post by underlipton » Tue, May 28, 2024, 11:09 PM UTC

EgregiousCube wrote: post #448

fire_lake wrote: post #240

Earlier quoted context omitted.

Inequality is another issue. Even with enough homes, if they are all owned by minority of the population who extract rents from the rest the situation remains pretty dire.

Is inequality bad in and of itself? If there's a healthy market of buyers and sellers, but also a lot of inequality, is that a problem?

Yes. As an analogy, inequality has been linked to lower average adult height. Silent, small deficits in nutrition and health lead to lower height attainment among most of the population; the wealthy tend to be quite tall, but there's only so much environmental optimization can push even people with genes that predispose them to a high final height.

In housing, you have many people struggling to afford to buy anything at all, while investors buy up multiple properties or drive prices for even modest residences into the 7-figure range in some areas.

Essentially, unequal societies bifurcate, and while the vast majority of people have to go without the resources they need to lead fulfilled and dignified lives, a small minority of elites put more and more resources towards trying to eke out smaller and smaller advantages against each other.