[Animats]

> We don't, as a matter of intentional policy, build enough housing.

If actual number of houses was the problem, house prices would not be increasing in areas of population decline. It's existing houses being repriced upward by speculation that makes them unaffordable.

[vslira]

It's not number of houses, it's number of houses where people want to live.

"house prices would not be increasing in areas of population decline" -> the causation could be running backwards: a family of 2 (maybe 2 retired people with accumulated wealth) can outcompete with a young family of 4 for the same unit, that drives prices up and population down. I'm not saying this is the case, but decreasing population not being associated with decreasing housing prices does not mean that increasing housing prices is not caused by housing scarcity

[brailsafe]

This seems to be, or have been, a very common scenario in Canada, which is why I completely discount when most politicians start going on about a "housing crisis" when in another breath they'll say they don't want houses to get cheaper. If it was a "crisis", one might think houses would be treated with special care instead of basically just another commodity. If a person with wealth can just buy up as many of a finite resource within, especially within the same city as they can tolerate the possession of, then nobody should have a surprised Pikachu face when they do that. If all of the food could and was bought up by a few rich people and figuratively removed from access by anyone who can't bid arbitrary amounts for it, there would and should be riots. That's how houses and condos are priced, and more supply without finite policy restrictions just mints more money for people who already have it. If it's a crisis, why is anyone allowed to own more than 1? Level it out.

[bryanlarsen]

In Canada, second houses and vacant houses are taxed higher than primary residences.

[brailsafe]

As far as I know, they're taxed higher in the sense that they're not exempt from capital gains, like primary residences are, but in my view it seems like that would at-most be a marginal disincentive if renters don't have much in the way of other options or protections (which vary across the country). Likewise, I'm fairly sure a mom+pop residential landlord can save on tax for any expenses related to secondary suites or secondary properties if it's considered business income. If there is very little suitable supply, it still makes sense to acquire the asset and profit off of rent, although this dynamic may be changing with increased cost of borrowing and less demand depending on market, AirBnB short-term rental restrictions, etc..

When money was free and restrictions were few, non-institutional investors seem to have capitalized aggressively on this, because the price of the property increased dramatically and also it was a near-certainty that there would be a constant stream of inflated rent a landlord could charge.

I'm happy about those tax disincentives, but they do strike me as playing around the margins; in normal economic circumstances, they should play around the margins, but that particular aspect of the economy is so embarrassingly tilted that it's really not funny anymore.

[magicalhippo]

Here in Norway non-primary residences were taxed higher but not very much. They've changed that in recent years, so now you get taxed about 100%. However here it's not (just) capital gains, it's wealth, so you pay a percentage of what the estimated street price is for the place each year.

The result is that in the last couple of years landlords have gotten rid of many rental units. This primarily affected smaller apartments, and surprise surprise, those prices have remained flat while the rest has increased.

On the other hand, sucks if you for some reason need to rent, because now there's just a few rental units out there and they're now expensive.

[brailsafe]

Early in my adulthood, the balance of rent vs buy was closer, and renting was either the choice for someone without much money, or you paid a premium for the convenience of renting, but otherwise the cost of borrowing for the same place was much more similar to the rent cost. I didn't have any interest in buying, not just because I didn't have the money yet, but because I didn't see any value in owning over renting. I still don't see much value in owning, but now it's nearly impossible, and rents are half of cost ownership.

[anon7000]

Why not both?

[Noumenon72]

After thirty years of house prices rising astronomically, you can't appeal to "speculation" any more. People are speculating because the underlying scarcity makes prices sure to rise.

I think if you look closely at "population down, house prices up" you will find normal supply-and-demand stories like "population down, houses down even more" or "population down (downtown), prices up (suburbs)".

[JKCalhoun]

Agree.

So often I see people complaining "people treat their home as an investment…". Because in fact it turns out it is?

Are we supposed to pass laws that fix the price of a home based on the square footage?

(I wonder if jewelers complain that the reason silver is so expensive is that people treat it as an investment.)

[ironman1478]

Nobody advocates for fixing the price. People want more supply which will bring the cost of housing as a whole down or at least provide more price diversity.

Is it even beneficial to have a house worth a lot of money? Think about places where property is expensive, it is also expensive to live there in general because housing costs so much. The cost of housing means employers have to pay their employees a lot to keep them there. This in turn means you are paying more for goods and services. If you're a homeowner, but NOT a high income person, this is very bad. It means you can't make payments towards maintenance of your house, going out becomes harder, etc. Your quality of life decreases.

People who inherit homes that are worth a lot, but aren't flush with cash end up having to sell frequently because there is no way for them to maintain it. It's also the plot of white lotus season 2 with the villas lol.

[inigyou]

Expensive housing means expensive commercial rent too, which means high prices and less quirky niche shops. In Berlin I've watched them disappear and get replaced by a McDonalds or a cryptocurrency startup firm.

[ironman1478]

You can't look at the cost of a house out of context. If you look at Flint, Michigan it's actually one of the most expensive places in the country if you account for average income in that area. Absolute cost needs to be normalized by income in the area. The housing is actually very expensive if you do this type of calculation. We saw an example of under supply during COVID. Housing prices in "underpriced" areas increased during COVID because regions with no real economy saw people moving there with the high out of state salaries. Those areas didn't have enough supply. Now that remote work is less prevalent, those places are having their costs go down but the Bay Area is seeing skyrocketing costs. We are able to measure the effects of supply and demand pretty clearly due to COVID.

Speculation is known to have an effect, but not nearly as much as an effect as under supply. Blackrock THEMSELVES published a paper that the reason their investments are working is due to the low development of housing. Their whole strategy is reliant on NIMBYism and people's lack of understanding of the housing market.

[bryanlarsen]

Weren't there a bunch of houses available for $500 in Detroit 20 years ago?

[thegrim33]

Anyone with 60 seconds of free time can trivially see that your claims hold no water.

Simply Google for cities/areas with declining population, choose one, look up average housing prices there over the last 10 years or so, see how they've changed, correct the figures for inflation, and you'll see that in almost all cases inflation-adjusted prices are lower today in those places than they were 10 years ago.

[lostlogin]

I searched, the first hit was New York (seems odd?). I looked up average price over time, inflation adjusted. They are increasing.

https://fred.stlouisfed.org/series/NYSTHPI

Edit: DuckDuckGo seems to have served me a terrible example, further digging shows some examples which don't even need looking up, its clear that pricing has plummeted.

https://en.wikipedia.org/wiki/Shrinking_city

[scoofy]

He’s talking about places with long run population decline.

NYC has grown by about 1.5 million people over the last 30 years.

[ffsm8]

And anyone with a braincell would've remembered that wages didn't keep up with inflation, hence the point you're making isn't actually being made.

You're just being rude for no reason, which is also why I'm now rude to you. You could almost call it rudeflation, tomorrow we'll probably cause a rudeness singularity

[medvezhenok]

Not necessarily.

House occupancy laws also have a role here - some of the living arrangements that ended up in higher density in the past are illegal today, forcing population decline in a given area (which is not necessarily equivalent to _demand_ decline)

[slibhb]

There's no question that underbuilding is the largest factor here. You can look at construction vs. population over time (it's well below historical standards). Or available home vacancy rates. Or notice that the number of households is increasing faster than the number of homes. Or look at the various models, which show a 2 million-4 million shortfall in homes.

That aside, housing prices are reasonable in much of the country. Where population is stagnant or declining, they are generally reasonable.

[jayGlow]

are these areas with declining populations and rising housing prices increasing the number of houses? it could be that the population declines because no one can afford to live there however it's still a desirable area so prices remain high. cities like Austin are seeing reduction in housing prices despite population increase due to construction of new housing.

[alphawhisky]

That only covers a portion of the population. Don't forget the middle of nowhere towns that refuse to tax their citizens (but eat grant money like pigs) and refuse to allow new housing. All of this is essentially being done to maximize property value and keep new people out. This is why people are moving to cities in the US. Not a desire, but a need in order to make ends meet and get on the property ladder.

[inigyou]

People move to cities because of lifestyle and jobs. Cheap housing has never been an attraction of cities...

[alphawhisky]

Yes, they aim to improve their income to expense ratio with a high paying job, I.E. they have more spending power.

[s1artibartfast]

How do you separate speculation from legitimate price increases? If the houses are overpriced due to speculation, why isn't someone building Alternatives and undercutting them? This implies that there is either a real increase in value, a manufactur bottleneck, or both

[alphawhisky]

Civil Engineer/City Planner here. The bottleneck is legislative. NIMBY's are all over in US politics right now, local and larger. These folks put together legislation that makes it extremely hard to build without City/County/Township permission, unless the project benefits them in some way. So, most places will disincentivize new construction unless they get a grant for it, because they feel obligated to help their citizens by keeping taxes low and house values high. New construction does the opposite of these things.

[mothballed]

This is exactly it. I built a house for 60k a few years ago in a HCOL area by finding a legal loophole to permitting/planning that bypassed civil engineers, code inspections, and almost all planning. The house next to me, quite similar and 50 years old, is selling for 5x that.

In the old days it was common to build your own house. And it usually allows a house for half or less the market price. But this is effectively illegal/impractical in most the US. Some simple changes to legislation would halve the average cost of a house overnight!

[bell-cot]

I'm thinking that very few folks, these days, have the mindset & skill set & finances & timeframe to build their own houses.

And it wouldn't be just the currently-active NIMBY's who fought tooth and nail against any "simple changes" that might halve the average cost of a house overnight.

[mothballed]

I was working 60 hours a week, plus raising small children, plus had zero construction experience, plus buying literal pieces of lumber and block paycheck to paycheck as money allowed. If you start at 18 and finish in 20 years, you are still ahead of age of median new home buyer by 2 years.

Some people have valid excuses, but most do not.

[inigyou]

A house doesn't have to be fancy. Live in a tent on a grassy lot? Why not?

But you can't, because the lot is unaffordable

[mothballed]

Last I checked 5 or so years ago a lot big enough to drop a yurt on in San Francisco was only like 100k. Legally unbuildable, but perfectly usable and sanitary with an incinerator toilet, solar, and hauled water. Maybe 200k all in, in roughly the most expensive place in the US.

[inigyou]

What was the loophole?

[mothballed]

Do everything yourself and it never touches commercial regulations on licensing, inspection, and and building plans. I recorded a sworn affidavit with the county I was building it myself on my own property for purely personal residential use and then they issued me a permit explicitly stating I did not need to submit building plans or inspections.

Since the house was built without any compensation and not used for any commercial purpose, it bypasses "commerce" which was the auspice under which housing was regulated. When I was done I literally just sent the county a picture of a house and they closed the permit and that was that.

[10000truths]

May I ask where this was? This seems like the kind of thing that would be highly dependent on the wording of the laws of your municipality or state.

[inigyou]

Ah. One of those weird bureaucratic legal things. Probably wouldn't fly in most countries that have building permits.

[TitaRusell]

If they were unaffordable they would not be selling. Don't underestimate just how much money people can conjure up. Most parents don't want to be buried with their money Egyptian pharaoh style.