[zamfi]

> China built enough homes to house its population twice over, yet it's not reflected in the prices. All because everyone and their grandma is investing in real estate.

Yes, but this is reflected in China's vacancy rate: 22% by some estimates.

In the US, home vacancy rates are sub-1%.

Not saying people aren't treating homes as investments, but it seems clear we also have a supply issue.

"Real Estate is Investment" should naturally lead to overproduction as investment-only properties get built to satisfy that demand—as we see in China. In the US, we don't see that.

[seanmcdirmid]

The methodology is to take a hot city like Shanghai or Beijing, and count the number of windows lit up at night on a standard 30 story concrete apartment building. You'll find something like 25% of the units never light up. Now, those are in cities where people want to live, it is much worse in lower tier cities and new districts without services or jobs of lower tier cities.

Property taxes in the US mean you can't speculate so easily on property (you lose ~1% value a year). But they have 99 year leases instead, but everyone thinks the government will let you renew those with minimal fees.

[mrguyorama]

>"Real Estate is Investment" should naturally lead to overproduction as investment-only properties get built to satisfy that demand—as we see in China

China had massive home overproduction because the goddamned totalitarian government told builders to build or else. It was not market forces.

How do you suppose we do that in the US? Especially with this administration?

In the US, builders don't build 100 starter homes because it is more profitable and easier to build a couple McMansions and sell them for crazy prices. THOSE are the homes that get built as "investments". No builder will benefit from producing a large supply of homes, so they don't. The market will not self correct.

[andrewjl]

> How do you suppose we do that in the US?

Exempt or lighten planning requirements for affordable housing construction. California is going in this direction now.

There are other levers like subsidized financing for developers building homes targeting a certain price range as well as favorable tax treatment of those profits.

A lot of these have would probably have some bipartisan support.

[_DeadFred_]

In China, the local government gets income from leasing new construction land for 99 years, hence the incentive to build.

In the US, the largest amount of government land is held by the Feds and they keep increasing the limits on what the land can be used for year after year. Figure out how to make new home building key to government finances like in China and you will INSTANTLY have the problem solved and even have over supply.

[ty6853]

As someone who has taken raw land with no utilities to a full house all with my own engineering and construction labor this is only half the story.

To build a starter home I not only had to go to bumfuck Egypt with the most libertarian zoning anywhere near jobs I can find, i also had to rule out the 9/10 of properties with practically irrevocable covenants made by self righteous boomers back in the 80s who already built their pig farm shithole and don't want their precious livestock living near anything but a mansion.

Then I had to find a rare loophole around code compliance and inspections so I could DIY it on weekends and not be subject to weekday inspections. Most codes want stuff like an expensive egress window even though no one living in the house is bigger than a much smaller sliding window, and it goes on infinitum.

Then I had to find a place they hadn't outlawed water yet through a grandfathered well, and finally get buddy enough with the power company to actually get them to run power without royally fucking me with arbitrary requirements. Almost the entire system is designed around grandfathered protectionism while kicking the next generation in the teeth with entirely different and constrained rules voted on by people who who live in places that don't even conform to the requirements imposed on you, which of course gives them a free artificial value boost as well.

[lostlogin]

If they built double the houses they need, how is the vacancy rate just 22%?

[londons_explore]

"need" can have a lot of flexibility.

For example in some countries, many students share a house. Whereas in other countries, every student will have a whole house to themselves.

In some places, children will get their own house at 16. In others, children, parents, and grandparents are all sharing one house.

[xeromal]

Because people want to live in particular areas

[monkeycantype]

I think this paradox makes sense to me when combined with the comments above. The best way to maximize return on real estate is to influence gov to restrict supply

[Tade0]

> In the US, home vacancy rates are sub-1%.

That's homeowner vacancy rate. Rental vacancy rate is around 6.9%:

https://www.census.gov/housing/hvs/current/index.html

[Kirby64]

A 6.9% rental vacancy rate implies an average vacancy of ~3.5 weeks per year. Given the high turnover of many rentals, that seems pretty low to me. Turnaround time just to do a make ready for a new tenant tends to be a week at minimum, sometimes longer for proper overhauls (replacing carpet, fixes damage, etc). Sure, not all properties turn over every year, but there's also quite a few properties that have longer vacancies to counteract that.