Increasing wages will not fix the housing crisis, and will just drive prices higher. How convenient for a bunch of realtors...
But the current housing market doesn't feel sustainable. I don't understand how a proper middle class family could afford to buy in this environment, unless they are willing to put off any savings indefinitely.
Suburbs, good ones with low crime, access to jobs and good schools are desirable. Desirability leads to prices going up. Prices going up leads to property tax revenue going up. That budget going up leads to a higher $/pupil for schools, better infra, etc... Increasing desirability.
So, not a supply problem.
Here's another. Jobs are in cities. People don't like commutes, and value not owning a car if possible. Young people like cities. People go there, causing demand to skyrocket, while companies hire there. Places like NYC and Paris and London are not Houston - unlimited development would ruin the cities. There's no amount of supply that would ever make these cities cheaper. Moreover the land itself is expensive, and the building costs (labor and other costs), so there's a floor to what things should cost.
In every one of these conversations on building, you get these Reddit-style upvoted comments akin to 'it's due to zoning and NIMBYism'.
Newsflash, the world isn't California. The problem of housing costs has a lot of dimensions.
I propose - abolish the property tax paying for schools like in most of the country, and distribute school funds equally at the state level. This would reduce wealth inequality.
Second - let's revisit this return to office idiocy. If I have a million dollar apartment in a city, it's because of my commute, not because I necessarily enjoy or want to be there. More than happy to sell it to someone else who'd enjoy it more (a young person - what cities are for).
https://x.com/heimbergecon/status/1943925791055917417
As for how it all happened, I don't have a comprehensive exploration of this to share, but look at interest rates and house sale prices:
https://fred.stlouisfed.org/series/MORTGAGE30US
https://fred.stlouisfed.org/series/MSPUS
Sale prices begin rising immediately once interest rates dipped to the lowest ever (borrowers could "afford" more principal - sale price - for similar monthly payments).
Combine that with houses making up a significant chunk of balance sheets for the US, and we (collectively) are loathe to let prices fall:
https://eyeonhousing.org/2024/02/homeownership-is-key-to-hou...
The problem with a house as investiment is that, its 1 consoldated undiversifed asset that ruins you if it goes down. Its bad strategy for your children because it makes it so houses will one day be unobtainable this generation or the next. We can try to build it out but I think a lot of the issues with building houses is that we have a shortage of the people that build houses and its a project that is not really DIYable anymore in the places that need houses. (the last point might be a stretch but you know)
But beyond that, interest rates are a big driver of what people can afford for a monthly mortgage. These rates may come down a little. However, the FED facility that was creating sub 3% rates was likely a once in a lifetime opportunity.
Now that the rates have gone up, that money is chasing lower downside risk investments. Assets and commodities are the safest place to park cash when you can’t trust monetary policy to protect savings.
Allow me to introduce you to Bryan Caplan - https://www.amazon.com/dp/1952223415
We get out of it by building more, read Abundance by Ezra Klein and Derek Thompson.
Its extremely simple.
I feel like I get very little value out of what seems to be a mostly fixed/required price.
I know flat fee realtors exist, and if/when we sell our home, I’ll be looking into this heavily.
But I feel like they rank up there with car salespeople/dealers.
The realtor cartel still enforced a 6% commission, with half to the seller's agent and half to the buyer's agent. Our contract with the buyer's agent refunded half of his commission to us. So basically we got a 1.5% home discount. Our buyer's agent still made 1.5% but didn't have to babysit us while traipsing through dozens of potential homes, so it feels like everyone wins.
https://www.nytimes.com/2026/05/28/technology/sell-house-wit...
Also, it's true this article isn't recognizing the root cause, overpriced housing, because realtors in general do better when prices are high. But "realtors in general" is a very different category than "your realtor".
"We currently have 10 houses renting at $2500 for 15 people who have $2000 to spend on rent. WHAT IF, we gave those 15 people $2500 instead. Housing crisis solved?"
-This article...basically.
I’m not sure how or why this article got published by an organization that should, given its very nature, understand economics. The article doesn’t paint them or their members as people I’d trust in either side of a major financial transaction.
They want wages to go up so that home prices go up even more, and their members make even more money for doing basically nothing most of the time.
They can be some great people but as a profession they are known more for their extroversion and soft skills than their high IQ understanding of economics lol
I'd say being a realtor is more about dealing with the psychology of buyers and sellers than the economy. And yes, you are wise to not trust them. Their interests are not yours.
And as the saying goes, it's difficult to get a man to understand something when his salary depends on him not understanding it. I bet most realtors would prefer housing prices to stay high and the average home owner to stay rich. They are not here to solve the housing problem. They are a part of the problem.
https://sfstandard.com/2026/06/17/san-francisco-marina-landl...
This is true though?
I bet there is a middle ground where we could relax or eliminate a lot of building restrictions and NIMBY policies to ease the upward pressure or even exert some downward pressure on home prices. We're also fighting against 6-7% interest rates after an extensive period of 2-3%.
In this case, housing prices are ridiculously high, and wages are ridiculously low, if you compare both to the overall cost of living excluding housing.
for housing we need to replace zoning rules with a neighbor vote, put the community back in control instead of bureaucrats who block new apartments for dumb reasons or take bribes from developers to build luxury investment properties nobody wants. there should also probably be an escape hatch where anyone can build affordable/rent controlled apts without a vote but only if the location has high enough average rent. that would help balance out inequalities and break up exclusive rich neighborhoods, maybe even help against racism.
the other side is lower costs with less paperwork (removing zoning makes a big difference) and enforcing competition in the home building industry. make it easier to start a new business and break up corporate monopolies. create a safe path for undocumented immigrants to legalize themselves so they can have labor rights, make legal immigration cheaper and more predictable.
> for housing we need to replace zoning rules with a neighbor vote, put the community back in control instead of bureaucrats who block new apartments for dumb reasons or take bribes from developers to build luxury investment properties nobody wants.
> there should also probably be an escape hatch where anyone can build affordable/rent controlled apts without a vote but only if the location has high enough average rent.
So when you say landlords are the least productive class in society, it is that they are totally unproductive by their nature. There is literally nothing to be produced! The land is there regardless! Then the fact that they collect a tax on consumption of a good they did not create makes them a negative-productivity component.
If you remove landlords (but keep property managers, developers, etc, which are all different jobs sometimes played by the same people), it would be a strict improvement to everything about our economy.
Landlords assume a similar role in economy that banks do, they assume risk on your belalf. We have quantified this to an extent that you can reliably put a dollar amount on how much risk there is.
When you are renting and there is a job change or war or natural disaster or really, anything inconvenient at all, you can more or less walk away without losing much.
In this scenario, who owns the property? And if you are advocating that everyone should own their home, what is the point of a property manager? What about the people who do not actually want to own their home?
You need to be specific about what you mean by “remove landlords” because that’s a nonsensical statement by itself.
Some party must be responsible for the investment to produce the property. Some part must own the property.
The most charitable interpretation of what you’re trying to say would be that private rental contracts are forbidden and the government would have a monopoly on renting properties out. So only the government could own properties that are rented and the entire rental market would depend on how much housing the local government decided to build and manage.
This is how I know that you've never tried to run houses. If you hire out a property manager and all of your maintenance you are not making money.
I have to be an electrician, a plumber, a painter, a drywaller, an engineer, a salesman, a delivery driver, a businessman, an appliance repairman and a lawyer. And that's to make a measly 8% on my money.
> There is literally nothing to be produced! The land is there regardless!
No one rents bare land. They are renting a depreciating asset that you have to upkeep.
Yea yea yea, Henry George says that the value is provided by the citizens around your property. I call bullshit. The value is the shelter, the heat, the comfort. That's what people need.
you mentioned supply and demand, if everyone is struggling to buy houses, downpayments wouldn't just go down a little.
in the end, everyone needs housing, every single house would be occupied just as now, but instead of having renters being squeezed by supply and demand you would have owners.
how is that a worse scenario?
let developers have rent, they are the risk takers, they deserve it.
Without renting everyone would have to buy a house / apartment on each move.
For instance: I bought my wife's grand fathers house. It appraised for $165k, and he sold it to me for $130k, I put $50k down, and got an $80k mortgage. I earn a very decent amount around 4x the median household income. I have 22 years of employment history with 0 days "unemployed". I have maintained a DTI of less than 10% and a Credit Rating of 800+ for at least the last 15 years I've been tracking. I have more money in my brokerage than the house is worth, let alone the mortgage, and yet it still took 3 different banks, and over 13 months to close on the house. I was denied by Bank1 (who I have over 20 years of history with) and Bank2 (who owns my business accounts and holds $10s of thousands on average up to $100k regularly). Bank3 approved me, but by the time they approved me, interest rates climbed from 2.5% to 5.75%.
TBF, would you give some randomer a few hundred grand without a strong guarantee you'd get it all back?
There's risk in owning housing and so we should make sure people get rewarded for that instead of rewarded for owning land.
I personally think it’s usually a shitty investment and a waste of my life, so I’m glad to pay someone else to use theirs.
Landlords do not manage properties. Property managers do that. Property managers should get more reward for managing properties and landlords should get less.
Sometimes these are the same individuals and they lump their fees into a single check, but these are not the same jobs and they should not be treated the same.
Cost of money (inflation), building, and maintenance is the floor for rents.
Median rent in the us today is around $1,750, or around $21,000/year. Today's median income in the us is around $89,000. So, housing cost has nearly doubled, while wages have only risen by about 5%. And that's just housing. I'm sure the math for healthcare and education costs is even more grim.
On the other hand, wages haven’t kept up with inflation and the super-wealthy are constantly capturing more of the value. At least in the case of small-scale landlords, maybe they are just the only lower-to-middle class people who’ve managed to defend the deal they had in the 90’s, proportionally speaking…
Rent for one bedroom apartment was 500$ in 1998, cold / hot water included other utilities are extra.
I was making 35K back then and it was enough to afford relatively good living - car, groceries, gas, occasional meal for 2 at a restaurant.
And gas was 35cents on the Wet Coast of Canada.
It was common plot point in media to: 1) kick your kids out at 18, 2) if two men lived together they were assumed to be dating.
HVAC, transportation, anything beyond maybe emergency medicine, Internet access, education, drinkable tap water, …
The fact that the bulk of the US population has these things is what makes us a first world country.
The common factor: the capital class screwing over the working class.
This thought terminating cliche is getting real old. What are your solutions? and what evidence do you have that those solutions will solve the problems? Shaking your fists at "the elites" and regurgitating populist slop is not going to
https://usafacts.org/answers/are-wages-keeping-up-with-infla...
It is in fact rents, especially with mandatory add-ons. The actual cost of renting a place is a lot more than the direct rent payment.
Meanwhile, where do the money for OpenAI and the SpaceX IPO comes from? Who got hold of so much money? How did they got hold of it?
And here's the killer question: would they, and the rules and system supporting them, change in any way if there were less immigrants?
You cannot live in Musk's banking account. You have to have the actual physical structure, and current laws in hotspots like San Francisco and New York do their utmost to prevent new development.
Places like Austin, which are less restrictive, don't have this problem.
>Places like Austin, which are less restrictive, don't have this problem.
Not really fair to compare 2 cities on the waterfront with no obvious space to build over to a city in the middle of Texas. San Francisco is even worse than New York(IMO) because of the hills.
I’m sure many immigrants had money on the IPO as well?
This has been a key factor in my fiancée's and my decision to move away, as it's simply unsustainable for families with children.
Ed: obviously the 50/30/20 rule sums to 100% so would need to be net - although the US is weirdly treating health insurance as a "premium service" that go into the 50% here, not into taxes like in a modern society.
So the second-hand/used market is red hot. Renting has become so expensive, that many landlords have exited - so we're likely heading into a really bad crunch in the near future for the renters. I've read about people spending 50%-60% of their net pay on rent alone.
I recently entertained the idea of building a new house. Not terribly surprising, but worth mentioning that the time and materials to put up the structure was going cost even more than buying a used house. If nobody can afford to buy a less expensive used house then naturally nobody is going to build the much more expensive new house either.
Therein lies the bottleneck.
The real killer for them is interest rates, as they finance the whole thing and then can pay it off when all the homes are sold. High rates make the finances much more challenging to work.
Where I live, people are blocking the construction of new apartments because the cost of the new ones is a bit higher, 10%-50%, than the average existing apartment.
The idea behind blocking the new apartments is that "new expensive apartments don't help anybody" and people get very upset that the new housing is going to the type of person that can afford to pay slightly more for the newer apartment. Rather they would prefer that new housing is only built if it's cheaper than existing housing.
So when housing does get blocked, the existing landlords demand the higher new rents that those wealthier people pay, driving up the overall costs on old apartments. The poorer people get displaced, the wealthier people have housing but worse housing, and the only people who are better off are the landlords of the older apartments.
I live in an apartment in Stockholm but I also own an old forest cabin. It’s perfectly legal for me to live in said cabin permanently, but it would be strictly illegal for me to build a new house to the same simple standard. The building codes are basically making it illegal to be poor.
Similar patterns exist for student housing. The old style of student corridors with small rooms are no longer being built. Instead we are basically getting full apartments with individual huge bathrooms because the building codes mandate that everything is wheelchair accessible even when it’s practically temporary housing and they could get by with making 1/10 apartments accessible.
And that’s not even getting into how NIMBYism is enabled by laws that basically guarantee stagnation anywhere housing is in demand.
Shit’s fucked.
- Boom of AirBNB's and apartment rentals with tourism, with real low tax rates
- Limited liability abuse - company opens up, sells 30 apartments in a new building, build out the building, don't get any permits, just close the company down and open a new one. Legally, they are untouchable, and getting the permits is now on the apartment owners. Multiple friends live in such buildings, and maintenance is a PITA, trying to legalize it is a PITA, getting water/power is a matter of making shady deals with the neighbours, basically even living in it is technically illegal but not much they can do.
- Large influx of illegal money into the housing market (we have no law to investigate source of income), so money could be laundered easily.
- "Legalization procedures" where if you built a house before a certain year, or just started construction, it could be legalised. This caused people to build "fake roofs" and then claim it as a real building later on.
- Recently, immigration joined too - workers from non-EU countries are now allowed to get work visa's, and a lot of landlords are renting out a small 50m2 apartment to 10 people at the same time for ridiculous prices. The poor workers have to share bedroom with 10 other people, which is a terrible living condition, causing accidents like a whole floor collapsing due to 50+ people living in the building. While it's not legal, inspections are rare and the grey market is thriving.
- And my favorite - as a large number of apartments are bought as investments and uninhabited - around 22% in the capital, according to official estimates, with about 500k free total, in a country of 3.5 million people - the government got a great idea:
They will free up more housing, by offering the landlords of the empty apartments to rent thenm out with government guarantees. This means the government will pay them out 60% of the future rent money immediately, so the landlord can buy another apartment as an investment immediately using that money, and just get richer.
Now, we're in an interesting situation:
- Prices have risen quite a lot, like 3x over the last 5-6 years
- Existing landlords will get funding from the government to buy more apartments
- Meanwhile, new loan rules came out, prevent people from getting a loan that is more than 45% of their salary (after subtracting the costs, including your current RENT). 10% of the value has to be provided immediately by the buyer, and after loan payment and living expenses, you need to have at least 900 euros remaining each month from your salary.
In a country with a median salary of 1300 euros, with median rent being about 500-700 euros, this puts a lot of people in a locked position - you can't get a loan to buy, because you are renting. So from the 1300 euros of your salary, the bank subtracts 500 euros of rent as your "living expense", leaving you with 800 euros monthly total, which is under the legal limit for getting a loan, even tho once you buy the apartment you would not pay rent anymore.
So to get a 30 year loan to buy a 50m2 apartment, you need to have about double the median salary.
Now, they are talking about property taxes, which will force people barely making ends meet to sell the inherited land/houses/apartments for cheap to people that can afford it.
"Go tell that to the middle school travel team in my neighborhood."
Why are you even making this comment? The comment you responded to was obviously talking about median wages of the entire US population. Real Wages are near all-time highs - it's just a fact, you can look up the data yourself.
It looks like people on the upper arm of the K are not only experiencing the economy differently but are also grotesquely unaware of the lower arm.
> The EU should be abolished and sovereignty returned to individual countries, so that governments can better represent their people
That sounds like a great place to live. Good weather, quiet, Italian food & culture, safe & stable, public transit to the city…and you can work remotely.
There is a crazy amount of land in the world, but either it's too expensive or you're not allowed to build over it, or a combination of both. Houses have been built for millennia but somehow in the most advanced period of humanity you're supposed to pay hundreds of thousands of dollars for a roof over your head.
I think that low key the ruling class + landlords are not interested that housing be an affordable thing, so the whole system works to create artificial scarcity. How's the population going to be forced to work unpleasant and low paid jobs if not by controlling their access to housing? You have to be too naive if you think that a few minds in your country's parliament haven't thought of this.
If someday economic activity gets automated enough, and the majority of people are not needed anymore for regular jobs, and this populace gets violent with their ruling class, then I think a lot of housing will be built outside of cities, and the supply of houses will no longer be a problem.
And those laws were passed with the political will of who?
Now with the benefit of hindsight what causes that seemed legitimate were used to hoodwink those people?
Have those causes and their peddlers lost credibility or legitimacy?
Western society is basically slowly recreating old world landless peasantry because we have adopted bad world views or bad morals or bad ideologies (or whatever else you want to call them) that allow us to be manipulated into incrementally creating the system that produces that outcome.
Complaints about NIMBYism and "ship it overseas and forget about it environmentalism" are sniffing around the right neighborhood, but there's a more general problem here.
This is true, to a degree. There is another factor and thats WHAT kind of housing we build.
> ruling class + landlords are not interested that housing be an affordable thing
Off the mark, the real people pinning housing prices where they are, are home owners. Home ownership is the leading predictor of voting, and issues that maintain or raise current home prices will drive that up. https://www.gsb.stanford.edu/insights/if-you-lived-here-you-...
Furthermore home ownership is a functionally unmovable number: https://fred.stlouisfed.org/series/RHORUSQ156N (that fed data is interesting and says a lot, capturing the 2008 financial crisis, bad lending hardly moved the needle in real terms).
> controlling their access to housing?
The reality is that this is a social problem.
Boomers are living longer (higher quality of life) and alone. They either took their parents in (cohabitation) or put them in homes. I know plenty of elderly people who are living in large houses, by themselves, who had their parents, at that same age living with them. You're not going to see a bunch of retirees moving in together to save on bills - The TV show "Golden Girls" would not make sense today.
On that note, cohabitation among younger generations is down. Fewer people have roommates, and lots of them "want to live alone" - sharing a house with 4 friends is much cheaper than living in a studio or one bedroom. And there are whole categories of housing, like boarding houses, that have disappeared. Again this is a cultural problem, look at the TV show "Bosom Buddies" - this is something that would be lost on a modern audience for so many reasons.
Part of the cohabitation issue is "renters rights" have gone way too far. There are plenty of people with space, who will not cohabitate because the risk, cost and pain of a renter turning into a squatter is WAY too high. The rules to protect good renters from bad landlords have only served to push out good landlords because of bad tenants.
> If someday economic activity gets automated enough... This will never happen. If you dont think were going to find new things to keep busy and if you dont think were going to find new ways to compete for "dominance" I have news for you.
"The biggest flaw: It uses gross income, not take-home pay
One of the biggest issues with the 30% rent rule is that it’s based on your gross income—not the amount of money that actually lands in your bank account on payday.
To illustrate this flaw, let’s use some real-world numbers. According to the latest FRED data, the median household income in the U.S. is about $84,000 per year, or roughly $7,000 per month before taxes.
Under the 30% rule, you could theoretically spend about $2,100 per month on rent if this is your income.
But let’s take a look at what your take-home pay could be with this salary. "
And unless your argument is that public services are 2.48x better now, then yes, I know that the problem is, as usual, that the government is taking workers money away to do as they please.
Inefficiently taxed land, and artificial scarcity via laws, turned housing into an asset class. This problem will not go away, in any country, as long as those two things are not resolved.
The political power base of a city is usually the land-owning class. Everyone from homeowners to commercial landlords that also live in the city. Roughly, every single person gets one vote when it comes to elections, but in the reality of local politics, the homeowners dominate due to their long-established social networks and the low-information environment of most local elections. Large landlords have barely any more influence than the random homeowner, and renters as usual are completely disorganized and are nearly impossible to organize.
We need both a much stronger organized tenant movement, and enough class-traitors in the homeowning class in order to get an LVT to stick. Ideally it would legally imposed at the state or federal level, and administered somewhat locally, with a mixture of funds going to the municipality, county, and state levels of government, IMHO.
Without a broader base of strong political support, LVTs eventually get voted out by the land owners, like in Vancouver in the 1970s.
Modern budgets are not much more complicated. The rent is too damn high!
Like if a landlord wants to sell their building and someone comes along with an offer for $500k then the current tenants have an option to buy it at that price.
Certainly would be annoying for investors looking to buy quickly but potentially life changing for long term tenants about to get a new landlord.
The grim reality is that over-financialization of markets combined with a lack of regulations against predatory practices (like surveillance pricing and algorithmic rent setting) added gasoline to the bonfire that was a fundamental housing shortage brought about chiefly from treating housing itself as an appreciating asset rather than the land housing sits on and taxing accordingly (don’t even get me started on residential property tax schemes popularized by the Baby Boomers and the associated gap between sale price and tax assessed values dictated by law). Growing wages won’t fix this, nor will cutting interest rates. Building more housing is the only way out, but existing homeowners don’t want their assets to decline in value, so that’s generally not happening. Rent control is becoming increasingly popular, and I think it’s a good idea to protect existing renters and force landlords to side with wanna-be homebuyers instead of homeowners by forcing revenue growth through volume creation (new housing) instead of rent hikes.
"Map showing the affordability decline by state as costs of living outpaced wages"
so a + is an increase in affordability as the title indicates (wages outpacing COL), or + is a decrease in affordability aka an increase in non-affordability (COL outpacing wages)
https://na.rdcpix.com/a19175a2a7e40c2a2272c013b8b3458aw-c174...
I think this is all demand/supply problem. There were way more rental listings May/June 2024 than this year.
