[TomMarius]

Could you please describe exactly how could housing get continuously cheaper when there are more people every year and the demand for good locations is increasing?

(Edit: I asked a sincere question. Don't downvote without explanation, please. It's really tiring, anti-discussion and makes it seem like you don't have any good point at all.)

[Lazare]

Yes, there are more people every year, but in the US, there aren't a lot more people every year. Population growth is at 0.7% and falling.

On the other hand, I see no reason to think that "demand for good locations is increasing". What counts as a "good location" is in flux, but people always want to live in "good locations". I see no reason that it's more important to live in a "good location" today than 5 years ago, or 50, or 3000.

So what I see is a fairly static number of people who'd like to live all over the place, but a decent chunk wanting to live in large, dense, desirable cities. Which are, not surprisingly, quite expensive.

> how could housing get continuously cheaper

Housing, as opposed to land, is a manufactured good, and we're getting better at manufacturing things every year.

As for land, we can use it more efficiently (higher density, fewer parking lots, more transit, etc.) It's well documented that many cities (Los Angeles is an infamous example) drive up the cost of housing and bias new developments towards luxury units due to building codes that, eg, require very inefficient land use and a large number of parking places.

Alternatively, we can work towards changing what is desirable. In 1920 something like 5% of the entire US population lived in New York City; now things are much more spread out. Today a hefty slice of software engineers live (or want to live) in San Francisco, but that's not an immutable law of nature.

I mean, taken to an extreme, if you build an absurd number of houses in San Francisco without sufficient infrastructure, the combination of massively increased supply (all the new units) and decreased demand (because it's no longer a great place to live) would absolutely lead to house prices dropping. That doesn't sound like a good policy (and is certainly not what the parent comment was suggesting!) but there's no particular reason why house prices can't continuously fall.

[ragequitta]

In regards to whether or not a good location is more desirable today than 5, 50, or 3000 years ago it definitely is. Reminds me of a story I found about Greyhound going down in my neck of the woods.

https://www.theguardian.com/world/2018/oct/29/canada-greyhou...

Relevant bit:

"More and more people are leaving rural Canada, and the people who remain are often the ones who are unable to leave.” Since 1950, the rural share of the country’s population has fallen by half."

So while population growth isn't fantastically large, people are flocking to urban areas (for many pretty obvious reasons).

[dionidium]

> On the other hand, I see no reason to think that "demand for good locations is increasing".

I think demand pretty clearly is increasing and my hunch is that it's a technological effect. † The internet didn't make place irrelevant, as many thought it would; in fact, it had the opposite effect in that it made it a lot easier to move to the most desirable cities. You can scope out neighborhoods on Street View; shop for new apartments on Street Easy or Craigslist; endlessly research the target city, apply for your new job, and complete the first round of interviews -- all on the internet, from the comfort of wherever you live now.

(And, not for nothing, it's also a lot cheaper to fly back and forth today, once you get to that point in your transition.)

† In some abstract, Platonic sense, San Francisco is probably no more desirable than it might have been in 1971, but, as I try to argue above, a Clevelander then would have had a much, much harder time manifesting that desire than today. And as more and more people realize this desire, the attraction grows as if by accretion.

[fredgrott]

but its not just house prices themselves if you look at a map of value of farmland in the US you will find that more accurately reflects the current house price upward rise.

Example...in NW Indiana farm land is about $35k per acre which reflects the amount of revenue earned per acre. In California its 3 times that.

Its we are running out of farm land acre to feed the world that is driving up the house price in the US

[moorhosj]

Housing can be built vertically.

[ben_w]

At significantly higher cost. If you’ll excuse a very broad brushstroke, this is why California — with lots of land — builds so many single-story buildings compared to the UK where there is so little land available for construction. (That the difference is in part due to policy doesn’t change that there is less availability).

I’m looking forward to more automation in construction so that vertical is not significantly more expensive.

[moorhosj]

==At significantly higher cost.==

Significantly higher building costs, but lower land acquisition costs.

Excerpt from a BuildZoom analysis:

"The high cost of housing in expensive coastal metros is not driven by construction costs. It is driven by the high cost of land which, in turn, reflects a scarcity of zoned units, not a scarcity of land per se."

https://www.buildzoom.com/blog/paying-for-dirt-where-have-ho...

==That the difference is in part due to policy doesn’t change that there is less availability==

Except the current policy explicitly limits the availability, they are one in the same.

[rileymat2]

Is this some special case? I can’t find sources listing it that high.

[snovv_crash]

Build more. Better transport. Encourage remote working. Allow denser construction. Relax ridiculous laws that push up construction costs.

The trouble is, lots of people will lose money...

[credit_guy]

You can bribe those people. If any new building on your block gives you a tax abatement for 5 years (which is then absorbed into that building's construction costs), then you bring a serious economic incentive to YIMBY. You can tune up the amount of tax benefit until YINBY outvotes NIMBY, and then you're good.

[snovv_crash]

That sounds like a way to make construction more expensive. Transfer money from new buyers to existing owners. This is against the entire premise of the article.

[credit_guy]

All things being equal, it would, indeed. However, the main driver of the high real estate prices is the artificial scarcity of locations. If you can remove that, you'll see prices collapse all over the country. To remove this scarcity, you need to fight NIMBY.

[jplayer01]

We currently have a feedback loop where rising prices attracts investors who sink money into real estate, which reduces supply and raises prices, which attracts investors, etc. There are a number of factors that incentivize reduced supply such as reduced incentive to build lots of new buildings because that would increase supply too much and reduce prices and an increased incentive to build a small number of luxury apartments instead, which further raises property values.

If ownership wasn't seen as an investment vehicle, this feedback loop would be broken. People would only buy because they need it, or in the case of landlords, the rents they could secure from rentees would be much lower because of the lower market value of the object and the overall lower rent prices across the entire market.

Of course, sufficient supply has one big condition: Zoning laws are relaxed, allowing enough supply to be built in the first place.

[usaar333]

It depends where you are.

I'd argue the SF Bay Area is not being driven by investors (many investors think it is bad to invest given the very low rent yields), but by supply constraints themselves.

The supply constraints are not so much financial, but being driven by residents who don't want their neighborhood to change. And since they don't suffer (no property tax increases come with the home value increase), there's not much push back other than the moral argument that their children can't afford homes anymore.

[jplayer01]

You're right. I just didn't want to write an essay. There are a number of incentives that motivate owners to prefer supply constraints.

[sleavey]

I guess, meet and exceed housing demand and improve less affluent areas. This involves government money but most seem happy to let the public take the bill in the form of continuously inflating house prices instead.

[camgunz]

You build more houses, supply/demand, etc. There are many, many good locations in the US where affordable housing been be built. You can also replace low density housing with medium/high density housing.

[village-idiot]

Population growth is very low, the technology to make homes should get cheaper, and old homes degrade and become less desirable as the rich continue to build new homes.