[stego-tech]

> It's not new affordable housing, but the people moving in to the new expensive houses are leaving their old houses, and the people who buy those are leaving their old houses, so eventually the price drops happen on the older, smaller homes at the bottom end of the market.

As I commented elsewhere, that’s the paper math version that doesn’t resemble reality for those of us living in it. Buyers of new luxury stock are increasingly just leveraging prior housing equity to fund the new purchase and renting out old stock at “market rates”, which doesn’t actually increase supply or decrease pricing. Laws have made short-term rentals and long-term landlording immensely profitable for those who got into the game early, especially in major metros that lack regulations on rent control or have preferential property taxation schemes. When actually affordable housing is built (i.e. starter homes), they’re frequently snapped up by PE firms and investors rather than being sold to first-time homebuyers.

The “property cycle” you mention does not exist anymore, and that’s by design. It’s why meaningful legislation and taxation policies are needed to deter landlording of SFH properties and prevent exploitation of renters by implementing rent controls.

[colonCapitalDee]

In every single reputable empirical study of housing, adding supply really does bring down prices. Your preferred policy solution would decrease housing affordability, hurting the very cause you profess to champion. If this truly is something you feel strongly about, you have a duty to yourself to investigate the evidence, otherwise you are shooting both yourself and your movement in the foot.

[jeremyjh]

Building a new house and renting the old one absolutely does increase the supply of housing.

[uv-depression]

GP was incorrect that it doesn't increase supply, but correct on pricing. Besides, if I can't afford $3000/mo rent, it doesn't matter to me how many rental units are available at $4000/mo. With massive pricing collusion having been the standard for the last few years (RealPage) and the demand for housing always being extremely inelastic, the supply/demand curve is extremely complex.

[stego-tech]

Again, on paper it does.

But paper often neglects reality. A reality where it can be more profitable to simply hold the land rather than lease out the home on it. Where a constructive loss can improve tax savings. Where the intent is to have it vacant for some other perceived use or gain - like a vacation home, AirBnB rental, Pied-a-terre, or just letting the structure languish until it can be condemned and bypass red tape around teardowns/rebuilds.

Current incentives and structures do not mandate that homes are made available when someone buys another domicile. That’s one of the myriad of issues affecting the housing crisis.

[margalabargala]

All that means is, that building one unit of housing and selling it means that the pool of available housing is increased by less than one unit. It does not mean that the available housing supply did not change, or decreased.

So if building one unit of housing increases the housing supply by 0.7 units on average or whatever, then the same logic applies, just overbuild by 30%.

[bryanlarsen]

how does renting out old stock not increase supply? Renting and buying are relatively fungible. People buy fewer houses when renting is cheaper.

[WarOnPrivacy]

> how does renting out old stock not increase supply?

Raw and overall housing numbers can be misleading by their nature. That is, they can be technically true while being false for many/most people.

    Declaration: Housing supply is increased!
    Actuality: Increase is only in homes for >$100k income earners.
    The declaration is true for >$100k.
    It is not true for most <$100k earners.

   (of those <$100k earners)
   There could be a very slight increase in supply for $80k.
   It'll be less, if any, for $60k earners.
   There is no increase in supply for <$40k (25% of US households).

Past that, there is a challenge in tossing around $250k and $500k houses as examples of anything. Those numbers are 4x & 8x over what typical-wage households can afford.

Generally, there is no affordable, reasonable housing for typical income earners.

[bryanlarsen]

It's still an increase. Rich people always have a house. If they can buy a rich person house it means they aren't outbidding normal people for non-luxury housing.

[WarOnPrivacy]

What figure divides luxury and non-luxury housing?

Asking for the 25% of Americans who make <$40k/yr.

[rootusrootus]

> Past that, there is a challenge in tossing around $250k and $500k houses as examples of anything. Those numbers are 4x & 8x over what typical-wage households can afford.

Is that true? A median household (with ~80K income) should be able to swing a 250K mortgage, probably a $325K house with down payment.

[WarOnPrivacy]

> Is that true? A median household (with ~80K income) should be able to swing a 250K mortgage, probably a $325K house with down payment.

80k is 3-4 typical wages. That is, the wages of jobs that are most obtainable make 25k-31k.

The folks in those income brackets are 25% of the population (and 35% of minority groups).

Housing stats are commonly presented as if they don't exist. However until few administrations, they had a long history of home ownership.

[BobaFloutist]

>Buyers of new luxury stock are increasingly just leveraging prior housing equity to fund the new purchase and renting out old stock at “market rates”, which doesn’t actually increase supply or decrease pricing

Ok, but they have finite leverage and financing. The market can easily overwhelm their access to capital, no investor class has anywhere near enough access to capital to fully corner the behemoth that would be a healthy housing market.

[nine_k]

Doing similar things in Berlin (regulations instead of building more) put the housing market there to a crazy state. Yes, the rents are mostly affordable, but demand seriously outstrips supply, and it becomes a game of chance, personal connections, waiting for a year or two until a particular unit frees up, etc.