Can you answer your own questions in reverse? Why aren't new developments built wholesale, complete with shopping and services somewhere out of the way (and cheap)?
There are reasons housing prices in expensive areas are what they are. Some of it is poor zoning and land usage that suppresses supply, but a lot of it is also demand. People want to live in dense, vibrant areas, even if they could live cheaper elsewhere.
How are you supposed to predict what to build before anyone moves in? A grocery store is easy, but the hipster main streets that people love are hard to nail down. What stores are going to seem “eclectic” and “cute” to the people who move in, without being too far out there or too “corporate”?
How many bars? What kind of bars? Is the coffee shop fine or does it need some kind of fancy tea time place?
What price point should these places target?
All of this is very hard to know without having people living in the houses who can be polled or observed to see what they’d want.
Cities benefit from high urban density, and reducing density means less benefit.
Cities used to be where young folks found a job and a mate. The job part isn't such a thing anymore due to remote work but I can still see the appeal of a place like NYC if you're trying to find someone.
The digital elite are mostly staying in concentrated areas, they have the money to and concentration leads to much more amenities nearby.
California Forever is trying your thing and facing massive headwinds.
Homes are considered an investment because people want nice ones in locations that can only support so many (either via artificial or natural restriction). In turns out homes outside of those locations can get really cheap since finding buyers is hard.
Im all for cheap simple houses for those with less money. However, unless they are so cheap as to be disposable, they too will be investments.
What your house would cost to replace is only very tangentially relevant to what its resale value is.
They have borrowed cash to purchase an asset they think will maintain or go up.
Renting would be the short position.
https://www.investopedia.com/ask/answers/100314/whats-differ...
The US is a FIRE economy - https://en.wikipedia.org/wiki/FIRE_economy
still, I think building more really is what's needed, so subsidies for building would be a great way to stimulate building, as well as better funding for city permit departments, and also challenges to more egregious zoning restrictions.
If my house goes down in value but the trend is roughly general then I don't care indeed.
It matters to me for many reasons I doubt you find sickening or sinister. It matters because my family might want or need to move for work. It also forms a major part of my retirement, and how I will feed and take care of myself in advanced age
It makes perfect sense that it has financial value to someone else, because it would take a tremendous amount of material and labor to re-create if it burned down.
We just keep trying to crowd into existing places.
Arguably the Sunbelt suburban cities are new cities. If 90% of a metro's population is new since 1945, that's a new city grafted onto an old town.
In the US at least, we have built new cities, and we have also crowded into a smaller number of winner cities.
Canada, despite being huge, actually has fewer opportunities for new cities because building on the Canadian shield is impractical.
It is impossible for housing to be simultaneously a good investment and affordable. Policymakers simply have to decide if they cater to those that already own homes, or those desperately wanting to buy one.
I feel strongly housing is a basic human right, and so we should stop viewing residential property as an appreciating asset.
This is one of those meme-phrases that no longer really means anything.
> Policymakers simply have to decide if they cater to those that already own homes, or those desperately wanting to buy one.
What exactly would you propose this means?
A house is always going to appreciate over the long haul on average, simply due to inflation. Are you proposing policymakers should decide to make inflation go away? (If it were so simple to accomplish that!)
It means exactly what it says it means. You can either making residential housing something that regular people earning regular salaries can afford to purchase, or you make it a vehicle for investment to grow money, so that rich people, and companies and brokerages and all the rest want to park their money there so that it will grow rapidly.
> What exactly would you propose this means?
Policymakers could decide to implement laws to limit how much of an "investment" housing can be. Obvious choices are limiting houses to only be owned by humans, limiting how many each human can have and penalties (tax or otherwise) for trying to "make money" from owning residential housing.
> A house is always going to appreciate over the long haul on average, simply due to inflation.
Residential property appreciates WAY faster than inflation. Since covid most Canadian houses are up at least 50%.
Has inflation been at 50% during that time?
Think about what conditions would need to be true for housing to be a bad investment.
>I feel strongly housing is a basic human right, and so we should stop viewing residential property as an appreciating asset.
Its not about "views", it is about reality. You cant simply wish an alternative into existence by closing your eyes.
The most simple of all - It goes down in price.
With high density housing, me and another few hundred people who would have been demand for land can instead buy condos or rent apartments and share that plot of land. Our demand was satisfied for fractions of a percent of the supply it would have taken with low density housing.
Ie high density housing efficiently uses land, thereby reducing demand for it.
Some areas will be gentrified and be worth more. If I were going to guess, the downtown core will spike in value and the suburbs will have to drop in value to compete with the affordability of downtown living.
I suspect a lot of people would live downtown instead of the suburbs if they could get a 2/3BR that wasn’t 4x the cost of living in the suburbs.
In any case, the problem might very well be, directly, that prices are too high, because it has invited speculation and warehousing. Inventory as the crux might be wrong.
> decreases the cost of shelter.
Which is it?
While I see this as plausible in some cases, I also think it's sweeping a big error constant into "housing affordability" if we're saying that the kind of housing "affordable" to one generation is of a different kind than was realistic for the preceding generation. If your parents could afford a single family home with a yard and you can afford an apartment in a building put up where someone's single family home used to be ... surely we can agree that actual housing affordability meaningfully decreased?
You subdivide and build another house on the lot with building value 300K. Total land value appreciates 50K.
Outcome
Unit 1 land 175 + building 600, total 775 (and the owner gets 175 for the land they subdivided and sold off , coming out ahead 50k in cash)
Unit 2 land 175 + building 300, total 475.
Average unit cost on the lot is now (775 and 475) = 625 (30% decrease)
Value and affordability can be considered independently.
Increasing median income and economic growth both increase affordability, even if housing costs track inflation.
Given 1% growth a year that would take close to a lifetime to just halve current home prices per income. It isn't a solution for the people living today.
With a more realistic number of 2% (for the US), you are talking about a 35% reduction in Price/income in 20 years. I think that is a very optimistic case to shoot for socially and politically.
If the median income increases from 50K to 100K (adjusting for inflation), and houses stay at 500k (adjusting for inflation), they have become more affordable without losing value.
Using home equity as a long term store of value seems nuts, what if your town turns into the next Florida (uninsurable hurricane and flood zone).
These are pretty well-known risks. The people buying just think someone else will bail them out (and aren't generally wrong).
1) Government could put up down payments for first-time buyers in exchange for say 50% of the home equity. Buyers obtain a normal mortgage loan. Such buyers can optionally pay back the down payment over time and get 100% equity or govt regains their share of equity after a sale.
2) Government could offer landlords payments for equity in rented property and convert willing renters into owners. Renters can pay back the government over time to gradually gain equity. Landlord shares ownership with govt and some or all renters.
Eventually people will just stop participating in the housing game and there’s no telling where that will lead.
Everyone has a price they wouldn’t or couldn’t afford housing.
What game? Not being homeless?
People will always want a place to live.
This has made me determined to fight affordable housing even more so. I'd also like to ask, why is British journalism so shit tier? It's a fucking joke.
I'll pick door number two, Monty. Not because that's what I actually want, but because I'm pretty certain that's how it will play out.
Lowering nominal asset prices is almost as hard as lowering nominal wages. It only happens when policymakers screw up.
That's what inflation is for.
Today, affordable housing means someone takes a loss. In new housing, the builder or the lender could take the loss but they won't start a project unless they are guaranteed to make a profit, which means the property owner takes the loss.
Deflating prices on existing housing means either the lender (ha!) or the homeowner takes the loss. An additional impact of deflating housing costs is that there may not be any equity for major repairs like roofing or medical expenses.
But it's important to realize that if a mortgage goes underwater, nothing happens.
If you buy stocks on margin loan and that goes underwater too much you get a margin call and are in deep trouble.
A mortgage is nothing like that, it can happily go underwater and nothing happens. My mortgage has been underwater twice during its existence. No big deal.
Okay.
(Expand or they're going to flag you for snark.)
The cohort that is currently at prime home-buying age (and, really, most people under the age of 50) have had the wealth that was generated by their labor and productivity systematically siphoned to mostly-older higher-earners, in order to shore up unsustainable compensation and retirement funding for the professional managerial/executive class and Silent Gen, Baby Boomer, and Gen X workers. The value of the overbuilt, low-density, transit-access/amenity-access-poor housing that they've built or speculated on plummeting would be not only economically healthy (as it would act as a stimulus for non-asset-speculation activity and finally incentivize density and transit access, while disincentivizing the socioeconomic/racial exclusion that characterizes most American suburbs and which drives so many of our objectively terrible NIMBY-focused municipal planning decisions), but also just deserts.
Just my 2 cents. If we are reliant on Boomers giving up their house values (which many foolishly rely wholly on for retirement) then there’s zero chance we tackle this crisis.
Can you explain what this means? What does "substituted" mean in this context?
Building dense urban dwellings, especially cheap ones, shouldn't impact the price for better housing much.
This is the same reason the availability of paddle boats doesn't impact the price of megayachts.
Part of this is housing, but part of it is just people wanting to live in a high-demand location and thereby tempting politicians and developers. You can satisfy the important part (housing) without the bad part by prioritizing building outward. Create more communities, which have the opportunity to become high-demand, instead of destroying places people have worked hard to live in and in which people have developed solidarity and community.
We could fix that problem by 10X-ing the number of players on the court at once. So, rather than 5 players per team the court would have 50.
45 more people would be starters!
We accept the limited availability of other luxury items, why is housing in a _specific_ locality any different?
If housing affordability is a problem, live somewhere else.
The complaint is that good jobs are accruing to particular areas, through nothing the inhabitants of those areas have done, and then the locals are using that accrual of jobs to boost their own property prices.
Housing in a specific locality is a weird luxury item because people often don’t really want the housing, they want access to the job market.
So an underlying question is “are we okay with citizens enriching themselves by gatekeeping the good jobs behind a paywall?”
Their desire to enforce scarcity is causing societal issues as workers demand more wages to pay for the housing, prices of everything go up as a result of wage demands (among other things), and the US deals with its citizens funneling ever greater portions of their income to housing.
There are a few problems with that statement.
Less expensive homes tend to be in regions that lack jobs. Most of these regions also lack adequate infrastructure for remote work. Many of these regions also lack the resources for people to meaningfully live off the land, never mind the resources and infrastructure to generate income off the land.
This isn't really an example of capitalism. It is extraordinarily rare for people to be compelled to surrender their property to facilitate development. It is far more common for property owners to be denied the right to develop their own property in the manner they wish due to restrictions imposed by the government.
Quite often this isn't even an example of democracy. A group going to city council to lobby against a development is not necessarily representative of the community as a whole. Zoning laws developed fifty years ago don't necessarily represent the interests of people today. Then you have complicating factors. Democratically elected representatives at the provincial and federal level may be pushing for more housing because the population as a whole is pushing for more housing, while city counsellors are opposing development since the people who voted for them oppose development. Who's voice is more important? When everyone is saying: we need more housing, but not in my neighbourhood, how do we decide where housing gets built?
Finally: while some housing is luxury housing, housing is not a luxury item. People should not be denied access to housing due to income. People should not be denied access to housing in a reasonable location due to income. By reasonable location I mean things like reasonable physical access to employment, education, transportation, and material necessities (e.g. food). The environment should also be safe. In other words, that penthouse suite on the waterfront is a luxury item. An apartment within thirty minutes of the shipyards, in a community with a grocer, a school, a low crime rate, and isn't a former toxic waste dump is not luxury housing.
Housing price dropping is good for basically everyone I say.
If prices go down I won't sell my current house for as much as I bought. If I try to upgrade, granted the new house will be less expensive, but I won't have access to as much funds to pay for it.
If you build X affordable units, but let it 2X or even 1.1X new residents, the prices are going to go up.
The YIMBY types tend to be in love with unconstrained immigration. Unfortunately, more people means more competition for housing.
You're explicitly assuming "1.1X new residents" but the point of YIMBY is to increase supply fast enough to maintain housing affordability. You're making the case for YIMBY rather than disproving it.
Like it or not big cities have a future of big ghettos for poor and desperate and the real estate value there will surely drop retargeted to mere local human exploitability index (or hum much you can milk from the desperate before they start looking for you without friendly and civil intents).
Personally I left the big city for a nice mountain area where I built a new home, unfortunately for me my parents (who start to be a bit elder) do not want even if they can economically leave the city, so I'll suffer indirectly the easy foreseeable high entertainment costs of city classic buildings (at least here in EU, where most buildings are terribly designed and for another era) then the big drop of real estate value (plus taxes who will NOT drop) but I've NOTHING against that, it's simply a fact any rational human see if he/she do not want to be blind, the point is that if we start debating and moving slowly with public support we can transform the inevitable storm in an opportunity, otherwise it will be just another 1929-alike crisis probably covered by a concomitant global war.
My mom owns a single family home near the best park in her city.
The only way housing prices will fall in that city is if they build a massive number of affordable, high density buildings.
Which will significantly increase the population of the city, because people keep leaving for cheaper locations.
Which will significantly increase the price of my mother's house, because it'll be much harder to find a unit like hers, and there will be many more people competing for it.
Removing those policies will decrease the cost of the minimal housing unit by increasing supply, but also increase land prices (by opening up more valuable uses) and increase the premium for single-family homes sitting on land (since they will become rarer), so making housing more affordable will simultaneously make existing houses more valuable.
I'm fine with losing 3-400k value if it means we have all but solved the housing crisis locally.
