The sooner we collectively decide that housing shouldn't be a market, the better. We all need it, and we should figure out mechanisms to make it available to all.
Practically that means paying to build and maintain housing stocks, changing tax incentives so developers are incentivized to build more housing and less luxury housing, charging a premium for unused land in desirable areas (parking lots don't house people), abolish mandatory minimum parking, and upzone neighborhoods (eliminating the "single family home" neighborhoods as a zoning type.)
I'm also of the much more radical opinion that we should protect tenants over landlords in nearly every case, that we should protect the rights of people to live where they've historically lived (eg, one shouldn't be "priced out" of the home they've lived in for 20 years), and we should offer extensive public housing (built as many geographically distributed small apartment buildings and 5 over 1s, not giant tenements or projects.)
The inevitable outcome of housing inflation and elimination of the middle class is slums: illegal housing. People will have to live somewhere. And when that becomes unaffordable they'll just improvise.
This is not a technical problem but a policy problem. The solution is changing the policy. The current policy is to drive up housing prices by creating completely artificial scarcity. All the land is owned and earmarked. Just not for housing. This problem exists in most wealthy nations. There is no shortage of space. Just of access to that space. Mostly that's completely intentional and reinforced by generations of politicians acting on the will of the people they represent to ensure that can never change.
You have NIMBYs and vested financial interests basically. Nobody wants their property devalued. So, social housing always is unpopular with the locals. Places like San Francisco where the homeless take dumps on Market Street are of course a bit extreme. But same principle. No shortage of space there.
But it's all reserved and off limits. So, the homeless are camping out there. In the middle of a city full of some of the richest NIMBYs on this planet. That's not a temporary solution. That's a slum and it is growing. Complete with people just shitting all over the place. Slums are what happens when you let things escalate.
Nobody "decided" that housing is a market. If something can be bought and sold, then this is inherently a market.
Yes, we can and should regulate markets, and we probably all agree that the purpose of the housing is for people to have a roof over their head, as opposed to use housing as an (speculative) investment market. This can easily be regulated via taxes (on ownership and transactions), but it comes with a caveat: if something is over-regulated to benefit the user, then there is less incentive for investor/landlord to build housing, which makes housing scarcer and drives prices up.
A more practical solution is housing coops like the BRF system in Sweden. Individual landlordism is mostly banned (there are some company rentals though) - you buy the place you live in, and there are restrictions on renting it out (no more than 2 years in a row, etc.).
It's helped a lot here.
I don't think that social housing is a good solution. It's a complete disaster here in Sweden, with 12+ year waiting times, and massive inequality between those who have those rent-fixed privileged first hand contracts and those stuck in the unregulated wild west of second hand renting. Often resulting in the working poor effectively subsidising wealthier, older people to keep their very cheap flats in the city centre, etc.
I really think most of the solution is in the first part of your plan.
There’s no need to micromanage tenant-landlord relationships or setup governmental panels on who historically deserves to live where, if the government can just make sure there is an oversupply of decent housing at all affordability levels.
The rest really takes care of itself at that point.
Isn't the problem that housing isn't more of a market?
In an actual market, margins are competed away and prices drop over time, there's elasticity in supply and demand, and people don't view their 15-year old cars or whatever as "investments", they trade them up for a newer model and pass down the older stuff to people who can't afford them as much.
In housing, we artificially constrain supply with zoning laws and building codes, and we stimulate demand with subsidized mortgages and rent control laws. It's pretty much the opposite of what you want to do if you want there to be more affordable housing.
> The sooner we collectively decide that housing shouldn't be a market, the better
Housing is already barely a market. An actual market would be much better.
We artificially restrict the construction of new housing supply by policy and then act all surprised when demand exceeds supply and prices skyrocket.
The same thing is happening in medicine: we artificially constrain the training of new MDs and then act all surprised when demand exceeds supply and prices skyrocket.
Then people come out of the woodwork with "oh look markets aren't working!" -- but in fact the markets are working exactly as designed: those with control over the supply are acting to constrain the supply, in the process enriching themselves at the expense of all others. But instead of recognizing this fact, we look for other reasons. Sure, there are other reasons and interactions, too, but the primary drivers are supply constraints!
Imagine if we explicitly forbade the construction of new grocery stores, forced farms not to use modern agricultural techniques, causing reduced yield, and then bought up a bunch of farmland just to take it out of commission. What would happen? Food prices would, obviously, skyrocket! That's exactly what we're doing with housing.
Your proposed solutions probably won't hurt, but aside from making it easier to build housing, they're noise. In particular:
> upzone neighborhoods
This is the only one that matters -- and it needs to come with other changes too, including construction "by right", that is, without needing to go through a 3-year process of fighting with neighbors who will try whatever they can to prevent new construction because they've been convinced it will destroy their neighborhood and/or property values.
> changing tax incentives so developers are incentivized to build more housing and less luxury housing
We don't need to change tax incentives to get developers to build more housing, we just need to stop preventing them from building more housing. Developers are not sitting around waiting for incentives, they're actively being denied the ability to build. Let's fix that.
I can't imagine physical housing not being a market. Even in a post scarcity star trek world someone gets the penthouse, someone gets the house on the hill with a view, someone gets the beach front property, someone gets the house in a convenient location or close to public transportation. How would that ever not be decided by a market? Even without money it would end up as a market of "merit" or policial capital
> The sooner we collectively decide that housing shouldn't be a market, the better.
How do you or we decide it's not a market?
If people are paying money for housing, it's a market. And it's not just money, but the largest lifetime expense by an order of magnitude and more.
> I'm also of the much more radical opinion that we should protect tenants over landlords in nearly every case
That's already the case, at least in many places (I know not all). If you take it too far the result is no landlords, thus no rentals. Perhaps that's ok if everyone wants to buy, but if there is anyone who wants to rent, it's useful to have rentals.
The problem in almost every country with out of control house prices is low interest rates since the dot com crash.
That's where everything went wrong. At 0-1% interest you can get insane mortgages for 90-95% of the value of the property, pushing the price up to where people spend every last cent they can on mortgages, but at $xxxx per month you can easily afford hundreds of thousands of dollars in mortgages.
Raise interest rates (happening), go into recession, crash the market, stop people getting mortgages, house prices will drop insanely fast and hard.
Of course no government wants to do this because it will panic the home owning class. Well - you have to chose at this point. Make it impossible for young people to buy a home, or piss off homeowners.
Isn’t there tension between what I’m assuming is land-value tax to push developers to create more housing and keeping people in the home they’ve lived in for 20 years? That home has probably become inefficient from a public value standpoint and would better contribute if it was a multi-unit dwelling. I’m with you that people should be able to continue to afford to live in the same neighborhood even (with a shift in the type of building most likely), but attempting to protect their exact house just creates the equivalent of a public subsidy to exempt them from keeping pace with local land efficiency demands.
The reason the housing has turned into such a market is not because the evil overlords are deciding. It's due to overwhelming demand and the supply cannot keep up, so landlords have the freedom to choose any prices. The reason there is so much demand is because there are way more people on this planet now than there ever used to be. So if you want cheaper houses, solve the overpopulation problem first.
> charging a premium for unused land in desirable areas (parking lots don't house people)
Housed people need parking lots though. Tons of places are not, and never will be accessible with public transports. I live in a city with a great public transport network but I still need a car, as much as I'd love not needing one: I need to visit friends or family outside the city, I have to make bulk grocery shopping sometimes and bags are not enough, I sometimes buy big housing furniture, I even had to retrieve parcels outside of the city sometimes... Heck, even to go to work, sometimes I'm late, or I missed my bus, or public transports are on strike, or anything can happen that I need my car to save 1 hour.
Are you American? I feel like you are assuming taking extreme measures to solve US problems. Have you considered how similar measures already affect markets in other countries?
ad. "not a market" - When you do that are you going to also forgive my crazy large mortgage?
ad. "protect tenants" - In Czechia we protect the tenants more than landlords. If you mean that this should scare people from renting that works quite well. People do not have much leverage here to kick out tenants who are problematic or skip payments.
>The sooner we collectively decide that housing shouldn't be a market
Then how would you recommend houses trade ownership?
>so developers are incentivized to build more housing
How do you prevent the development of shitboxes (it's a technical industry term)? Because that's what builders build when they need to hit a particular price point at scale. Houses that are quickly built out of low end materials and will decay over about twenty year period unless a homeowner invests considerably in upgrades.
>one shouldn't be "priced out" of the home they've lived in for 20 years
I'm in full support of the concept, but when you start to look at the causes of this, it gets complicated quickly and many of the causes aren't even directly related to housing. It's not just as simple as property tax moratoriums.
At least in the U.S., you'll also need to replace the system of local governments being mostly funded by local property taxes. That results in local government (and the residents who elect it, and whose taxes fund it) being very strongly in favor of high-end residential development (ideal - a gated neighborhood of mansions, or a luxury skyscraper, with absentee owners), and very strongly against low-end residential development (worst case - a mobile home park). Vacant mansions will pay very heavy taxes, require minimal city services, and generally push up property values (good for all those already aboard the property ownership pyramid scheme). Mobile home parks will do quite the opposite.
> I'm also of the much more radical opinion that we should protect tenants over landlords in nearly every case,
At least you understand this is radical. Developers/landlords are the ones providing and maintaining housing, not tenants. The government is incapable of doing this themselves which is why it’s left to the free markets.
The only real issue is that the ‘free markets’ are anything but. Governments overly try to dictate policy which continues to hurt us (a well known feature is state run economies)
Examples of this are zoning restrictions (NIMBY) and rent control.
Broad, idealistic government policies are a disease; they will never be as efficient as entrepreneurs.
Housing shouldn't be a market? Then how would housing be allocated? The state builds and gives housing to everyone?
Maybe you should take a trip to Eastern Europe one of these days to see the final result of what you're advocating. Pros: everyone is given an apartment to live in. Cons: your city's skyline looks like this: https://i.imgur.com/5X1sIeP.jpg
"We collectively decide" just means you decide for me. You think you know better than everyone else and want to impose your values on others.
I’m sorry but respectfully, literally none of this will effect the outcomes you desire. You will assuredly constrain supply and decrease vendors to produce new supply.
And how is that different from a market? All we have to do is tax land appropriately and remove NIMBY regulation that prevents higher density building. Over time the land tax will displace inefficient single family homes, parking spaces, etc where needed. A good way to celebrate the upcoming 150 year anniversary of the release and continued ignorance of the book that pioneered this policy.
I guess you are unaware of all the money people pour into their homes - renovations, furniture, upkeep, maintenance. People spend all kinds of money on nice things, but nothing comes close to the home itself. There will always be a market for this.
Housing isn't a market because there are 1001 restrictions on supply and subsidies for holding large amounts.
I'm far from right wing, but let's not pretend the issue here is a market not working. It's that we rigged the whole system and then blame "the market" for the results...
Cut down home ownership to max 3 homes per household. Otherwise rent from someone else.
And yes it’s possible to be capitalist and agree with sensible regulations. I’d rather we focus on building amazing companies and utilizing labor effectively.
In spirit I agree with some of your ideas, and I hate rent-seeking.
However, where I live, I nearly ended in a situation where I was not allowed to sell an appartment I owned and had lived in for 20 years.
I had moved to a different city to work and live with my girlfriend, and had rented out the apartment, because obviously it is expensive to both hold one apartment and pay for a second one in the new city.
I had rented out the apartment, because initially it wasn't clear if we were staying in the new city or going back to the old city, once my girlfriend had finished her degree in that city.
I had made a written agreement with the tenant they rented for 2 years.
1 and a half year later, we had decided we were going to buy a house in the new city and stay there.
I wrote the tenant to inform them, I had decided to sell the apartment, come the 2 year date.
"OK", replied the tenant, "it's just that, I've decided I don't want to leave this nice cheap apartment anyway, and prefer to stay.."
So I start to read up on the law in my country regarding these things. It turned out, in my country it is nearly impossible to make a pre-determined time-limited rental. In fact, there are only 4 scenarios where it is possible.
It turns out, our contract should have had the specific wording "I rent out this apartment for a period of 2 years, because after 2 years I am going to move back to it myself, on this date, because I have the following specified timelimited activity I'm doing at location X". Because my contract only stipulated the duration, but not specified the exact legal grounding for the limitation, it was not valid.
TL;DR. I ended up having to 'bribe' the tenant with a huge sum of money, to get their written consent to leave the apartment by the originally agreed-upon date. I also ended up losing a significant amount of money on the sale, because the presence of the previous tenants hurt the price I could negotiate on the sale.
In fact, I would have made 5x more money on the sale,
than I made from received rent for renting out.
(ie I received maybe 50000 some-currency in rent (without expenses subtracted, so in practice it may have been more like 10-20000).
But the reduced salesprice was ~300000 lower, because I ran the sale while the tenants were still present (in hindsight, I should not have put it up for sale until the tenants were gone, but I paid a huge price to learn that lesson :-(.
So if I had let the appartment stay empty for 2 years instead of renting it out, I would have made 300k instead of 20-50k.
Apart from the fact, that those 50k ended up being what I had to pay in "bribe money" to get the tenants to leave. So I basically let two strangers live for free for 2 years in my apartment,
in return for them making it very difficult for me to sell my own apartment.
A final caveat is, that technically it's even illegal to leave the apartment empty in my country - if it's empty for a prolonged period of time, you have to register it for "public rental", at a reasonable rent price..
So, yes, I definitely want the rights of tenants in place and protected, but it is possible to protect them so much,
you actually make the life of people who have bought a single property miserable.
A postscript: I know many won't buy my arguments about "losing money" here, since the money I would potentially earn or lose here, are exactly the sort of 'board game monopoly money' we are arguing about whether anybody should have or be entitled to.
IE the money I would make back on the sale of the apartment I have owned for 20 years, are exactly those 'the game is rigged' money,
that appear out of thin air, for not exactly doing anything (apart from maintaining my apartment against wear and tear.)
Isn't this one of those "If everyone is crazy, you're crazy" situations? If every house is overvalued by some metric, then maybe the metric is wrong. People's perceptions of value are a large part of the actual value(meaning what someone would really pay) for things like housing that should depreciate over time.
Moody's who quite famously engaged in what should be criminal conspiracy regarding the rating of MBS [1] leading up to 2008 that cost pension funds, mutual funds and investors billions of dollars makes further statements about the housing market.
Sorry but I don't put a lot of stock in what Moody's says about anything.
There's pretty strong evidence that the rise in house values is structural not speculative. This is essentially the constraint of supply. There are multiple causes of this including:
1. The US building very few new homes 2010-2020. There are lots of reasons for this. A big problem is the type of housing being built, particularly in urban center where like NYC where the vast bulk of new housing units are ultra-luxury condos;
2. Permissive policies allowing the rich to park money in real estate. This particularly includes foreign nationals from places like China, India and Russia; and
3. An increase in people owning multiple properties. These include second homes, vacation homes and short-term rentals (most notably for AirBnB). There's strong evidence that AirBnB in particular has huge negative impacts on a lot of metropolitan areas.
A lot of tempted to blame Blackrock and other instituationl investors as constraining suply. this is completely overblown. These account for less than 1% of US homes.
I can’t help but think of that saying “the market can stay irrational longer than you can stay solvent.” Yes, prices in many markets are very high and appreciating at a rapid clip, but if there are buyers, competition, and houses are continuing to move quickly, then it’s a bold statement to say they are overvalued and that we should predict a significant decline.
Everyone seems to agree that speculation in housing is a global problem with adverse effects on communities and societies. Toronto seems to be a good example of how the end-game will look like.
People are priced out of owning a home for good and/or have to leave places where they might have been living for their whole life.
Rent controls don't seem to work, and just cancelling (by whatever means) the market for real estate in general might yield a lot of unwanted side-effects.
I believe there are 'simple' measures to curb rampant speculation without distorting the market to badly:
- Disallow foreign investment in residential real estate.
- Disallow for-profit corporations to purchase residential real estate.
- Stop subsidizing speculation by bailing out real estate investors
- Invest in infrastructure so that living apart from big cities is more worthwhile. Especially broadband internet and schools.
- Add a tax penalty to vacant residential real estate.
Where I live, in an affluent town on the east coast, homes have been going for 50%+ over ask. And the asks were high.
Something is broken. Homes that wound have been listed at $1,000,000 in 2019 are going for $1.750,000 today. Interest rates going up should cool it off but I fear it will break much of the rest of the economy. There was a massive mismatch in executive policy and fed policy and here we are.
There’s something happening with Euro/JPY vs USD that is forcing a significant inflow into US assets. It’s going to continue because: (1) EU kicked the can for far too long and they cannot meaningfully raise rates without facing the realities of the debt crisis of 2010-12, and now made impossible due to Ukraine, and (2) Japan is committed to driving down the yen even further. USD is king and real-estate will reflect that reality.
I used to believe such things and then I did a median income vs price per square foot worldwide comparison and it turns out the United States is one of the cheapest, if not the, cheapest place in the world when it comes to the “affordability” (median income vs price per square foot).
I think the issue is that the United States has been too cheap and finally that era of abundance at a low cost is coming to an end.
This is an artifact caused by the fact that the house book is thin and so is rapidly depleted by a few moves from a HCOL to LCOL area, but the incomes there don't rise to match.
Essentially, a few hundred rich people moving from SF to some smaller town won't move SF's housing cost but will skyrocket the small town housing cost. However, the few hundred rich won't boost the income significantly.
This is a data artifact made from the fact that "prices" are determined by what's on the book and "income" is determined as a whole. The difference between what's on the book vs. the whole is best illustrated by San Francisco, where most people pay far less for a 1 br apartment than the "going rate for a 1 br apartment".
Even the repeat-sales method for home pricing is not immune to this data artifact because we don't use a new-job method for income. This causes decoupling of the fundamentals when you get the remote-work revolution.
I picture that vertical M2 supply graph from March 2020 whenever I hear ‘overvalued’ when it comes to real assets.
The money has changed, not the property. I’m now curious how undervalued it really is and what a huge accounting trick it was to play on everyone over the past two years.
The issue, as with health care, is that this is a market the consumer cannot choose to exit. I can't decide to not live somewhere, just as I can't decide not to have an appendectomy. I can decide not to have a tablet or a car or a bike or an espresso machine, so markets work well. But if you must participate in a market, it changes the dynamics to the detriment of consumers.
I love free markets but they don't exist without laws and regulations, and those laws and regulations must match what is being sold.
I mean think about it, people can't get housing in cities without paying a ridiculous multiple of the costs to create that housing. It's like if restaurants cost 10x or more than the cost of goods for meals. I can make my own steak dinner for like $50 in components, but if I want to eat out at a nice place, even 3x is extreme, and really nice. This is like if all restaurants, even cheap ones, were $500+. It's insane.
Would you rather hold cash or a home during a period of inflation. Most people wisely chose to put it in a house. With a 7% compound interest rate, your money doubles every 10 years. With a 7% inflation rate, I believe it halves in the same time frame. Perhaps it's not that houses are worth more, it's that money is worth less. A 350k house in 2010 should be 700k now if the real inflation was 7%. And at least where I live, that checks out. However, employers haven't raised wages to keep up with this new reality.
They may be overvalued but don't see how they could fall without forced sales. At start of pandemic borrowers got mortgage repayment holidays in Australia - so didn't have to sell if you got into financial trouble. Yesterday one of major bank bosses telling borrowers to call the bank if rising interest rates and cost of living getting people into difficulty. Somehow they will work it out whatever that means.
Yet another asset crash would annihilate whatever assets millennials have happened to acquire. This would leave the millennial generation largely asset free as they enter their 40s except for inheritance.
Housing should never have been an asset to make piles of money on. That's how we're in this mess to begin with. We need a place to live. The first priority for a house is to HOUSE someones. That should matter first and foremost.
Investors should be forced to legally go fuck themselves. Same with flippers. Same with landlords. All of these just add extra cost and exfiltrate equity for some rich person to get richer. (I've lived with landlords for 40 years. My hatred is deep here. They've taken my money, built their equity, and charged 1.5x more than the housing would have cost. Damn straight I'm angry.)
there's few cases where landlords of a form make sense - dense housing is needed in cities. Treat them like cooperatives, or do like utility companies where this service is guaranteed and here's the cost. But companies should not be able to unduely profit on the fact that people have to live.
In my city, 10 years ago, a nice starter home was around 150k. Now you can’t buy a dump for less than 200k. And those same nice starter homes are 250k+. It’s not hard to imagine why. People flipping burgers can easily make 40k per year now just in base pay. A single person working an incredibly low end job now makes enough money to get approved for nearly 200k loan.
Houses lose value by depreciation. In few decades the value is zero, then becomes negative - the price of demolition for the next project.
What gains value over time is land. Poeple only think they invest in houses, but they are fooling themselves and overspend on the construction and interiors. They pay for land.
Easy to prove - construction material and labor are highly mobile. Cement, bricks and imported labor costs the same in New York as in middle of nowhere. The price differs only by transportation costs and temporary lodging of workers. The real difference comes from 1. price of land 2. bribes for construction permits of a respective town. In other words - location is what you pay for.
[+] [-] turtledove|3 years ago|reply
Practically that means paying to build and maintain housing stocks, changing tax incentives so developers are incentivized to build more housing and less luxury housing, charging a premium for unused land in desirable areas (parking lots don't house people), abolish mandatory minimum parking, and upzone neighborhoods (eliminating the "single family home" neighborhoods as a zoning type.)
I'm also of the much more radical opinion that we should protect tenants over landlords in nearly every case, that we should protect the rights of people to live where they've historically lived (eg, one shouldn't be "priced out" of the home they've lived in for 20 years), and we should offer extensive public housing (built as many geographically distributed small apartment buildings and 5 over 1s, not giant tenements or projects.)
[+] [-] jillesvangurp|3 years ago|reply
This is not a technical problem but a policy problem. The solution is changing the policy. The current policy is to drive up housing prices by creating completely artificial scarcity. All the land is owned and earmarked. Just not for housing. This problem exists in most wealthy nations. There is no shortage of space. Just of access to that space. Mostly that's completely intentional and reinforced by generations of politicians acting on the will of the people they represent to ensure that can never change.
You have NIMBYs and vested financial interests basically. Nobody wants their property devalued. So, social housing always is unpopular with the locals. Places like San Francisco where the homeless take dumps on Market Street are of course a bit extreme. But same principle. No shortage of space there.
But it's all reserved and off limits. So, the homeless are camping out there. In the middle of a city full of some of the richest NIMBYs on this planet. That's not a temporary solution. That's a slum and it is growing. Complete with people just shitting all over the place. Slums are what happens when you let things escalate.
[+] [-] 5ersi|3 years ago|reply
Yes, we can and should regulate markets, and we probably all agree that the purpose of the housing is for people to have a roof over their head, as opposed to use housing as an (speculative) investment market. This can easily be regulated via taxes (on ownership and transactions), but it comes with a caveat: if something is over-regulated to benefit the user, then there is less incentive for investor/landlord to build housing, which makes housing scarcer and drives prices up.
[+] [-] nivenkos|3 years ago|reply
It's helped a lot here.
I don't think that social housing is a good solution. It's a complete disaster here in Sweden, with 12+ year waiting times, and massive inequality between those who have those rent-fixed privileged first hand contracts and those stuck in the unregulated wild west of second hand renting. Often resulting in the working poor effectively subsidising wealthier, older people to keep their very cheap flats in the city centre, etc.
[+] [-] pj_mukh|3 years ago|reply
There’s no need to micromanage tenant-landlord relationships or setup governmental panels on who historically deserves to live where, if the government can just make sure there is an oversupply of decent housing at all affordability levels.
The rest really takes care of itself at that point.
[+] [-] bmmayer1|3 years ago|reply
In an actual market, margins are competed away and prices drop over time, there's elasticity in supply and demand, and people don't view their 15-year old cars or whatever as "investments", they trade them up for a newer model and pass down the older stuff to people who can't afford them as much.
In housing, we artificially constrain supply with zoning laws and building codes, and we stimulate demand with subsidized mortgages and rent control laws. It's pretty much the opposite of what you want to do if you want there to be more affordable housing.
[+] [-] zamfi|3 years ago|reply
Housing is already barely a market. An actual market would be much better.
We artificially restrict the construction of new housing supply by policy and then act all surprised when demand exceeds supply and prices skyrocket.
The same thing is happening in medicine: we artificially constrain the training of new MDs and then act all surprised when demand exceeds supply and prices skyrocket.
Then people come out of the woodwork with "oh look markets aren't working!" -- but in fact the markets are working exactly as designed: those with control over the supply are acting to constrain the supply, in the process enriching themselves at the expense of all others. But instead of recognizing this fact, we look for other reasons. Sure, there are other reasons and interactions, too, but the primary drivers are supply constraints!
Imagine if we explicitly forbade the construction of new grocery stores, forced farms not to use modern agricultural techniques, causing reduced yield, and then bought up a bunch of farmland just to take it out of commission. What would happen? Food prices would, obviously, skyrocket! That's exactly what we're doing with housing.
Your proposed solutions probably won't hurt, but aside from making it easier to build housing, they're noise. In particular:
> upzone neighborhoods
This is the only one that matters -- and it needs to come with other changes too, including construction "by right", that is, without needing to go through a 3-year process of fighting with neighbors who will try whatever they can to prevent new construction because they've been convinced it will destroy their neighborhood and/or property values.
> changing tax incentives so developers are incentivized to build more housing and less luxury housing
We don't need to change tax incentives to get developers to build more housing, we just need to stop preventing them from building more housing. Developers are not sitting around waiting for incentives, they're actively being denied the ability to build. Let's fix that.
[+] [-] gernb|3 years ago|reply
[+] [-] jjav|3 years ago|reply
How do you or we decide it's not a market?
If people are paying money for housing, it's a market. And it's not just money, but the largest lifetime expense by an order of magnitude and more.
> I'm also of the much more radical opinion that we should protect tenants over landlords in nearly every case
That's already the case, at least in many places (I know not all). If you take it too far the result is no landlords, thus no rentals. Perhaps that's ok if everyone wants to buy, but if there is anyone who wants to rent, it's useful to have rentals.
[+] [-] cloutchaser|3 years ago|reply
That's where everything went wrong. At 0-1% interest you can get insane mortgages for 90-95% of the value of the property, pushing the price up to where people spend every last cent they can on mortgages, but at $xxxx per month you can easily afford hundreds of thousands of dollars in mortgages.
Raise interest rates (happening), go into recession, crash the market, stop people getting mortgages, house prices will drop insanely fast and hard.
Of course no government wants to do this because it will panic the home owning class. Well - you have to chose at this point. Make it impossible for young people to buy a home, or piss off homeowners.
[+] [-] merrywhether|3 years ago|reply
[+] [-] Ferrotin|3 years ago|reply
[+] [-] shetill|3 years ago|reply
[+] [-] throwaddzuzxd|3 years ago|reply
Housed people need parking lots though. Tons of places are not, and never will be accessible with public transports. I live in a city with a great public transport network but I still need a car, as much as I'd love not needing one: I need to visit friends or family outside the city, I have to make bulk grocery shopping sometimes and bags are not enough, I sometimes buy big housing furniture, I even had to retrieve parcels outside of the city sometimes... Heck, even to go to work, sometimes I'm late, or I missed my bus, or public transports are on strike, or anything can happen that I need my car to save 1 hour.
> abolish mandatory minimum parking
Same as above, that's an awful idea.
[+] [-] unmole|3 years ago|reply
[+] [-] vletal|3 years ago|reply
ad. "not a market" - When you do that are you going to also forgive my crazy large mortgage?
ad. "protect tenants" - In Czechia we protect the tenants more than landlords. If you mean that this should scare people from renting that works quite well. People do not have much leverage here to kick out tenants who are problematic or skip payments.
[+] [-] coward123|3 years ago|reply
Then how would you recommend houses trade ownership?
>so developers are incentivized to build more housing
How do you prevent the development of shitboxes (it's a technical industry term)? Because that's what builders build when they need to hit a particular price point at scale. Houses that are quickly built out of low end materials and will decay over about twenty year period unless a homeowner invests considerably in upgrades.
>one shouldn't be "priced out" of the home they've lived in for 20 years
I'm in full support of the concept, but when you start to look at the causes of this, it gets complicated quickly and many of the causes aren't even directly related to housing. It's not just as simple as property tax moratoriums.
[+] [-] bell-cot|3 years ago|reply
[+] [-] imapeopleperson|3 years ago|reply
At least you understand this is radical. Developers/landlords are the ones providing and maintaining housing, not tenants. The government is incapable of doing this themselves which is why it’s left to the free markets.
The only real issue is that the ‘free markets’ are anything but. Governments overly try to dictate policy which continues to hurt us (a well known feature is state run economies)
Examples of this are zoning restrictions (NIMBY) and rent control.
Broad, idealistic government policies are a disease; they will never be as efficient as entrepreneurs.
[+] [-] glerk|3 years ago|reply
Maybe you should take a trip to Eastern Europe one of these days to see the final result of what you're advocating. Pros: everyone is given an apartment to live in. Cons: your city's skyline looks like this: https://i.imgur.com/5X1sIeP.jpg
"We collectively decide" just means you decide for me. You think you know better than everyone else and want to impose your values on others.
[+] [-] cplusplusfellow|3 years ago|reply
[+] [-] tsss|3 years ago|reply
[+] [-] stjohnswarts|3 years ago|reply
[+] [-] afpx|3 years ago|reply
[+] [-] unknown|3 years ago|reply
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[+] [-] acchow|3 years ago|reply
[+] [-] LatteLazy|3 years ago|reply
I'm far from right wing, but let's not pretend the issue here is a market not working. It's that we rigged the whole system and then blame "the market" for the results...
[+] [-] me_me_mu_mu|3 years ago|reply
And yes it’s possible to be capitalist and agree with sensible regulations. I’d rather we focus on building amazing companies and utilizing labor effectively.
[+] [-] anovikov|3 years ago|reply
[+] [-] fifticon|3 years ago|reply
1 and a half year later, we had decided we were going to buy a house in the new city and stay there. I wrote the tenant to inform them, I had decided to sell the apartment, come the 2 year date.
"OK", replied the tenant, "it's just that, I've decided I don't want to leave this nice cheap apartment anyway, and prefer to stay.."
So I start to read up on the law in my country regarding these things. It turned out, in my country it is nearly impossible to make a pre-determined time-limited rental. In fact, there are only 4 scenarios where it is possible. It turns out, our contract should have had the specific wording "I rent out this apartment for a period of 2 years, because after 2 years I am going to move back to it myself, on this date, because I have the following specified timelimited activity I'm doing at location X". Because my contract only stipulated the duration, but not specified the exact legal grounding for the limitation, it was not valid. TL;DR. I ended up having to 'bribe' the tenant with a huge sum of money, to get their written consent to leave the apartment by the originally agreed-upon date. I also ended up losing a significant amount of money on the sale, because the presence of the previous tenants hurt the price I could negotiate on the sale.
than I made from received rent for renting out. (ie I received maybe 50000 some-currency in rent (without expenses subtracted, so in practice it may have been more like 10-20000). But the reduced salesprice was ~300000 lower, because I ran the sale while the tenants were still present (in hindsight, I should not have put it up for sale until the tenants were gone, but I paid a huge price to learn that lesson :-(.So if I had let the appartment stay empty for 2 years instead of renting it out, I would have made 300k instead of 20-50k. Apart from the fact, that those 50k ended up being what I had to pay in "bribe money" to get the tenants to leave. So I basically let two strangers live for free for 2 years in my apartment, in return for them making it very difficult for me to sell my own apartment. A final caveat is, that technically it's even illegal to leave the apartment empty in my country - if it's empty for a prolonged period of time, you have to register it for "public rental", at a reasonable rent price.. So, yes, I definitely want the rights of tenants in place and protected, but it is possible to protect them so much, you actually make the life of people who have bought a single property miserable.
A postscript: I know many won't buy my arguments about "losing money" here, since the money I would potentially earn or lose here, are exactly the sort of 'board game monopoly money' we are arguing about whether anybody should have or be entitled to. IE the money I would make back on the sale of the apartment I have owned for 20 years, are exactly those 'the game is rigged' money, that appear out of thin air, for not exactly doing anything (apart from maintaining my apartment against wear and tear.)
[+] [-] twirlock|3 years ago|reply
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[+] [-] melissalobos|3 years ago|reply
[+] [-] jmyeet|3 years ago|reply
Sorry but I don't put a lot of stock in what Moody's says about anything.
There's pretty strong evidence that the rise in house values is structural not speculative. This is essentially the constraint of supply. There are multiple causes of this including:
1. The US building very few new homes 2010-2020. There are lots of reasons for this. A big problem is the type of housing being built, particularly in urban center where like NYC where the vast bulk of new housing units are ultra-luxury condos;
2. Permissive policies allowing the rich to park money in real estate. This particularly includes foreign nationals from places like China, India and Russia; and
3. An increase in people owning multiple properties. These include second homes, vacation homes and short-term rentals (most notably for AirBnB). There's strong evidence that AirBnB in particular has huge negative impacts on a lot of metropolitan areas.
A lot of tempted to blame Blackrock and other instituationl investors as constraining suply. this is completely overblown. These account for less than 1% of US homes.
[1]: https://www.ft.com/content/6457f28a-d9fa-11e6-944b-e7eb37a6a...
[+] [-] coward123|3 years ago|reply
[+] [-] halotrope|3 years ago|reply
- Disallow foreign investment in residential real estate.
- Disallow for-profit corporations to purchase residential real estate.
- Stop subsidizing speculation by bailing out real estate investors
- Invest in infrastructure so that living apart from big cities is more worthwhile. Especially broadband internet and schools.
- Add a tax penalty to vacant residential real estate.
[+] [-] nemo44x|3 years ago|reply
Something is broken. Homes that wound have been listed at $1,000,000 in 2019 are going for $1.750,000 today. Interest rates going up should cool it off but I fear it will break much of the rest of the economy. There was a massive mismatch in executive policy and fed policy and here we are.
[+] [-] lvl102|3 years ago|reply
[+] [-] endisneigh|3 years ago|reply
I think the issue is that the United States has been too cheap and finally that era of abundance at a low cost is coming to an end.
[+] [-] renewiltord|3 years ago|reply
Essentially, a few hundred rich people moving from SF to some smaller town won't move SF's housing cost but will skyrocket the small town housing cost. However, the few hundred rich won't boost the income significantly.
This is a data artifact made from the fact that "prices" are determined by what's on the book and "income" is determined as a whole. The difference between what's on the book vs. the whole is best illustrated by San Francisco, where most people pay far less for a 1 br apartment than the "going rate for a 1 br apartment".
Even the repeat-sales method for home pricing is not immune to this data artifact because we don't use a new-job method for income. This causes decoupling of the fundamentals when you get the remote-work revolution.
[+] [-] adamomada|3 years ago|reply
The money has changed, not the property. I’m now curious how undervalued it really is and what a huge accounting trick it was to play on everyone over the past two years.
[+] [-] gilbetron|3 years ago|reply
I love free markets but they don't exist without laws and regulations, and those laws and regulations must match what is being sold.
I mean think about it, people can't get housing in cities without paying a ridiculous multiple of the costs to create that housing. It's like if restaurants cost 10x or more than the cost of goods for meals. I can make my own steak dinner for like $50 in components, but if I want to eat out at a nice place, even 3x is extreme, and really nice. This is like if all restaurants, even cheap ones, were $500+. It's insane.
[+] [-] dukeofdoom|3 years ago|reply
[+] [-] asta123|3 years ago|reply
[+] [-] avelis|3 years ago|reply
[+] [-] lumost|3 years ago|reply
[+] [-] noasaservice|3 years ago|reply
Investors should be forced to legally go fuck themselves. Same with flippers. Same with landlords. All of these just add extra cost and exfiltrate equity for some rich person to get richer. (I've lived with landlords for 40 years. My hatred is deep here. They've taken my money, built their equity, and charged 1.5x more than the housing would have cost. Damn straight I'm angry.)
there's few cases where landlords of a form make sense - dense housing is needed in cities. Treat them like cooperatives, or do like utility companies where this service is guaranteed and here's the cost. But companies should not be able to unduely profit on the fact that people have to live.
[+] [-] JohnJamesRambo|3 years ago|reply
This isn’t good.
[+] [-] lampshades|3 years ago|reply
[+] [-] mberning|3 years ago|reply
[+] [-] snidane|3 years ago|reply
What gains value over time is land. Poeple only think they invest in houses, but they are fooling themselves and overspend on the construction and interiors. They pay for land.
Easy to prove - construction material and labor are highly mobile. Cement, bricks and imported labor costs the same in New York as in middle of nowhere. The price differs only by transportation costs and temporary lodging of workers. The real difference comes from 1. price of land 2. bribes for construction permits of a respective town. In other words - location is what you pay for.
In Japan, this is more explicit. House value drops to zero in 30 years. https://www.theguardian.com/cities/2017/nov/16/japan-reusabl...