Build more housing. Keep law and order.
No it doesn’t need to be “affordable”. Yes rent control is a terrible idea.
Just build more housing.
Note: that the US already has plenty of housing and housing costs basically go up in areas of low crime relative to economic opportunity. If you build housing, but allow crime to rise, you have wasted everybody’s time.
So yes, it really is "just build more housing." The problem is: why would you build more housing as prices fall?
The answer- essentials can never be a non-government interferring market. This can be by creating artifical oversupply by buying up oversupply for foreign aid or bio fuels(food production). In the case of housing, this is by having the goverment continually construct housing.
Markets don't optimize for "everyone gets some", yet that's precisely what you need for housing. You'll always need the government to come in at some point to provide for those left behind by the free market.
Building is risky and costly
Having an asset that appreciates on its own regardless of what you do with it is not
Vacant land that's desirable is often held back from development due to zoning or infrastructure issues.
Nah, it's mostly speculation. Zoning/infrastructure issues get baked into the price. If you cannot build anything on a plot of land, its price falls.
I'm honestly trying to take this seriously, but I really can't square the problem of location and utility. On of the reasons why West Virginia has such a low homeless rate is just that mobile homes and manufactured housing is pretty much legal in many areas around the state. One of the reasons why California is so expensive is that those types of inexpensive housing options are effectively illegal statewide.
What are the employment options there? If I move to a cheap house somewhere where there are no jobs for me, I just moved somewhere where I cant afford.
Again, I'm not trying to be difficult here, but "where" is "somewhere." There are jobs in Austin, San Antonio, Kerrville, Marfa, and El Paso. They might not all be for me, but they exist in all these places. Where you live and what your commute is, again, is not exactly something that's particularly trivial to define. At what point should I start looking in San Antonio rather than Austin?
These are hard questions. This is what I mean when I ask whether I have a right to housing in Malibu? At what point should I be expected to just move to East LA?
At the end of the day, housing in Austin is relatively inexpensive. There are real options below $300K. Living in SF, it's pretty astounding that that's even possible within the city limits, much less at reasonable commuting distances.
I certainly think incentivizing subsidized low income housing is worthwhile, and I think even incentivizing builders to just target the low income price points is also worthwhile. I just think that focusing on subsidizing the lowest income folks, rather than letting markets actually work for most people has been shown to trivially fail in CA where I live at actually accomplishing anything. A lot of "ugly" 5-over-1's have been built in Austin, and it's working to keep the place affordable for working class people. I'm absolutely fine with that.
But it isn't a right, just because you would like it. Same as I don't have a right to a car at price I would like, just because I live, by my choice, in rural environment close to nature. I desperately need one though for work commute, shopping, taking kids to school etc so thats as non-optional as accommodation to existence of my family. I can either suck up car's actual prices, move whole family so I don't need it or do similar choices in life to tackle that.
But car ain't a right. Same as your own accommodation, of course not a modest small apartment but a house, ideally close to work, amenities, schools, and costing peanuts. Literally what everyone else wants. Or am I incorrect in your expectations? Because if yes, its easy to accept cheap remote small old properties, those aren't expensive for above-average earners at all, anywhere.
China has a 96% homeownership rate.
Kazakhstan 98%
Laos, Romania, and Albania 95%
Slovakia 93%
Russia 92%
> Everyone has the right to a standard of living adequate for the health and well-being of himself and of his family, including food, clothing, housing and medical care and necessary social services, and the right to security in the event of unemployment, sickness, disability, widowhood, old age or other lack of livelihood in circumstances beyond his control.
It's almost like those words are the product of useless bureaucrats, rather than an actual right.
Capital that could be invested in better serving the bottom half has to compete not only with the use of those resources to further enrich the rich but other investment opportunities.
Think about it this way: assume you supply all the housing to all the rich people. Then there still remains untapped demand of others that can be fulfilled by further production of homes for those specific people.
This story fails when land becomes restricted, which is exactly what zoning laws cause. Zoning is a big harm to the poor.
This disregards basic geometry. Sure, in some rare situations you only have one small plot of land surrounded by existing construction or natural boundaries. But, in the majority of cases, you have one large plot of land, and you can either construct one big house on it, 5 smaller houses, 10 small houses, or 200 apartments in a block. The rich are absolutely competing for this lot with the poor.
And as inequality goes up, the rich can even start contemplating buying up surrounding properties, tearing down construction, and transforming a small plot into a much larger one.
As with everything the regulator needs to strike a balance to make the market work.
The reality of zoning laws in Western countries is to provide a target for regulatory capture by the NIMBY crowd. With the result that we're systemically underbuilding housing, then wonder why we wound up with homelessness.
> ... and even investment properties occupied by nobody ...
Not much of an investment. Something is wrong if that is happening, probably manifesting as a lack of supply. Otherwise what is the point of an "asset" that doesn't generate income, degrades over time and could easily be rented out at a profit rather than sitting unused?
Whatever scenario there is where it makes sense to have an empty property, assuming a sane policy backdrop, it'd always be better for the owner do what they were going to do anyway but also rent it out.
Short term rentals are better on that score: no one sensible forms a long-term expectation that they're going to live in an Airbnb that they've rented for a few days. (If you think short-term rentals are "bad" for the long-term market or have negative side-effects on the neighborhood, then tax them to manage that tradeoff. But banning them altogether is unconscionable and just leads to houses sitting empty and unused.)
As for larger homes, people should be allowed to live in there as larger, extended family groups - a common pattern in non-Anglo cultures. Ban "single family" restrictions since they amount to unconscionable discrimination against such reasonable living arrangements.
But, to make Austin more affordable still, you make it less expensive to build so that it’s profitable to build. Typical regulations that do this are: - Lower minimum sizing requirements - open zoning - raise height limits - make sure you don’t have unwarranted restricted fire codes (some places have elevator stairwell requirements that are insane) - make permitting easier or not required at all for some cases - no min parking requirements
Pretty sure as good as Austin is, they could easily reduce the costs by up to 30% (there are parts of the country with 50% the cost per sq ft for new construction).
Another reason is high demand in locations where offer is limited due to physical limitations. There’s always demand to live in Broadway, and offer can never catch up due to its physical limitations.
Nowhere in the economic theory there is a proposition stating that prices should fall below affordable levels, given enough competition.
Stop and think for a second. Someone in good health with a willingness to DIY and a sufficiently flexible schedule can literally build their own house from the ground up. It's a substantial time investment but not actually as much as you might think. Housing isn't very resource intensive compared to the rest of the modern economy.
The only possibilities I can imagine to explain unaffordable housing are broken regulations, critical levels of resource exhaustion, natural or man made disaster, and gross economic dysfunction.
Construction labor is quite expensive and so are the raw materials (and going up). Means there is a hard lower bound on cost and unfortunately it's not that cheap even if they built at zero profit (which nobody will).
In reality, those ideas do not apply to the housing market, esp. as there is no real competition; and because the demand is absolutely inelastic (if we are already applying in MBA-wording universe)
Also, that this is true you can see if you compare to housing markets which "are more free than the Australian"
Do you think, people will migrate to a city with an unaffordable housing (unaffordable for them)?
Unless you are living in North Korea, the competition is also there.
- inelastic means the demand is more or less independet of the price; you can't "just stop renting & living" if prices are going up, your options to bypass are highly limited -> therefore its called >inelastic<
Literally an appeal to ignorance.
"What else could it be?"
No. Why do you guys fall so easily for the "regulation" cliche?
The answer is far easier: unwillingness to invest.
Why are there investment funds willing to burn through tens of millions in stupid stuff like NFTs or pets.com, but investing $10m on a 5 story apartment building that can get you a solid RoI of 20% is frowned upon?
I know some people that are currently "willing to invest" in buying a ship container or two and transform it into a house to get costs down. The problem? Regulations don't allow them to put the container in their own property.
Sure you're free to go out into the middle of nowhere and build all sorts of wild stuff but there's no market for that because that isn't actually what anyone wants. You can't blame the investors when what people actually want to pay for has effectively been outlawed.
- reduce restrictions around planning / construction / etc (because it takes time and expertise to comply, both of which cost money)
- find a way to bring in cheaper labor, or make it possible for construction companies to hire the same labor at a lower price. Maybe a subsidy, maybe reduced taxes, maybe relaxed labor laws
- add a subsidy for homes
- make your citizens more wealthy, so the price is no longer above their means
- outsource construction to a place that can build it more cheaply (eg, prefab homes)
It's far easier than that: just have your regional/local government finance urban renewal projects that increase occupation density. You can even tie the project to the expansion of a public transportation system.
I can only think of extremely land-limited places like Monaco and Gibraltar. Where the answer is "not everybody should live in Gibraltar".
But the US has a lot of land. So much land that it can afford wasting it on endless sprawl of single family homes, which is the least efficient way of providing housing. Most Asian megacities would not be able to exist if they had as strict zoning principles as the US has.
Maybe you should also think about barriers such as "bans on boarding houses". This is what messes with poor people the most. A room in a house full of rowdy individuals sucks, but it is still a room. Possibly you may spend just a year there, then find something better. A tent in an encampment of rowdy individuals is strictly worse on all accounts except cost, and bouncing back from that is harder.
"Go build homes [beyond equilibrium]" is not a solution
Sure, so long as involves (you / us / society) not housing people which is pretty sick and twisted
Basic housing is a necessity, but people also huge homes and 2nd homes etc. So housing policy should therefore be more complicated than simply subsidizing anything you can call housing. Capping the home mortgage tax deduction at ~median home prices for example is probably a better use of government funds.
I'm not sure what you're trying to imply here. You should spell it out explicitly.
It's entirely different if you're buying the housing already built; there's no productive activity, you're just a rentier and do not benefit at all from falling housing prices.
The differences in interests between an asset holder and a productive builder are night and day.
Right... my point is that the costs are not far below the eventual sales price. That's why construction is slowing down.
And as mentioned several other times, it's actually not as simple as cost > sale price. It's margin > margin of alternative investments of similar scale and risk profile.
US homebuilder gross margins have been declining since 2023.
Every single municipality in the US I'm familiar with has done everything they can to make it expensive to build and try to remove any profit margin from building. Which leads to capital moving towards piggybacking on the rentierism of the average homeowner, the people who control the policies that make it unaffordable to build.
IIRC, Mountain House (near Tracy, CA) in the 2008-2010 crash was an example of a large new development that did not initially sell and was in serious danger of going zombie, and not having the new schools that had been promised to people moving in.
Or land ends up better value left as suburban house than developing up.
Or they build where sale cost - build cost is maximized. I.e. different city.
Governments need to build more housing. Make it bland so snobs can price discrimnate themselves to buy builders' homes. Why thrifts by the government home for value for money (and quality).
Government doesn't need to make a profit due to taxation.
UK public housing is widely known for being shit. Unsafe, puts all the poor people together in a block. There's bunch of crime, and your kids will be likely to stay stuck there or go to jail due to bad influences.
Social housing should be sprinkled around it has been found. So nice example of what I was saying.
And privately built appartment blocks are awful. One cracked in Sydney had to be evacuated. Concrete cancer and water ingress issues. It is concrete enshittification.
Comments should get more thoughtful and substantive, not less, as a topic gets more divisive.
The Grenfell tower fire was caused by a renovation intended to improve thermal insulation.
The renovation project used an external thermal insulation system that failed to meet both the manufacturer's recommendation and building regulation requirements. The particular system was actually banned in the UK while it was installed.
Tell me why you believe this has anything to do with public housing.
They're just gonna pay builders a sum anyway so it's not like they need to shoulder the full upfront cost anyway.
But surely soviet style huge blocks of tiny t0 apartments all stuck together is a dream...
Public transit. Capturing enough money from fares is difficult, maybe impossible, but it's quite profitable if you can capture the value generated by the enabled economic activity and raised property values.
The same really goes for most infrastructure. There's a reason the government operates nearly all the roads. Also the fire departments and police stations
In this case what people want is the reverse. They want the government to build in Austin.
The government should be involved when market forces won't solve an issue, ie no market will make it profitable to send an ambulance to a town 3h away in the mountains. You don't need affordable housing in the center of Austin just because it's trendy though.
The problem is the cost of inputs. Classic Baumol's disease. We cannot escape Baumol's disease by just saying "hurrr durr just gotta get people to finance projects into a market with falling prices!"
Theres no problem here. Thats how the system should work
I.e. Probably due to Baumol's disease, there is no price at which it is both 1) profitable to invest in constructing new housing and 2) makes housing broadly attainable to people.
This is a problem. There are a lot of goods (like a platinum-bodied iPhone) that cannot achieve both (1) and (2). However, unlike all of these other goods, housing is a necessity with an extremely high floor on demand.
This is the beauty of the free market because it guarantees three things:
[1] Real estate is generally a good investment and will hold value or appreciate in the long term, because supply will adjust to demand shocks to rescue values
[2] If people want to live somewhere, houses will be built for them to live there
[3] Real estate developers and construction are solid, safe businesses with great unit economics because building may decrease prices, but may still increase demand
It's when you constrain and restrict a market that players have to adjust and then you get crazy scenarios
Not as a developer you wouldn't...
You already have razor thin margins. Prices going down 10% means you cannot get financing for your project.
Holding real estate is generally a good investment. Developing real estate actually is not.
> Real estate developers and construction are solid, safe businesses with great unit economics
No they are not lol
There are only really 3 scenarios where prices are low and demand is low:
[1] There is a dramatic surplus of supply, in which case if a developer is trying to build they've not done research and probably should not get financing
[2] There is some other factor (usually high crime) in which case again, developer should do their research, and the market is operating fine
[3] You are developing super early and operating within incentives offered by the city, usually tax abatements, which drive down the carrying cost and make it a better investment.
Also important to note that in scenario [3] a smart developer will slowly release inventory to restrict supply to meet demand, and as demand grows, release more inventory at the newly raised price, continuing to do so as long as the tax abatements advantage the strategy. This is common in successfully developed areas e.g. Jersey City, and is fine as long as broad scale collusion doesn't occur
Homebuilders make at least an order of magnitude more on a very expensive item.
Looking at the Kroger 2024 Annual report shows that they have 22.3% gross margin . they pay dividends, had a stock buy back, etc so its entirely possible that they had a very low margin but gross margin seems to be similar to a home builder.
Sales $ 147,123
Merchandise costs $113,720
Rent, Depreciation, Amortization $655
Gross profit $32,748
for a gross margin of 32.7/147 = 22%
So it's not the margin itself but actually the spread between the margin and what investors could get by investing in alternatives. Real estate investment opportunities are often measured by their advantage (measured in fractions of a percentage, .2% advantage being considered solid) over 10 Year Treasuries or S&P 500 returns.
Real estate developers do often actually lose money, but the more salient boundary condition is whether they can get financing for a project, where they have to clear a bar well above the "just make >$0" bar.
Neither do homebuilders, because homes don't cost millions to billions to build (high end custom homes can cost millions, but that's not what we're talking about here).
> So it's not the margin itself but actually the spread between the margin and what investors could get by investing in alternatives. Real estate investment opportunities are often measured by their advantage (measured in fractions of a percentage, .2% advantage being considered solid) over 10 Year Treasuries or S&P 500 returns.
Okay? So they have an advantage over alternatives, which means higher profits. And a .2% advantage is not considered solid, or meaningful in any way without a lot of missing context.
> Real estate developers do often actually lose money, but the more salient boundary condition is whether they can get financing for a project, where they have to clear a bar well above the "just make >$0" bar.
Many companies often lose money, due to incompetence or bad luck. The industry as a whole has very healthy margins.
> Many companies often lose money, due to incompetence or bad luck
One of those signs of incompetence or bad luck is building a bunch of new supply into a market with falling prices, in which case you will find yourself not among those with healthy margins ;)
I don't think the free market is giving the promises you say it is - supply isn't elastic for real estate if nobody's building because there's no margins. Demand can be anywhere really.
I like to look to Tokyo for an example. Small lots, extremely predictable regulations (that are still strict enough to ensure a safe living situation), fast approvals, mean it's much faster and easier to throw up an 8-10 story apartment than say downtown Austin, and so even today they keep doing it despite land in Tokyo being very expensive. And, no sprawl.
It would be better if you considered new actual living capacity in Tokyo rather than just new constructions.
Generally speaking, freer markets seem to lead to worse outcomes overall.
Real estate is NOT supposed to be a good "investment" and only became so because the government started propping it up with bank bankstops, zoning, NIMBY, redlining, etc. If your pricing is working correctly, real-estate should be close to zero-sum.
Austin, in particular, had several nasty bust cycles where real estate prices tanked after overbuilding which is precisely what kept the cost of living under control. Alas, that is a thing of the past after 2008 when everybody realized that the federal government will backstop the banks "Real estate number must always go up! Brrrrr!"
The good news is this is totally fine with keeping cost of living under control and overbuilding, because prices will go back up over time. Most people aren't going to own their home until the 30 year mark so it really is a much, much longer term investment than anything like overbuilding or other factors can reasonably affect.
The problem is really that people started seeing 2x-10x returns on homes and started treating that like the norm. That is not a 'good investment' that is a 'money printer,' and in most cases the government does not want to safeguard that behavior, but it's hard not to when those same people panic like crazy if their home only goes up 2% in value in a year or, god forbid, decreases in value for a year.
There is really no good solution to that mentality, if there really was one then Wall Street would have uncovered it ages ago to get more people into long term ETFs.
That's bad and a central part of the problem.
I accept that my car is depreciating in value every year I own it, and but I need a car so I buy one. I don't need it to be a good long term investment, despite it being a major purchase.
The entire mindset of treating a family's home as being an investment class rival to bonds and equities is a relatively new phenomenon, and one that's clearly been detrimental to many.
> That's bad and a central part of the problem.
Why? Or to ask in a different way, how could it not be?
For nearly all regular working people, there is nothing they will ever buy that costs more in labor and materials than a home. So of course it will be the most expensive purchase most people ever make. How could it not be?
It's not like homebuilders in Austin flee for North Carolina when the margins shift slightly.
It matters whether the margin is higher than other investment opportunities of similar scale and risk profile.
Already, the answer is very often no. In Austin, the answer will increasingly be no. That means people will not finance new construction, so if demand continues to grow it will outstrip supply and prices will go back up until the margin on new construction exceeds that of alternative investment opportunities of similar scale and risk profile.
And indeed that amount of uncertainty: will I be allowed to build eventually? How long will I have to pay interests on assets before I'm allowed to build? Can I actually build what's specified in code or will discretionary processes arbitrarily change what I'm allowed to do, 18 months into the project?
It demonstrably is not what people understand it to mean to "the cost to build is lower than the price." The cost to build can be well below the sale price and development still be a totally uninvestable activity.
I guess I don’t see where we disagree?
Austin new housing starts (approx per month):
2019: 1416
2020: 1504
2021: 1495
2022: 2083
2023: 1415
2024: 916
2025: 900
2026: 481
The problem here is that the market obviously does not have perfect information, limited mechanisms to coordinate, and significant lead time. It seems pretty much baked in at this point that many of the projects currently underway will complete into a negative market and (assuming Austin remains somewhat desirable) a whole lot of developers will be wiped out. This will stop development until prices rise again, probably back to a level where housing is quite expensive again relative to local wages.
The question is whether the market achieves equilibrium at a point where 1) developers can get financing to build profitably, and 2) units can be sold at a broadly attainable price to the local market.
The answer appears to be no because the cost of inputs is so high. No one here is talking about directly reducing the cost of inputs. They believe that instead developers will just continue to build units that they sell at a loss, or at least investors will continue to invest in construction that returns less than the S&P 500 or 10 Year Treasuries (they won't).
Humans don't have a ton of preferences for the electricity they consume or the water they drink, just that it exists. It's a commodity, so a good task for government. Housing is not an undifferentiated commodity and is subject to extreme variances in preference. Markets do differentiation and preference matching infinitely better.
Hence why Government housing always takes the form of a utilitarian blight on the community with giant towers of tiny apartments with tiny windows...doesn't matter if its communist Russia or the richest capitalist city on earth (NYC), all government housing results in the same outcome.
Assuming someone will chime in with some "halo" government housing project in the nordics that represents like 0.01% of the government stock there but socialists will use as propaganda. However, it's important to remember these are not cherry picked examples, they are median examples:
[1] NYC government housing: https://www.brickunderground.com/sites/default/files/styles/...
[2] Russian government housing: https://i.redd.it/twz37r739xse1.jpeg
I am saying just like any other capitalist endeavour, where things that barely existed or were quite expensive many years ago eventually reached a point where both the price became so low and quality so good that it became a mindlesss thing eg sawblades. And housing for whatever reason has been an extremely anticapitalist market. Even if we take the exact same houses people want today, their execution seems far from optimized. Think of something like precutting all the timber and sheets at a factory and doing some light adjustment and fitting on site, developing new materials that are cheaper or easier to work with tools, etc there are countless angles of attack.
In optics for example, it was mostly this rather bespoke work by a few artisans and people back then might have said this needs a fine touch that can't be done on mass scale. And then Carl Zeiss emerged. I feel housing is in the pre Carl Zeiss era.
EDIT: Neither example looks bad to me. The russian looks denser but both look clean and well organized. It doesn't at all look like blight to me, any more than a grid of houses in a suburb does. It's clean and geometric just like rows of houses in suburbs. If you like one but have a problem with another, I think you are trying to get offended deliberately.
To be sure, are you asking if society does better when its people are homed vs. homeless? Because that seems like a question with an obviously-yes answer.
And who pays for that? The whole society: Either the government raises taxes, gets more in debt, or they print more money driving inflation up.
The most basic commodity, food, is a great example. The moment the government has ever step into controlling production of food, we’ve only seen subpar performance and starving people as a consequence. Ultimately killing millions (USRR, China, Korea…)
You might be surprised to hear how heavily government directed and subsidized food production is in the USA.
I'm curious to see how Austin will do in the near future by that same metric. More people can afford a place that will let them pay rent, although now at least some of those people will be living in someone else's basement or garage. These may not be very nice places to live, but they may be all some people can afford.
They've also removed the regulation requiring a second way out of a burning 5 story building. Austin faces an increasing number of red flag warnings and has the 5th highest wildfire risk in the US. It remains to be seen what removing that second exit route will cost in the charred corpses of families.
Austin is also cutting corners on permitting which is great news if that was all needless red tape that can be rushed or skipped without cost, but if new apartments built today are (or soon become) deathtraps due to lax code enforcement that could be a major problem down the road.
Austin has already lowered rents which is great, but hopefully it was also done right and it doesn't result in more people being forced into substandard housing or increased deaths. As long as it doesn't, other cities should look into trying some of the same things Austin has done.
There's an alternative approach which mirrors the public healthcare concept of "public option". Instead of restricting government housing to means tested individuals or specific low income populations, you develop a public competitor to drive prices down and to eat costs in regions where housing is needed but the economics just don't make sense yet.
i.e. the US Postal Service model. It works extraordinarily well as long as you don't repeatedly capture and handicap the org/agency (like has been done to the USPS). And even with the USPS despite being severely handicapped it still provides immense value by driving prices down while maintaining the essential service of last mile delivery.
A similar approach could be envisioned for a public construction agency.
Also, the Postmaster General was on Capitol Hill today saying how this time next year the service won’t be able to afford delivering to all addresses in the US.
When the options ar homelessness or subsidized housing, subsidized housing is absolutely the best option, which is backed up by decades of data.
Not quite. That's only true if you are housing people who ended up homeless due to bankruptcy or similar reasons (lost jobs, medical issues, etc). If you have people who are homeless due to sever addiction, you just end up with more OD deaths. You have similar issues with people with sever mental illness.
The homeless are not a monolith and different parts of the population need different solution unless you really really don't give a f*ck about them.
If the government just went on a building binge of housing to be sold at market rate, or even set an upper bound before qualifying to buy them at a middle class income, it’d work out fine. That’s basically how Singapore does it only they couple it with somewhat aggressive policies to encourage people to downsize their living situations once they’re empty nesting to free up family dwellings for people with families. We probably wouldn’t need to do that second part since we’re not a claustrophobic island, and could just count on natural turnover.
we can also make it cheaper to build. easing taxes on imported materials, bringing in more skilled labor, expediting permits, and even direct subsidies like tax breaks
Correct, which it basically doesn't in Austin, which is why construction is decelerating.
> we can also make it cheaper to build
Yep, this is the only structural solution. The "just add supply" runs into the problem of price equilibriums. The reality is the input costs of building housing basically guarantees that housing is hard-to-attain for any local market. We need to address the cost of inputs. Temporary reductions in price are temporary and the market will self-correct back to restrict supply (as we're seeing in Austin) until prices go back up to being hard-to-attain.
Talk about praising with faint damns.
Classic case of Baumol's disease, which is not solved by "well duh we just gotta build more." People will not "just build" enough to solve the problem because they won't "just build" beyond equilibrium (for long).
> already-near-zero margin on real estate development
Why is the margin so low when the prices are so high? Is it because the value of housing is already priced into the value of land?
> The problem is: why would you build more housing as prices fall?
Why would you want to? When you stop being able to sell more houses, that's the sign that you've built enough.
The data is here: https://fred.stlouisfed.org/series/AUST448BPPRIVSA.
Assume austin is only half as bad as LA, a 25% rent decrease would be incredible
Gruber's paper: https://evansoltas.com/papers/Permitting_SoltasGruber2026.pd...
That is not what Gruber shows. The 50% figure is that there's a permit adds a 50% premium on the value of raw land. In other words, the permit cost is "only" 33% of the cost of the permitted raw land. That's significant and a big problem, but very very far from "50% of on LA home's price."
But yeah structurally the solution is indeed to reduce the cost of production. Which if your 50% figure was correct, would be huge. But it's not correct.
There are some inherent costs to new housing. Work of professionals involved, cost of materials, compliance with all technical regulations, some profit for the developer, connection to infrastructure. Let us mark this unavoidable cost by C. It is a component of the current prices.
Then there is the component N, which is deadweight cost caused by zoning and non-technical regulations. I am not saying that it should be 0, but it is in our interest that it is kept in check, maybe 20 per cent of C. As of now, in some places, it well may be 120 per cent of C, even though it is really hard to calculate.
This component of the final price directly enriches no one, it is pure friction caused by special interests of various parties that don't want to see any new housing either near them, or anywhere (landlord cartels that hate competition - indirect enrichment).
Even C is now a formidable figure. Modern homes are basically industrial robots, they are much more complicated from the inside than they were 100 years ago. But there isn't really a reason why they should be horribly expensive.
If as a regular office person you can buy a home for, say, 5x your annual income, it is not unaffordable. That is well, just normal. Not completely everyone is expected to own their home.
The problem is that nowadays, the multiplier in many places isn't 5x, but 10x or 12x. That is just way too much. And given that C cannot be easily massively reduced (unless some sort of massive robotization of construction work happens), you really need to attack N.
Those very processes that make it hard to develop keep out the scrappy up-start competition, the contractors that could be building houses all over if they had enough lawyers/planners/specialists to help them get through the system.
Look, for example, at LA, which has super super restrictive rules on what can be developed where, and has huge amounts of discretion at the political level, so that NIMBYs can block what they want. The only people who can build housing are developers who bribe the politicians (there was a somewhat recent arrest in LA on this, involving literal bags of cash, by the FBI).
Having simple, straightforward rules that are completely objective is the only way to try to flatten out the playing field. However such rules get shot down by NIMBYs precisely because they don't want the shady developers profiting off apartments! It's all highly ironic.
PS Most of the people who build houses aren't very rich, just the CEO/big boss who owns the entire company is. The other 99.9% of people are middle class/blue collar.
Yup. I did some IT integration work for a man who owned a local construction company and was very effectively vertically integrating it. In addition to their other work he'd buy land, personally, his company would build at cost prices, and his office staff first informally and then more formally became property managers.
So which way is it now?
As long as construction costs remain below the value of the units all-in, there's profit motive for developers to build.
Not true
Real estate development is extremely capital intensive and therefore it's a question of all-in cost of capital compared to other investment opportunities.
And FWIW "opportunity cost" doesn't really show up as "a cost" in the traditional sense.
Profitability is not black-and-white. Real estate investments can still be profitable if prices fall.
There are different types of real estate markets too. Working class homes in suburbs are not the same market as upper middle class apartments in an urban center.
A very interesting type of investment is high-density housing in catchment areas of new public transportation hubs. Those tend to be so profitable that they can even finance the investment in the public transportation service.
All you need is willingness to invest.
1. Houses are unaffordable for many Americans. To get houses to prices where they'd be affordable again would require a housing prices drop that would likely be, market-wide, significantly low enough to put a ton of people underwater on their mortgages. What is society/the government meant to do about that? Is it an insurmountable floor on how low we can get housing prices? That floor feels very close if so.
2. We've been promising the last five generations (or more) of Americans that a house is an Investment, capital I, an excellent place to keep your money. How do we overcome the political pressure to turn a house into a depreciating investment for the length of time required to get housing to be affordable again? What kind of politician would put their neck on the line to piss off every boomer and 75% of gen X and 30% of millennials, or whatever the house ownership distribution is?
You can make housing cheaper by putting more houses on the same amount of land. In high cost areas, the price of land dominates the cost of housing.
Political pressure to change the investment nature of housing can come from various directions, for example establishing a land value tax, which eliminates the financial incentive to speculate on rising land prices by keeping people out of your area, redistributes all those unearned land rents to the population equally, as is only fair, and also results in a lot of people selling land to be redeveloped taht are otherwise hoarding it when the rest of society would be using it a lot better. Of course, in societies with high levels of land ownership, the voting public usually tries to vote away such extremely fair taxes.
Politically, we must stop prioritizing the views of homeowners at the local level. They already got their reward, massive unearned capital gains on their residence, there's no need to give them priority on land use over the general needs of society.
They are the majority of people in most areas, so it does make sense that they would be given priority in some ways.
The rest of your post is unsubstantiated vitriol, which isn't exactly convincing.
> They are the majority of people in most areas, so it does make sense that they would be given priority in some ways.
In some ways sure. But in the ways that they are? Absolutely not, it's basic unfairness. The entire tax system is tilted in favor of home owners. We don't need to do that, we could make it more equal so that people with less wealth are not penalized.
The tax code does favor home ownership, because people want to support it. Less people will be able to afford their own home without that support, which seems to be the opposite of what you want.
High levels of home ownership combined with "local control" and "democracy" enables the "haves" who already own homes to weaponize government to keep supply low and home values high. Zoning restrictions, building codes, taxes, and other government tools are brought to bear to support this. The "have nots" don't have a chance.
Austin seems to be a counter-example when they "instituted an array of policy reforms" in 2015 that showed great results. Sadly the key may be appealing to the greed of existing homeowners. Changing zoning to allow tall apartment buildings where single family dwellings once stood lets existing home owners make even more money by selling than they'd make by continuing to restrict supply. While it's sad if that's the only path to success, we'll have to take small successes where we can find them.
The last few years have distorted this promise and I think some people have taken a more extreme view of the time window in the name of increased short-term profits.
All said the price you pay today being less of a burden over time was never meant to be a short-term profit motive in the discussion of homes as a economic safe haven.
It's a "yes, and" problem though, mostly. Let the market build what it can, and if you want to pursue social housing, do that too - just don't let the perfect be the enemy of the good and delay the reforms while you try and put together all the social housing pieces.
Not once has the private sector ever been "encouraged" to build social housing with deregulation. The only reason it keeps getting touted as The Solution in the media is because deregulation would boost their profits.
The bottleneck is land, anyway. If you dont tax that enough or take it with eminent domain then you'll end up like San Francisco with absurdly low density housing and criminally high rents.
Rented apartments are a commodity with features. Owned houses are fixed assets with different economic rules.
You know, like how a discussion about war might reference the various recent wars that everyone knows about; it's not limited to just the content of the article.
And from this is where you get "rent-control is a terrible idea". Essentially: trying to artificially drive down housing prices in any way is generally inadvisable if you can just build more housing.
Sure that's technically an opinion, but it's one based in facts, and it certainly doesn't have "zero evidence".
https://www.brookings.edu/articles/what-does-economic-eviden...
The only silly thing here is that "low income housing" got rebranded as "affordable housing" and absolutely everything else got rebranded as "luxury homes" for political reasons.
"Market-rate housing" is even sillier given that it is literally the opposite of what "affordable housing" policies dictate
What >you< are referring to and what it is conflated with by progressive policymakers is "low income housing" which imposes an AMI based restriction on the resident's income. This in turn means that 30% of their income is much lower and restricts the sticker price of the home.
In recent years, most 'affordable housing' policy has been advanced by progressives, who use that term for marketing purposes, whereas the actual policy primarily relates to 'low income housing' or even 'very low income housing.' This does not mean 'affordable housing' = 'low income housing', it just means the term 'affordable housing' is used in the title and the actual measures advanced are related to AMI and 'low income housing.'
When you are dealing with income levels it is universally called 'low income housing,' and the HUD definition is already scaled to local income levels, the 'A' in AMI stands for 'Area.'
You are conflating marketing ('we need more affordable housing!') with policy ('low income housing')
You seemed to disagree with that in your prior post, but I’m glad we can now agree that there is no point debating this then.
What happened was that good housing full of artists and musicians and other self-employed creatives began gentrifying, driving up property values, which drove up property taxes, which became unaffordable to the existing residents (who had owned their homes for a long time). Many (actually, most) of these artists had to sell and leave.
They often left for other cities. But hey at least the good houses everyone liked all got torn down to be replaced by McMansions for the influx of techbros.
Austin still has that slogan, "Keep Austin Weird." It failed. Austin isn't weird anymore. The University of Texas still is responsible for a lot of great stuff about Austin, but huge chunks of the city are just boring these days. There's certainly much less interesting culture happening. It's been airbnbified.
The existing residents (artists) made money by selling their appreciated houses. Those who could afford to remain were now in areas with less crime and poverty.
The new residents spent a ton of money to live in a place they themselves culturally diminished.
We should re-evaluate the winners and losers here.
https://www.austinmonthly.com/in-photos-what-gentrification-...
I don't think many home owners got a price for their land that allowed them to buy a similar house elsewhere.
The world is far from an ideal model where what you get is what you deserve.
Note the history of the East Side power plant, which depressed property prices. Ditto, I-35 construction plans. The article says the plant will become a park now. After the new developers locked in purchases.
Nothing will fix it until some case goes up to the supreme court and results in some sort of "they were there first the .gov can piss off" doctrine.
It looks like - it might not be what you mean, but it looks like - you're saying 'good housing' is housing that has "artists and musicians and other self-employed creatives", as opposed to poor working people.
But yes, I think there is a sense in which people who are driven to create have some kind of ineffable, cultural capital that people without this drive do not have. So a neighborhood that is full of artists is more interesting, and therefore more valuable to spend time in, than one that isn't.
Even renters in gentrifying areas may profit if housing construction outpaces population growth. Yes, they may have to move, but also the places they move to on their current budget may be nicer - because the people who can afford better have moved too.
That also raises property taxes, making the neighborhood unaffordable and driving them out.
> it's now a more pleasant area to live in.
For new wealthy residents. People who have spent lifetimes there don't want everything to change and have their communities destroyed.
> Yes, they may have to move, but also the places they move to on their current budget may be nicer - because the people who can afford better have moved too.
These are theoretical and very general averages. The actual individuals often do not benefit. Being forced to move is not a mere inconvenience to your theory.
That isn't theoretical. I just described the SF Bay Area.
Many other implementations of affordable housing further raise the barrier and thus even if any is built it doesn’t help widespread housing affordability issues.
Rent control is just another flavor of housing affordability policy that often (always?) backfires.
Crime, social peace, and economic opportunity are very linked. A lot of house prices in urban areas are wildly distributed and often the increase cost is to buy distance and safety (often just a couple blocks) from high crime areas.
>Many other implementations of affordable housing further raise the barrier and thus even if any is built it doesn’t help widespread housing affordability issues.
Can you be specific with what you mean here? Because this reads like a no true Scotsman argument that it doesn't count as "affordable housing" if it works. The article discusses the programs encouraging income-restricted units which seems like a classic affordable housing program. What specifically do you think is different in this case?
Affordable housing used as an incentive or way to overcome other barriers to housing (density limits, height limits, zoning etc) that makes the market more “free” net is will produce more development.
You don’t need it for development but it can be used effectively depending on other policies. As with all things it depends on what policy makers are optimizing for. These are all tradeoffs. But affordable by itself all else equal limits developer upside and incentives less development meaning less supply and higher prices.
I'm not sure what type of affordable housing program doesn't meet this definition. They are almost always tied to incentives for developers, including sometimes in the form of a removal of other housing restrictions. Or are you specifically objecting to financial assistance on the renter/buyer side? Because I assumed the “it” in “it doesn’t need to be “affordable”” was referencing the new development.
Also removing other housing restrictions that ostensibly were put in there by constituents is a valid reason for constituents to oppose AH. They get called NIMBYs for this but if the local populace wanted more high density development then the density limits wouldnt be there to be excepted by AH
Like I said, the “it” in “it doesn’t need to be “affordable”” seemed like it was referencing the previous “Build more housing”, so situations in which nothing is built are different. If your original intent was that not all housing policy should be about affordable housing, then we agree. But I do think it's an important part of the solution.
If people didn't want housing there, it wouldn't be built. If they didn't want the exemptions to be codified, then they wouldn't be.
The only way your statement makes sense is if you restrict "local" to a sufficiently small subset of the people (a town? A block? One single address?), but in that case, a greater number of people within a greater definition of "local" seem to disagree.
If the state gifts a locality power to impose zoning restrictions, then the state can usually alter (or withdraw) that gift when it stops being beneficial to the people of the state, even if a small subset of those people living in that one locality don't like it.
Property ownership is at the very core of entrenched power, and the foundation of rent-seeking and wealth asymmetry.
If you look at even the Monarchs of long past - it wasn't their 'titles' that made them powerful - it was the economic rent that came along with the land ownership.
Even in more open market economies, property is still is basically long term economics lording over short term economics of wage earning workers.
Being able to kick someone out of their home almost arbitrary basically puts working class people at the 'total whims of the market' and it's one of the most disruptive concepts imaginable.
If we take the view that 'housing is about housing first - only about investment to the extent it does not disrupt housing' - then a different perspective takes shape.
Many Canadian provinces have 'basic rent controls' and it does not generally prevent new housing development.
If anything, providing 'housing stability' is probably the best way to create base prosperity, so those people can go out and spend on all the other things.
There might need to be some degree of leeway here and there for certain kinds of density challenges, but that can be had with rent control
There is almost unlimited land in North America to build on - if in one spot it's a bit difficult - build elsewhere.
If people want to have 'density' then incorporate an area and 'build density' in that area.
Also it does need to be 'affordable' but that can work with regulations.
Edit: our housing problems are about screwed up management, it's actually not even an ideological problem underneath. Like 'rent control' the way it is framed scares some people, but its literally province wide in Ontario, Quebec and it's a 'non issue' for new unit hinderance. Even the nimbyism stuff can be worked around: if people don't want high-rises next to them, it's their right, but there's a lot less opposition to 'mild density' especially if it fits in local cultural and aesthetic context. We can have our cake and it eat on housing. I think we invent ideological lenses because it's easier to frame 'narratives' than it is just weird policies, special circumstances, hiccups, different municipal things going on all at once.
The reason is that you can’t produce more land. Fixed supply will also warp economic markets and create terrible incentives (land speculation).
If you want the best solution, you implement a land value tax. If you want the 2nd best solution, tax property (Land + Building value). If you want the worst solution, implement rent control.
The workaround is to build more dwellings, and rc generally is not an inhibitor there.
Funny enough 'wealth taxes' may actually be the worst of tax of all - aka a double negative - like a double negative.
What we want to do is make it so that 'rich people get rich' not from rent-seeking but from real value creation.
It's property ownership this is the core problem.
It's a zero sum game, of no value creation and mostly just economic rent extraction.
It's the 'property problem' not the 'thing on it'.
We have no problem getting people to 'make stuff and sell it'.
A market in this case isn't a literal street market with vendors hawking their goods. The word "market" describes the relationship between people who have more than they need selling to people who need and would prefer to exchange their money (or vouchers etc.) to acquire it.
Housing can't not be a market anymore than food or labor could not be a market. It's like saying it's warped that water evaporates and becomes clouds and turns into precipitation. It's a word that describes one of the natural systems of how the world works.
Even in communist societies where the State owns all the land and all the housing and decides how to distribute it, you still have a State-owned-and-directed market between citizens who need housing and a State that has excess housing and provides it to citizens.
It will also provide immediate relief for struggling citizens, whereas a LVT or taxing property will take time to actually drive construction which will push down rents.
It's something local governments often have the authority to implement, unlike LVT.
A little mentioned fact: the highest rate of house building in new york (FAR FAR higher than today) coincided with by far the STRICTEST rent controls. Something to ponder next time somebody tells you that rent controls just stops homes from being built.
It's funny how this question might have the greatest divergence in answer distribution between people who do and don't know what they're talking about
Other candidates are "is debt good" and "is property tax better or worse than income tax"
Like - seeing property as 'investment and ownership' vs 'places where people live' is sometimes pretty big gap. Especially when we've been grounded in 'mortgages and wealth creation' for regular middle class people.
Rent control and the underlying civilization power dynamics are kind of a subtle thing, I think most folks are going to just answer in terms of 'what is good for them'.
Rarely in human history has a specific policy failed more spectacularly. Yet you still hear supposedly educated people advocate for it every year.
A couple of things:
You're aware of the Californian property tax control? If you aren't, go read up on the 197X Proposition 13, as well as the ways even vaguely-savvy landowners can get around the "tax is reassessed when the property changes hands" rule. IMO, it's only fair that tenants get the same sort of price-increase-protection that landlords get. If the landlords get rid of Prop 13 and anything even remotely like it for the next fifty years, I'll be first in line to clamor for the removal of what passes for rent control in the few cities that have it.
Unless you -as a developer- especially request otherwise, SF's rent control only applies to buildings that were in existence back in 197X, when the ordinance was enacted. New units are not covered by rent control. It does not apply to any commercial buildings... just residential rentals. It also only controls the rate of rent increase until the unit is vacated. Once it's vacated, the landlord is free to charge whatever rent they wish.
Your story gets confounded by the fact that -for a variety of reasons- it's nearly impossible to build any new residential buildings in SF. When demand is met with a nearly zero increase in the supply, the cost of the thing being demanded tends to go up.
Rents are generally quite high in California, not just in SF. From [0]
2000 1990 1980 1970 1960 1950 1940
United States $602 $447 $243 $108 $71 $42 $27
California $747 $620 $283 $126 $79 $42 $27
Washington $663 $445 $254 $113 $71 $43 $22
Though, it is more interesting to look at the numbers when adjusted to 2000's dollar. [2] I wonder if your "15x" figure is inflation-adjusted...
2000 1990 1980 1970 1960 1950 1940
United States $602 $571 $481 $415 $350 $257 $284
California $747 $792 $560 $484 $389 $256 $286
Washington $663 $569 $503 $434 $350 $263 $226
[1] Costa-Hawkings prevents cities from even considering the adoption of the policy to level the playing field with Prop 13-subsidized landlords.
[2] <https://www2.census.gov/programs-surveys/decennial/tables/ti...>
It creates all sorts of problems that wouldn't exist otherwise. For example, if you've been in a rent control house or apartment for 10+ years and are paying significantly less, what happens if you want to move? Or just need a bigger place? It's a huge impeediment to mobility and flexibility.
Also, you have an adversarial relationship with your landlord. They want you to leave so they can raise the rent. They'll skimp on maintenance, turn off the heat (even when it's illegal) and generally make your life miserable until you leave.
The solution to these problems is social housing, meaning the government becomes a significant supplier of affordable, quality housing. The very wealthy and the real estate industry don't want this however because it will decrease profits.
> Property ownership is at the very core of entrenched power,
In the literature, there is a distinction made between private property and personal property. I'm fine with people owning their own home if they want. That's personal property. Private property is when we allow people and corporations to hoard housing. I'm all for making it financiall punitive to own more than one house.
To start - your 'very first example' is not even really 'a problem'.
'Without rent control' - you get kicked out of your abode every few years if your salary doesn't keep up with housing inflation. With rent control, you have the option of 'having a home; you decide when you want to leave (for the most part).
The answer to the 'second example', 'adversarial tenant/landlord' is that the theory doesn't line up with reality for the most part. Again - in most rent controlled areas this kind of stuff does not happen, especially if it's entrenched in the culture. It works well in a ton of housing markets like Quebec, Germany.
The primary concern about rent control limiting expansion ... just does not exist. It doesn't really impede new builds.
So disconnected from reality that it beggars belief.
Anytime you put two or more adult people into a relationship together and at least one person feels like they do not have the option to leave if things get bad (e.g. landlord feels like the tenant is wrecking the property but has no right to evict, tenant feels like landlord is not taking care of maintenance but feels pressured to stay due to artificially low rent), the result is toxic suffering.
"Pressure to stay" can certainly be alleviated, rent control all properties. Half measures do not necessarily solve half the problem.
Nope, you don't. You just do your best to foresee that outcome in advance before renting and pick a house you can afford. And if rents start to move against you, you plan to move out well in advance of getting "kicked out" by unaffordable prices. But that's actually easier than the status quo since no rent control means (1) lower rents overall for the same quality housing! and (2) everyone gets a home for the right price, there is no hidden privilege or lottery aspect to it. Of course it should be paired with higher property taxes or LVT so the rent itself isn't just value-capture by landlords, but that's politically doable. Just a matter of not picking the wrong political fight.
Yes, it is. Anywhere with significant and strong rent control results in a large number of people who simply cannot move. Look, rent control is better than no rent control but it address the symptom not the problem. The real problem is that rents shouldn't significantly outpace inflation. In a better world, you should be able to easily move because you're not locked in to a below-market rent that you don't want to lose. And rents get more expensive because a whole bunch of people make sure that housing is an appreciating asset. It should be a depreciating asset.
> The answer to the 'second example', 'adversarial tenant/landlord' is that the theory doesn't line up with reality for the most part. Again - in most rent controlled areas this kind of stuff does not happen
You will not find in any American city, especially one with rent control, where tenants do not absolutely hate their landlords as the general rule. What are you smoking?
Broadly, our housing problems are bureaucratic in origin and I think bureaucracy is indeed an ideology.
Building enough housing that rents go down is the same thing as lowering crime so not much of an issue there.
At least the latter has been equated with fascism in recent years. That's why it's become such a problem.
When you aren't building more housing, for whatever reason, rent control is the only thing that prevents domestic 'immigrants' into your city from making all the residents homeless.
Since cities can't stop migration into them, it's the only tool they have to protect their existing residents.
---
PS. If you believe in trial-by-combat for housing, why not a similar approach to border control? It's the same concept, open it all up and let the market decide whether your existence is worth it.
There are billions of honest, hard-working, capable people who will happily pay more than you for where you live, do your work for less pay than you're willing to accept, and would love to live... Wherever you currently feel entitled to live.
What gives you any right to deny the market from improving the welfare of your landlord and employer?
Also why should cities prioritize protecting residents based on how long they've lived there? Everyone counts the same.
That's a great question. Why do countries prioritize existing citizens over all people who want to move into them? We are, after all, all the same. Two legs, two arms, just under a dozen fingers, most of us aren't destructive shitheads.
If we just let in anyone who wants to emigrate, you wouldn't be trapped in an apartment, or home, or city or life you were born into. You would always have the chance to 'upgrade' to one that's worse!
Why should you deny him that mobility? Is he any worse a person than you are? Why does he have to jump through hoops and quotas and queues and all sorts of degrading, dehumanizing bullshit before he can do so?
Why?
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If your answer is 'because that's the law and because we can make him jump through all those hoops', that's the answer to why cities choose to protect people who are existing residents at the expense of people who aren't. Because it's the law and because they can, if you don't like it, tough, you are free to go somewhere else.
If you think one of them is immoral and unfair, but the other isn't, you're the one who needs to square that cognitive dissonance - not me.
It sounds like you generally think economics should trump the welfare of existing residents. That's certainly a view, but a logical consequence of it is wide-open borders.
No, you are. You have imaginary rules about who should be protected in a city (based on seniority??) that nobody else is aware of and are certainly not following. It goes by things like age and net worth, and basically nobody gives a shit how long you've lived somewhere.
Rent control is not imaginary (Any more than any other rules are), and yes, that is exactly how it functions, for the purpose that I have described.
It advantages senior occupants (Who are grandfathered into controlled rates), at the expense of junior ones, or ones who don't live there yet (Who are presented with inflated rates, for obvious economic reasons).
Build more housing? In a place like Austin, you can just keep building out, basically. To a point. Eventually cities doing this reach a limit. Houston and Atlanta are pretty much at or beyond that limit.
And it's not that building low-density SFH housing is the most economic. It's simply the most subsidized. Every road, every parking space, every sewer pipe, every water pipe, every utility pole, every school, every hospital, every police station, every fire station... they all add factor in to the true cost of housing and the more spread out things are, the more expensive those things become. Taken to extremes, look at the billions Houston spends now to add just one more lane (because this one will totally solve traffic) on, say, the Katy Freeway or the ring roads.
Yes it does need to be affordable. NYC is the posterchild for this. Nothing that's getting built on billionaire's row will ever trickle down to being affordable housing. They build ultra-luxury housing because it's the most profitable and it does absolutely nothing for anyone else because these units are just ways for non-residents (mostly) to park wealth and not pay their fair share of taxes.
Rent control is the wrong solution for the right problem and it's typically American. By that I mean it forces the solution onto private landlords who are going to do everything possible to get out of those obligations and deliver subpar but compliant housing. And they'll demand tax breaks for it. When in fact the solution is for the government to supply a large chunk of the housing market ie social housing. But there's a pervasive and wrong idea that we can only solve problems in the private sector and that's nothing more than a wealth transfer from the government to the already-wealthy.
"Just build more housing". Yeah, and then you get Houston. Cities need to be planned. Cities require infrastructure. And one of the most important thing cities need is public transit infrastructure, something sadly lacking in virtually every American city.
The core to so many of these problems is that we need to stop treating housing as a speculative asset. Owning two or more houses should be incredibly difficult and expensive and should be taxed punitively. By this I mean the capital gains on non-primary residences should be 80% and property taxes should be significantly higher.
Also taxing homeowners harder doesnt really solve the problem. CA has insane taxes, SF especially has a giant budget. They just waste it. I dont believe that once the govt raises taxes they will suddenly become efficient and competent.
The idea that the more spread things out the more expensive they are is sound theory. However in practice, per capita taxes in a city are often higher than the rural or suburban regions. One water main should serve more people in a city and its cost amortized across the population should be cheaper.
In practice, cities tend to have tons of programs that drive taxes up. They are free to do that, not necessarily bad, but also not efficient from a tax payer perspective.
Housing should be for residents of that city to provide a utility: shelter. Not as an investment vehicle.
It simply doesn't have to be this way. The poster child for this is Vienna [1][2].
Increasing house prices are an illusion of wealth creation. Let's say you buy a house for $200k but over the years it goes up to $800k. But every house costs $800k so you still have only 1 housing unit's worth of wealth. You've simply increased the barrier for younger people to buy houses.
Put another way: increasing house prices are simply stealing from the next generation and that money is really going to the already-wealthy and, to a lesser extent, the old. Just look at the median age of homebuyers in the US, currently 59 [3].
[1]: https://www.youtube.com/watch?v=41VJudBdYXY
[2]: https://www.theguardian.com/lifeandstyle/2024/jan/10/the-soc...
[3]: https://www.apolloacademy.com/median-age-of-all-us-homebuyer...
But let's not miss the point of the article. This is a right-ward shift of the supply curve. It means that the economics of building the next unit got cheaper. That's the point.
I've seen a lot of neighborhoods across the USA, and Austin making way for higher-density housing on urban corridors (Lamar) is like, duh, this is more live-able. There are new towers along rail and bus route, townhomes packed in, and behind the tree line it's now possible for some single-family lots to become duplexes or fourplexes. And rather than McMansion ugly, the new Austin residents are dressing those up to look pretty darn cool.
There is a lot more to be done to remove supply-side barriers in every city.
Also "Wipe out a whole boatload of techbros who artificially inflate prices". Nobody is talking about that part of the equation.
Austin was one of the places a lot of tech folks flocked to when everybody was working online. RTO and layoffs have wiped a lot of them out. I'd estimate almost 1/3 of the tech folks that were floating around last year are now in other cities.
It’s not NYC or SF, but this suggests that those would be more affordable if they just built more housing.
Homes for people. Not investors.
And here I thought people who want to live in houses add to demand for housing.
Investors buy houses that people want to live in. If people don't want to live someplace, you won't see any investors there either.
and so how do you decide who gets it?
1) morally. Alice deserves it because her intention is more pure.
2) financially. Bob gets it, because he can pay more for it than alice.
Which choice above you make as a policy direction is a reflection of your world view. I'm voting for 2), but i can understand the POV of 1), even tho i disagree with it.
the utopian answer is to build two houses. But we don't live in utopia.
The constraints faced today is real (paper or physical). You can't wish it away, and you can't say it's "easier" to just build two houses.
Desire is a necessary component in demand, but it also requires willingness at a given price point. If houses are selling for $1,000,000 and you only have $500,000 to spend, then no matter how much you dream every night about having a home, you are not a contributor to demand.
Many landlords seem to expect to pay their mortgage and property taxes and maintenance with the rental income, and still net a profit, if r/landlord is to be believed.
If there was no profit there would be no landlords. Some might say that's great. But it would be a world with less flexibility, with fewer choices. Don't like your job and want to move? Split up with your partner and need someplace to live? Moved to a new city and don't know where you want to put down roots yet? At college for 4 years? Don't want to deal with house maintenance? "F** you, buy a house anyway". That's what we'd have if there was no rental housing.
The actual numbers might be more like rent $1400 vs mortgage $1000. After property taxes, insurance, and maintenance there might be $50 left. A handsome 3.5% profit, rising to maybe 6-7% if you include principal paydown. This is hardly a money-printing machine. It's a steady return for taking on some risk.
Kind of an unhelpful tangent to the discussion, really.
Renting has annoyances but it also has flexibility. A flat "more expensive" is staring at one tree and missing the whole forest of tradeoffs. Way more people would choose to spend $50/month for that flexibility versus $700/month.
You can buy a boat for $10 or rent one for $9. Assuming you really want a boat, would you buy or rent? Do my numbers reflect reality? Do they have a bearing on the choice you make?
that doesn't sound plausible. May be for a select few properties that are in some unique circumstance (e.g., the seller of the property would sell underpriced because they needed quick sale).
And often, in arguments like these, the rent is the rent, but the mortgage is purely the interest on the loan, and doesn't count the maintenance cost, and doesn't count the deposit required (which has a cost, ala the cost of capital). If you added up all these costs, it exceeds rent.
Still, things can go either way. And well renting is lot more flexible and less risky. So there is really nothing wrong with that option existing. And many times it is the better pick of the two.
Because the down payment you put into your purchased home could've been put into the stock market and grown faster than property values (this is historically true).
Because you don't want the headache of home maintenance.
Because in the 21st century, job stability doesn't exist so it's a big risk to buy a home fifteen minutes from your current job that might be an hour from your new job after you get fired so a CEO can get more golden parachutes.
Because you might have to change cities a year from now.
My wife and I rented for a long time because it was better than owning for us.
This only holds until the percentage owned by the investors becomes a monopolistic chunk. At that point the investors would rather leave some apartments empty rather than see rents go down.
See: all the current RealPage lawsuits
> Build more housing. Keep law and order.
Safety (law and order) increases housing costs, as you say. It's desireable on its own, but it does not solve housing cost. NYC is very safe and very expensive. Crime is way down in most of the US, and housing costs are much higher.
the little old lady living in a rent controlled apartment is a big part of why rents are high in that area: she was part of what made the community thrive. we would do well to compensate her for this.
Yes, it does need to be affordable, and a certain percentage of it needs to be non-market housing. Housing isn't an elastic commodity. Get real.
Do I get to demand affordable housing overlooking Central Park in NYC? Beachside in Malibu?
If you want large incentive for development at scale you need to allow developers to make fat margins or else you wont get too many of them. Yes you can use affordable housing to do that. Eg: in the article they got higher density and exceptions (aka “fat stacks”) for building affordable housing units.
This is all policy tradeoffs at the end of the day. Eg: a tent is not “housing”, why? Because of reasonable policy. Same thing with housing codes etc. All directionally wise/good. But at the same time you can have bad affordable housing policy.
I do think housing is elastic and a cities policies around that elasticity determines if they will thrive or stagnate.
And don't get me wrong, asbestos and lead are wonderful construction materials. Cheap, durable, and high quality. It's just a shame it causes all sorts of health complications when we use them, right? I mean, it would definitely make housing cheaper, but also cause all kinds of health problems.
Keeping crime low matters too, because people pay a premium for safety, and high-crime areas often face weaker investment and worse long-term housing outcomes. And “cutting red tape” does not mean legalising asbestos or lead pipes, which is a straw man. It means reducing delays, exclusionary zoning, parking mandates, and other rules that limit safe housing production and raise costs for no good reason. Housing is absolutely a complex social problem, but complexity does not erase the role of supply. More safe housing plus safer neighbourhoods will not solve everything, but it is still one of the clearest ways to reduce pressure on rents and prices.
For most Americans, A house is their primary savings account, retirement plan, and probably where they keep majority of their wealth. We don't build new housing in old neighborhoods because it would de-value the investment of too many people. Until we can solve this problem (where people are incentivized to pull the ladder up behind them), we will always have housing shortages. It's just too profitable.
If you allow for increases in density, that house (actually the land beneath it, but still.) becomes more valuable as it's redeveloped. So that American homeowner does benefit, by unlocking the upside of "evil gentrification" (or actually, density increase).
Given the above uncertainty, and higher density could result in more traffic, noise, crime, nymbys are likely taking the correction position for wealth preservation and quality of life.
> Logan and Molotch's “urban growth machine” remains foundational in urban theory, describing how coalitions of landowners, developers, and politicians promote urban growth to raise land values. This paper argues that under financialized capitalism, the dynamics have inverted: asset appreciation now outweighs productive investment, and urban land is increasingly treated as a speculative asset.
So if we take it as an assumption that density increases housing stock, there is lots of evidence that density drives down prices of existing land/home values.
This is true for California, where people (foolishly) rely on their home value as their retirement plan, which further incentivizes NIMBYism.
But in places like Texas (and other areas with affordable housing), the house is just treated as something you pay off to have a low housing cost in retirement. And your investments are your retirement+savings account.
According to the first relevant search result I can find https://www.cnbc.com/select/average-retirement-savings-by-st... the retirement savings per dollar of median annual income in California is $1.44 and in Texas is $1.17
Do you think that's wrong? Or do you think it's a misleading statistic and doesn't contradict your belief?
I think Californians do, a lot of time, retire with a higher net worth. But most of them do that because they’re more relatively house-poor during their lives - they take out larger mortgages, and save more into their net worth.
As opposed to Texans, who have higher disposable income since they have smaller house payments. It’s less incentive to save so they may spend more.
So that’s a partial advantage to California - the expensive homes force a higher savings rate, naturally.
But, at retirement age, a lot of their net worth is tied up in their home. So to unlock a lot of those savings they need to move to a lower cost of living state like Arizona, Nevada, Florida, etc.
While the Texans can just stay in their paid-off house.
So yeah it’s just different.
Texans are just paying off their home throughout their life and staying in it. They have larger disposable income to go towards other stuff (kids, lifestyle) while Californians gotta pay that mortgage
That is highly dependent on what exactly is being built next to your home. Sure, if it's more luxury housing then it'll probably drive the value of your home up. If it's low-income housing then it probably won't. And what we need is more of the latter rather than the former.
> you can take out loans against the value of the equity but this isn’t particularly common.
It's because it's an investment, you're going to get the return once you finally sell your home. Only in a pinch if someone needs a large amount of money to start a business or pay for an emergency will they mortgage their house.
You just need to wait. The luxury housing that gets built today becomes low-income housing as it ages. There's no short-circuiting that process the way the incentives are set up, but you can drive down prices across the board by building more, even more luxury housing.
The home you live in isn't an investment; it's a store of wealth.
Many lives were ruined by thinking your primary home is an investment.
We certainly will not see zoning reform until the Boomers die.
This is beyond ridiculous and it’s totally unsustainable.
Suring property prices is a relatively new phenomenon (as in, post-WW2). The true origins of NIMBYism, at least in the US, is (you guessed it) racism. Long before segregation ended, and long after, there was economic segregation. Redlining [1], HOAs [2], the post-WW2 GI Bill [3], where highways were built [4][5], etc.
In fact this is a good rule of thumb: if you're ever confused why something is the way it is in the US, your first guess should pretty much always be "because racism".
[1]: https://en.wikipedia.org/wiki/Redlining
[2]: https://www.furman.edu/fu/placing-furman/what-are-racially-r...
[3]: https://www.history.com/articles/gi-bill-black-wwii-veterans...
[4]: https://www.npr.org/2021/04/07/984784455/a-brief-history-of-...
[5]: https://www.bloomberg.com/news/articles/2017-07-09/robert-mo...
Similarly, higher gas prices benefit the gas industry but we shouldn't let that dictate policy.
: unfortunately, we somewhat do.
It is the businesses around downtown who are pushing the save downtown campaign. I imagine the businesses contribute a fair chunk of revenue to the city now and have some influence .
Relative to say parts of Redwood City, or Palo Alto. Menlo park has a fair amount of student-ish 4 Unit lots, so it not all zoned SFU.
And, of course, once the development is complete, and the value of their land goes up, so too does their rent....
Menlo Park today has free and ample parking downtown. RWC is paid parking anywhere within few blocks of downtown, all the garages are paid, the garage on Jefferson Av charges more on Sundays. Same thing in San Mateo downtown.
I like the approach of making downtowns walkable and having a bit of parking at the periphery of downtown, along with good public transit. Encourages people to use public transit to get to town in the first place. Downtown residents can use transit or a zipcar or equivalent when the need to get out of town, instead of devoting a ton of space downtown for storing their cars.
Not sure if that approach is really practical, but if it can be made to work it is much nicer.
To be fair, I am boycotting the (similar) underground garage over at Springline because they're clearly made only for people in Range Rovers or whatever. They have those AWFUL ticket machines, set too far back (to avoid getting hit) and too high to access from a normal car.
There's a big disconnect from people building new projects and local governance, and it's growing. When tech companies started even providing buses for their employees, because local government is too fractured and incapable of running needed bus routes, and can not coordinate across county and city borders, local activists were extremely upset that tech workers were not driving their personal cars and instead using environments-saving and traffic-reducing transit.
It's extra silly cause I once parked in central Oslo and got the ticket mailed to my sthlm address. No fuss, no problem, super easy!
We got a lot to learn from our neighbours....
It’s mainly due to the state of US technological advancement decades ago when the whole thing got started, the general US-level business-friendly environment, and the presence of an extremely prestigious (especially in science and tech fields) university nearby.
Are you sure it's the ticket machines? Around here, the ticket machines have stayed the same, but it's now impossible to use them without stopping the car and getting out, because car manufacturers have decided I need eight inches of empty space between myself and the side of the car.
Also safety people: "These goddamn consumers have started buying SUVs"
I'm not saying this is you personally but the trend is pretty goddamn clear.
What a lot of the new buildings in Austin are doing is putting an attached garage directly behind a 4 + 1 mixed use development - the street-facing facade is the apartments and shops, and the garage is directly behind (and usually attached) to the apartments. You basically never see them.
A better comparison would be ATX against San Jose.
Just like how the "rich" residents of Santa Clara county know that you want to live in Campbell, Los Gatos, Menlo Park, Los Altos, Loyola, etc, similarly rich Texans and Austinites live in the Hills.
The reality is the residents of Menlo Park and Rob Roy don't want your type, and in a lot of cases tend to be the same people as there aren't many places left where you can trail run, bike, eat Michelin star ramen, and not pay income tax.
Just because we make good money in tech, it doesn't make us "them". I highly recommend reading the works of Pierre Bourdieu with regards to cultural capital.
The majority of it is not Bel Air...
Menlo Park was never a "middle class" town. The 101 was always the (literal) redline.
The median household income is $210K [0] and it's the same demographic, unlike historically lower middle class but now upper middle class San Mateo [1].
A Menlo Park home address that is on the correct side of the 101 opens the same doors in the Bay that a Bel Air address does in Los Angeles or an Austin Hills address does in Austin.
Rich doesn't equal conspicuous, especially in the Bay Area - "Wealth is quiet, rich is loud, poor is flashy"
[0] - https://www.census.gov/quickfacts/fact/table/menloparkcityca...
[1] - https://www.census.gov/quickfacts/fact/table/sanmateocitycal...
The old money (rich before tech) to the West of 280 in Woodside and Portola Valley.
West Lake Hills perhaps (which is not technically Austin) - Austin Hills is not remotely prestigious.
Yep! That's what I meant - Rob Roy, Westlake Hills, Barton Creek around the country clubs, and Lost Creek. Those are the equivalents of much of Menlo Park and Atherton, and I know of a number of people who lived in Menlo+Atherton and moved to those areas of Austin in order to front-run taxes in the run-up of some significant exits.
Just like how people pretend "I'm actually super concerned about emergency vehicles" when it comes to replacing a car lane with a bus/bike lane. It sounds better than admitting they don't want to be inconvenienced, they'd rather have an extra car lane than someone else get a bus/bike lane, etc. So the hand waving begins.
Austin is unique even in Texas for its aggressive construction boom + decreased rent, so it's not even a Texas thing.
Funny to read this when it’s common knowledge the rich commit so much tax evasion the IRS doesn’t bother investigating, and tech billionaires like Thiel are regularly abusing hard drugs and spewing unhinged theories about the end times and an AI god. You can just say you don’t like poor people. You don’t have to use some statistical fallacy that supports your confirmation bias.
The reality is that the visibility of criminal acts is inversely correlated with income. Why would a rich criminal spray paint graffiti on a building when they’re making so much money off white collar crime that they can just buy it and do whatever they want?
That’s not even getting into all of the things that should be crimes but aren’t, because the ultra wealthy and their megacorps can legally bribe politicians to their hearts content. Or the child sex trafficking. Epstein’s buddies weren’t living rough.
The best I could find was a couple of comments from two years ago which have a similar theme.
It's built upon untrue assumptions
- infinite buyers / sellers
- perfect information
- no switching / transaction costs
---
The article itself has 3 different year ranges provided so I'm not sure how you can use it as evidence. Plus overall the rent is still up by a lot since 93% - 4% is still at least 80%.
- Rents increase by 93% from 2010 to 2019
- Housing increase from 2015 to 2024 (this overlaps with when rents increased ...)
- Rents fell from 2021 to 2026 by 4%
- the main input (land) is also an output, so when the price of the output goes up, so does the value of the input.
- economies of scale don't really work, due to the impracticality of transporting the good (houses) and fitting the good inside a machine (in house "factories", normal workers go inside the house and work on it by hand; not a lot changes compared to traditional construction)
- more supply in one area increases the value (and therefore demand) in that area, so it's not actually clear-cut whether building more would reduce the price more than it increases it, at first glance.
"Lol economists are dumb they think humans are robots!"
No they don't. Sorry, we won't be throwing away an entire field of human endeavor based on a straw man caricature that isn't true.
We don't call physicists dumb and throw out their ideas because the real world isn't a perfect vacuum either. They know this, don't be silly.
Correct. That's why when there's more housing you're more likely to find what you need.
https://www.theatlantic.com/magazine/archive/2025/03/america...
Only when avoiding sanctions, not normally. And housing does follow economic principles no matter how much you wish that wasn't so.
Elasticitiy moderates the effect. It doesn't reverse it. Increasing housing supply decreases housing costs. A lot of people are venally or ideologically motivated against accepting this. Our housing crisis is a political choice. (Note: I'm a homeowner.)
Elasticity is the relationship between demand and supply, and there are actually very rare instances where it can be negative (where demand increases with price).
These are called Giffen goods.
https://en.wikipedia.org/wiki/Giffen_good
Explanation (that I remember)
Inelastic demand is when a good is demanded so much, that an increase in price has little affect on the total quantity (people still demand it, think like addictive substances)
So a perfectly inelastic product would be a straight line where any amount is demanded at any price.
So having the curve keep going it would get a positive slope, where higher price makes demand go up.
If I remember the example I was given was food during a famine. Supply is already low, but an additional pressure on price is the known shortage. The idea being that as the price goes up people see it as harder to get.
It’s been so long since I studied the subject so I might have gotten some things wrong here.
The terminology is actually split; sometimes they're called Giffen goods and sometimes they're called Veblen goods.
The two types have identical behavior, so there's no good reason to have two different names, but in concept Giffen goods are something poor people buy, while Veblen goods are something rich people buy.
(There is a difference if you're willing to look at responses to changes other than a change in the price of a good: if you give a household more money, it will increase consumption of Veblen goods, but decrease consumption of Giffen goods.)
That’s the story of the last 10 years among certain types that keep regurgitating obviously wrong concepts.
The urban orthodoxy is around demand rationing. Supply-side arguments are incredibly new. The evidence cuts in one direction. (Unless we want a hukou system.)
> From 2015 to 2024, Austin added 120,000 units to its housing stock—an increase of 30%
Compare that to the following [1]:
> The [...] government [...] intended to build 400,000 new homes annually, including at least 100,000 social housing units. This target was significantly missed from 2021 to 2024. In each year from 2021 to 2023, fewer than 300,000 new homes were built.
So, the city of Austin alone build on average 12,000 new housings each year, while all across Germany, they failed to build 300,000 new units. That's roughly a 1:25 ratio.
So, how much bigger is Germany than Austin, Texas? More than 80 times bigger.
Is that just because big projects don't scale linearly? I would think that that's definitely one factor. Also, I'm not convinced that economy of scale laws apply here, given that this is not one company building 300,000 houses.
But it does show a number of problems inherent in Germany's current situation: (a) shortage of skilled laborers; (b) high cost of labor; and (c) exorbitantly much red tape. These three points alone are among the most frequently cited factors that companies feel inhibit business, and it holds across disciplines.
[1] https://www.wsws.org/en/articles/2025/08/20/vmjm-a20.html
In the U.K. people are indoctrinated from birth to believe that you work hard to save your money to buy a house and the value goes up so that you can retire with a valuable asset. Flooding the country with new property would completely upend that foundational part of U.K. culture.
If the governments of European countries wanted more property to be built, they could make it happen. The problem is, there is no appetite, they're walking a very fine line: more property must be built but property values cannot go down.
China is an extreme example (and has quality issues) but they have been building more than 10 million new homes per year for a long time, and now have tens of million of vacant homes that nobody wants to buy. That's a nightmare outcome for most Europeans who plan to retire on the value of their home.
The U.S. is fairly unique among western economies in that investing in the stock market has been a normal part of wealth building for the hoi polloi and while homes are important assets, they're not everything. In Europe, investing in the stock market is still novel, property is still the asset.
In Amsterdam the Green Party is celebrating making homes more affordable to buy…. By kicking out the people who were renting them. And they continue to say only 20% of developments can be market rate, aka for everyone. When you’re new to the city because you just got a job at booking.com or whatever you only can hope to get a flat in that 20% - the rest isn’t for the likes of you!
Maybe the indigenous population you have contempt for wanting to preserve their communities and cultures don’t want your colonialist mindset of “those savages are not utilizing the land as I wish, so we can just overrule, overrun, and take it from them. How dare they not avert their eyes, for I have a job at booking.com or I go to UT/work at Oracle/Tesla.
It’s funny how you types never suggest that newcomers, i.e., colonizers, pay a high price for their colonization and that go to the indigenous, even if just to compensate them for the imposition and abuse. You always seem to insist on wanting to kick the indigenous from atop your high horse and demand they make way to your superiority as you abuse and exploit them. You’re not any different than any other past form of this colonist mentality, you want to steal from and abuse the indigenous.
I grew up in Austin. A bunch of people had kids there in the 1970's and 80's. More than where there before. So even if literally nobody had moved to Austin, there would still be a housing crisis without letting people build new housing.
Unsurprisingly, literally just letting the market respond to demand makes things more affordable for everyone. Yea, some people I don't like might move to Austin. They're probably not all bad. That's what multiculturalism is about.
There are 9 billion people in the world, roughly half of them are perfectly capable of doing manual labor.
There is plenty of skilled labor, and the cost is frankly not that high, you just need to let them work.
Can we be serious here? There is one and only one cause of "high housing prices" and that is a political choice to make housing expensive.
Don't tell people what they can or can't do with their property.
Don't prevent people from being brought in to build stuff.
Do these 2 things and housing will be built if the price is truly high. Anything else is bullshit.
Labor costs are determined by a lot of regulations - minimal wage, mandatory health insurance fees, mandatory pensions fees, etc. make labor costs in Germany much higher than the average in the West. So, it's all not that easy.
If housing is about supply and demand, surely the demand part matters too.
I'm sure the analysis is welcome though and I hope policy makers try to learn from this. We could densify most american cities quite a lot more.
You can look at other neighborhoods such as palms in Los Angeles, which has the most aggressive housing build out in all of California. Median rent has increased - sometimes more housing can create more demand
Or in other words, is there any econometric evidence that building housing increased rents in Palms, or could we be confusing correlation with causation?
That's not science, it's dogmatism
The greatest inequality difference is that between those with housing assets and those without. Yes the 1% are a problem but they are not the reason that young people can no longer afford housing without generational wealth, that's all due to the seemingly normal guy that's enforcing a class system based on home ownership versus non-ownership.
In a system where those with more capitol have more power, homeowners are the powers that be. They're more likely to vote and have more money for discretionary spending - like donating to politicians.
Which is self interested. The paradox is renters being turned against their own interests by large landlords pitching anti-gentrification.
Namely, when new housing is added, there are infrastructure considerations and corresponding expenses that translate to higher taxes. Civil planners have formulas for how much the student population will grow based on the housing density/type.
Schools built on parcels based on 1970's population now have to expand to fit more students or the township has to find and acquire new land to build a new school.
That requires raising taxes for bonds. A new school is several million dollars and then hiring staff. NJ has a legal limit of 25:1 in elementary. Add 100 students and you add at least 4 teachers that have to be supported by taxpayers. Expand the lunchroom, build a new gym, purchase new computers, all the ways up the chain for the next 12 years.
If you ever look at your municipal tax bill, you will find that education is going to be the biggest expense by far.
On top of that, roads may need to be widened. New roads have to be built and maintained. Municipal staff may need to increase.
Some services may actually benefit from economies of scale (waste collection). Most will not.
Imagine you bought a house in 1970 (i.e. my development) and you were paying $1000 annual property taxes. Now your property taxes are $12000 because of the increased spend on infrastructure and increased assessed value. You're a retiree and you've paid taxes for 2 or 3 generations of students. You live on a fixed income and your property taxes are a higher and higher proportion of your income. What do you do? Mortgage the house to pay taxes to fund more growth?
The problem is exacerbated because obviously people want to go where the good schools are, where it's low crime, good infra, easy access to transportation. That drives demand and puts pressure on services while also raising taxes to pay to fund municipal bonds for growth.
End of the day, my personal belief is that housing is a right. But I can also see why middle class folks, retirees end up pushing back when they get the bill in the form of increased property taxes. I've lived in my house 10 years now and my taxes have gone up ~$3500 in that time. Every school in the township had to expand to meet population growth with the additional units. Sure, my home value went up as well, but I can't cash that out. I can't imagine how it feels for retirees that are living in a family home here.
In my experience, most retirees have more rooms/land than they can make productive use of. I feel that there should be some pressure for them to sell that property to families who can use it more productively. That's the stick, but I feel there needs to be a carrot, where builders are constructing homes that these retirees will be drawn to. There are retirement communities in the southern US like "The Villages" https://www.thevillages.com/, but as the population here ages, we need to build these everywhere so retirees can move into the communities that meet their needs without being forced to leave their cities.
> I feel that there should be some pressure for them to sell that property to families who can use it more productively.
But there's nuance here, too: families. My wife's side is a big Italian family. Everyone's here. What do you do if your grand kids are all here? How do you support your adult kids and help them achieve financial security? Or leave and secure your own? Neither is an easy choice.
> There are retirement communities...
If the demand for housing is high, zoning fees can also be used to make developers pay for the infrastructure upfront. If done properly, their impact on housing costs should be minimal, as they mostly extract some of the added value created by the zoning from the landowner.
> If the demand for housing is high, zoning fees can also be used to make developers pay for the infrastructure upfront...
The developer for sure does not want to build a school and even if they build the school, they are not going to be paying for the teachers that are going to need to support the increased student body for every decade into the future; that's on the taxpayers.
More fundamentally, this is related to the principle of subsidiarity that is occasionally popular in the EU. Everything the government does should be done by the lowest level that can reasonably do it. And to enable that, local and state governments should have sufficiently wide tax bases.
At the state level, we have housing laws that mandate ratios of affordable housing. Many townships faught this in court (and lost) because schools and infrastructure are capital projects. Bonds are secured today against some future tax base.
Don't forget that developers and investors are voters too (and lobbyists) who are going to vote against the municipalities.
My point: it is a nuanced situation and not as simple as "Got mine FU" or "just build more". Build where? How do you pay for it fairly?
My solution was to widen the tax base to make the system work better.
The incentives around property taxes do not support significant new construction. If housing becomes more affordable, tax revenue per capita goes down, while local government spending stays the same or increases. Local governments should therefore not rely too much on property taxes.
Income taxes, on the other hand, are good. You are taxing things you want to grow, and you get more tax revenue when your policies are good to the people. Local governments might want to collect more income taxes and less property taxes.
When the demand for housing is high, zoning creates significant windfall to the landowner. Some of this windfall can be taxed to support infrastructure construction.
and if anything you taxes will go down because they are now spread across more households.
These are big capital expenses. My property taxes have never gone down, even as my township has expanded.
Part of this is that taxes are calculated on assessed value. Where I'm at, assessed value is a combination of lot size + structural improvement. Tax bill is assessed value * rate. Assessments have never gone down. The more people want to move here, the more values go up, the more capital projects need to be undertaken before new tax payers are contributing. It may take years to build a new development, but the multi-million dollar budget to expand the school and staff up teachers has to happen in tandem, before the new tax base exists.
My lot is from the 70's. It's huge. New lots are significantly smaller. Townhouses and apartments are very dense. New development does not yield savings in taxes in practice unless it is commercial development.
A big piece of farmland contributes taxes, but requires little in services. Convert that 50 acres into 50 units and now you need much more services and infrastructure compared to the 50 acre farm.
You underestimate just how much schools and teachers cost. Those 50 units might add 50-100 students. Capital projects start even before the units finish to prevent overcrowded schools. Contracts are signed for garbage and snow removal if 5 of those units are occupied or 50.
- many new building being very ugly (side note: ugly buildings no matter how green get torn down and are this not as green as building that are beautiful)
- increasing density bringing increased crime
- increased density actually turning out to be less efficient on a per capita tax basis (this is always wild to me, cities should be spending much less per capita than rural areas but arent)
Although it's not just NIMBY. There's a million rules about building housing and developing land from zoning, environmental, indigenous, or social ends. Which are arguably luxury self-benefiting priorities for people who already own houses. Plus all the activists who think the government can both make development extremely expensive via endless rules while affording to fund mass government housing at the same time.
There are a lot of people with some power, which they use as they see fit. It all adds up to marginal and pseudo-random changes, as the state drifts toward... wherever it's going.
[0] https://www.pbs.org/newshour/politics/watch-trump-says-he-wa...
"Density at all costs" ignores a huge set of tradeoffs that are equally as damaging to a city. Things such as urban form, street experience, long-term adaptability, integration with existing fabric, economic resilience, etc. These are the things that make a city work in the long term.
I’m a big proponent of building more housing. But a lot of it is being doing in very short sided ways that lead to huge externalities.
I have no idea what any of this is supposed to mean as a negative to people being able to walk around their neighborhood for essentials. It sounds like a classic vague "what about culture" argument that can't be explained.
My hometown has had a huge push to add more housing to make things more affordable. What happened? Rents went down for a couple years then right back up. Except now the city has a bunch of more soulless condos and is horribly congested.
Sometimes preserving things and keeping them nice and simple even if it’s costs a bit of a premium is better.
So there were a bunch of people who wanted to live there and now can.
The first bit is a taste thing; obviously lots of people view modern sprawl as "soulless" too.
But the latter point is just plain wrong. Dense housing IMPROVES traffic congestion and shortens commutes, always, everywhere, markedly. And it's for a bleedingly obvious reason: pack people in closer together and they don't have to travel as far to get where they're going. QED.
What you're imagining is some kind of fantasy hometown, which never increased in population and whose economy never developed. I mean, it's true. Forgotten ghost towns have very little traffic and quirky soulful architecture, c.f. Detroit. Everyone agrees that's a bad thing, though.
If you want soul move to New Orleans. Meanwhile people need comfortable places to live that don't make them indentured servants for the rest of their lives. I'll take a neighborhood with walkability and density over an old drafty brick building with no grocery stores any day.
Last time I did the back-of-the-envelope math, financing permitting delays in San Francisco added 10% to the cost of new housing [1]. (Note: not the cost of permitting. Just the cost of financing the delay.)
This is deadweight loss that everyone in the transaction wins from eliminating. One could absolutely see lower prices and higher developer margins if this waste were cut.
Nobody ever thinks of the poor banks!
I thought about that. But a bank would rather lend in lots of high-confidence, low-duration deals than a small number of high-margin deals. The only people who lose when housing is built are incoment landowners. Because prices go down.
For the everyman banks not winning is catastrophic.
Read the article and the peer comments here; Austin’s boom came about from reducing regulatory constraints.
Nationally remove the artificial restrictions and the supply side will fix itself.
https://www.youtube.com/watch?v=LVuCZMLeWko
As renown corporate welfare recipient Bezos would say: "your margin is [our] opportunity."
If the only thing stopping development is that rich developers want to make more money, then maybe we should get rid of the rich developers and let the public decide what to build. It couldn't be worse and it'd be 20-60% cheaper too.
It could work, but both Singapore and Austria have less than 10 million people amd have a residency system where you just can't come in from the outside and get your subsidized housing in Vienna or Singapore. Singapore doesn't extend subsidized housing to its foreign residents, even permanent residents, and they make up 40% of the population!
Vienna is a bit better, as it applies it to all EU citizens who are resident in Austria, but you have to have lived at the same address there for 2 years, you just can't come in and claim one.
I've been racking my brain trying ti figure out what it looks like for US cities to pull out of the housing crisis, and I think it's either going to take about a generation, or there will be some catastrophic event (Great Depression II, WWIII) that changes the political landscape so drastically that nobody can really oppose housing anymore.
I put this question to grok; its response:
> Unfortunately, Australia's legal, regulatory, financial, and practical systems make this extremely difficult (bordering on impossible at any meaningful scale).
Crazy that the reason we can't have an order-of-magnitude reduction in the cost of the most important thing people need (shelter) is not due to resource constraints, but man-made ones.
You say that as though reduction in cost of housing is a universal desire, but it isn't.
Suppose a couple of years ago you took a $500,000 loan to buy a $700,000 house, which you'll be paying off for the next 10 years. Would you like the market value of your house to decline substantially during that time?
If there's enough of the population bought into property, it won't be politically feasible to allow the value of homes to decline.
No, but when your city proposes a "missing middle" plan, watch who all comes out of the woodwork to scream murder at their research that shows that the projected effect of doing so will lower property values in my town from an 11.5% YoY average increase to a "mere" 9% YoY increase. You'd have thought the city was suggesting executing grandmothers in the streets.
(I cannot personally complain, I put down 10% on my home purchase here in 2021 and was able to get out of PMI due to having 20% equity against appraised value 366 days later, while only making required payments.)
that is why we build suburbs - they get anound this by being right next to a place with everything you want in a city
We don't observe this phenomenon occurring often in the modern day only because cities sprawl rapidly and so the evolution of the suburb becomes a borough of the existing city rather than a brand new city. Otherwise Brooklyn, Jersey City, Weehawken, etc. would all be considered new cities instead of being referred to as the NYC metro.
See Starbase, Texas
Think back to the old "company towns". Lowell, Massachusetts, built for a textile mill. Hershey Pennsylvania, built around a chocolate factory. Fordlandia, Brazil, a rubber plantation town. All of these were essentially cities and towns planned out around a central industry.
Similar things happened with the ghost cities in China with several of the big notable ones eventually actually growing into real, functional cities.
Once again, these have all kinds of messy histories and I'm not saying they're all good ideas. But just pointing out, it can be done.
however there are many places where there is more than enough water. East of the mississippi for example. other continents also have areas where there is plenty.
The existing smaller cities just slowly wither.
Existing homeowners of the capitals have little interest in real estate prices dramatically dropping - would you?
Public housing also has many models. State owned. State funded but via cooperatives. Part state. state assisted co-buy. There's lots of models and so it is also a bit bogus to talk as if public housing has one shape.
I don't like the tone of input here, there is jeering and name calling and ACKSHEWALLY type responses so I am not going to continue, I just wanted to say: don't forget the lessons learned in Austin may not extend world-wide.
Also those people will saturate downtown making it lose its culture.
I'm always amazed at the American way of "just throw money at the problem".
All three of the five things most economists say about house building - and each one will hit house owning voters hard making it hard to replicate.
But none the less a triumph of common sense :-)
If you are in your terminal home, you also want low prices until the week before you eventually sell your house, as Texas has a high property tax rate to make up for the lack of state income tax.
In a negative way?
Going down might be nice, perhaps I could buy the neighbor's house and combine the lots and make a nice set of row houses ...
House go up being important is really only needed if I'm using it for leveraged appreciation and doing something like dragging the cash out like a piggy bank; but that's a tiger that will have to be dismounted eventually.
These things push against that.
Really, I'd prefer not having policies that tend to push up housing prices or discourage people from moving, but here we are, those types of policies are common.
Which is myopic.
As a homeowner, I want cities to be livable and affordable for those who want or have to live there. I don't care if the value of my home changes one cent. It's honestly kind of useless, because it's not like I can sell the house and buy a nicer one. All the houses are more expensive so it's always going to be a lateral trade. It only helps if you sell and move to a lower cost of living area.
It's kind of a sham that we have been conditioned to treat housing as an investment. Housing is where people live, it shouldn't be a commodity to be hoarded.
It's a minority of people who are ok never capitalizing on their home value.
In that sense I agree with the current state of reality.
But what I am saying is that if we want to change that reality -- and it most certainly is possible to change -- it will take people rejecting the status quo. And there at least some of us who are already there.
The only people in the low income neighborhood I grew up in that could afford to weather this wave of out-of-state and investment banking homebuyers were those who were of retirement age and had their property taxes “frozen” at an affordable level.
I am strongly opposed to building homes in stupid places, worsening traffic or overburdening infrastructure. This is why I tend to strongly oppose ADUs. If you want to turn my neighborhood into a dense urban environment, fine, but buy my house and my neighbors' houses, bulldoze them, and build proper urban density.
I also have a lot of skepticism regarding our housing shortage. You can go find people making the same arguments about housing shortfalls in 2006(underbuilt for years, new family formation, prices will remain high...). But then something happened, and it wasn't that 10% of Americans suddenly died. Suddenly we had more homes than we needed. Why? Because housing demand is related to economics. Now that we're slowing down reproduction and kicking out or scaring off immigrants we're likely setting ourselves up for another round of oversupply. "Good!" Well, tell that to the soon to be unemployed home builders.
Similarly, the tested and proven solution to homelessness is providing housing up front. Don't have any requirements (employment, sobriety, etc) blocking housing. Those things are easier to achieve with a roof over your head.
Everywhere you look, Australia, Canada, UK, EU this is just a massive issue for young professionals with long-term disastrous downstream political consequences, and yet, the solution is so simple but hardly ever implemented in these countries.
Just BUILD MORE HOUSING. Mass build everywhere. Vast amounts of land is available. Just build homes and apartments everywhere!
No amount of evidence will convince these people, because they already made up their mind ahead of time: their ideology says the market can't help, so the market can't help, period. Any evidence to the contrary is a plot by billionaires or something.
*Nothing changes if you replace "salary" with "financial interests". Or "social interests". Or other interest near & dear.
Maximizing supply can mean other things than building like taxing unoccupied homes by large amounts making them unpalatable to own as a second (or higher) home, thus putting them back on the market. However these aren't all good because obviously our economy deals with more effects than just simple supply and demand, like maximizing the amount of loans given to people wanting housing regardless of the ability to repay is known to be a bad idea.
If you throttle the supply you can clearly control the price and the people you're talking about believe there is a concerted effort to control that supply. This can happen directly (choosing not to build as soon as land is available to build on) or indirectly (e.g. politics, mass media influencing people to vote to not increase supply).
What people generally hate is production of essentials not being maximized which would give us the actual lowest price, and maybe we as a society should be maximizing that supply to arrive at the lowest cost for a given house with given features.
And then the rebuttal to that is usually "tough shit lol" which is why people coming out with simple supply and demand replies are generally seen as derisive.
We kinda do, through farm subsidies.
It is of overall net benefit over the long term to raze a small three story walkup apartment and build something denser, overall increasing the amount of housing.
However, in the short term it's immediately quite (sometimes existentially) bad for affordability if existing affordable housing is destroyed and replaced by brand new (and thus inherently luxury) housing.
So accordingly we naturally see low income housing activists push back against some redevelopment and ask why development is not occurring in wealthy single family home areas where the amount of people impacted is less and class those that are not remarkably negatively impacted.
Personally I think the data shows that in general it is still really beneficial to build out as much housing as possible and avoid the negative impacts of a shortage, but I do think there are people validly pointing at a real problem of displacement.
> "Rents fell. In December 2021, Austin’s median rent was $1,546, near its highest level ever and 15% higher than the U.S. median ($1,346)."
Of course having more housing should, all things equal, lower rent. But all things certainly weren't equal, especially during this time period.
For comparison, in San Francisco December 2021, the median one bedroom was $2810. In San Francisco March 2026, it was $3597, an increase of 28%.
We’re seeing a reversal in trend when SF is hot again and Austin is not. So not exactly a straightforward comparison. It could explain the SF-> Austin and back trend.
Of course, people can come up with an ad hoc explanation for why Austin's prices happened to decrease against each of those data points. But is there a single principled way to present the data that suggests increasing supply in Austin did not decrease costs?
https://www.reddit.com/r/texas/comments/1grxqur/the_austin_t...
This appears to be a correction to an unsustainable market.
It's a win-win for our tenants. Prices seem to be stable and there's no rush for them to lock down a house RIGHT NOW.
It's sure not good for my bottom line as a landlord for them to keep adding homes and keeping rates up. But it sure seems like a no brainer for society at large.
A stable market is great; as you can find good deals with some sort of certainty, and focus on where you can actually build value (rehab, etc).
Increased supply lowered prices for the same levels of demand?
Seems unlikely.
In Melbourne I've never found a good source for this, only general averages; and my suspicions are that we just build shitboxes and claim the rent is lower on average, capturing something like shrinkflation rather than affordability.
At the time I didn't think they should have been allowed to be built. But looking back, they probably did keep a lid on rents. A bad roof over your head is better than no roof.
The Austin metro area's population has been monotonically increasing [1]. Increasing housing supply decreases prices. If you want to reduce housing costs, flood the system with housing.
[1] https://www.macrotrends.net/global-metrics/cities/22926/aust...
interest rates for construction loans, reduced funding, labor and material costs, all contribute to the amount of housing built.
there is a bond being debated in the ca senate now that will help by giving loans for construction.
https://calmatters.org/politics/2026/01/2026-housing-agenda/
:-)
Maybe if you flood the market with 30% more housing units like Austin you get the Econ 101 effect. On the other hand, apartment owners realized intentional vacancy is a profitable strategy, which alone seems to defy that basic interpretation.
The mechanism by which new construction drives down rents is that people that need a new apartment are in less competition with existing residents in older worse apartment buildings.
So the newcomer from SF moves into the expensive new apartment, which means that there's less competition for decades old apartments, which means that when one of those is vacated there is less price appreciation on that product.
If there is a scarcity of apartments what happens is that when a decades old apartment is vacant it is filled by a wealthy newcomer and the landlord increases the rent accordingly.
I think that might not be the right cause and effect relationship. The actual cause is increased demand. This creates both the increased pricing of existing stock and an incentive to build new stock.
They can only get away with that when there is a housing shortage.
My understanding of the situation is that luxury apartments do indeed gentrify neighborhoods (i.e. they increase the local rent and drive displacement of locals that can't keep up with those rent increases).
However, across the entire city, it slightly eases rent pressure by providing additional housing supply.
So, like you mentioned, if you get enough housing across many neighborhoods, you can drive down rents. Otherwise, that luxury complex in your neighborhood might only be helping ease rent pressure in other neighborhoods.
Your landlord lied to you to get you to pay the increase. You had little choice because finding a cheaper apartment probably wasn't possible/desirable and you probably didn't want to argue with him in front of the rent board. Understandable but that doesn't mean your landlord's explanation has any validity.
According to TFA, it seems so.
Which is great, because it's further evidence that we should do the same thing everywhere.
If the older buildings are able to raise prices 20% with no increase in vacancies after the new build, the new build not coming in would mean those older buildings rent would be bid up more than 20%.
The people moving in who could have afforded the 30% more expensive luxury units will just have to pick from the older units and outbid lower income people for spots in this low supply, growing city (under no other scenario could you crank up rent on aging stock 20% without losing to competing landlords).
It can, but not in isolation.
It requires a couple additional variables such as population demand (rate of growth of Austin has reduced since the COVID boom [0]), existing stock (Texas had a building boom and bust in the 1980s [1] that decoupled it's housing market from the rest of the US), and a shift from buying to renting.
That said, the peers I have who work in professional real estate (not realators - as in actual MDs for REITs or multi-generational landlord families whose parents went to school with Governers and Mayors) are starting to shift away from real estate to equities because of headaches around succession planning and reduced margins.
What is ending up happening is megacap REITs like Equity Residential, Essex, Avalon, etc are buying out older groups, taking stakes in new developments, and shifting away from selling condos to perpetually leasing. At their size they can afford to have significant amounts of unleased units becuase they would have made up the cost via higher rent on leased units, tactically building high margins condos and SFHs in high appreciation geographies, or loss harvesting in order to subsidize commercial buildouts like data centers.
Naively saying only construction will reduce prices is false, and if the consolidation aspect is not solved (and sadly, it won't be) it would only lead to an even worse situation.
Additionally, these are hyperlocal problems and what may work for Austin may require significant retooling for Chicago.
[0] - https://www.bizjournals.com/austin/news/2026/01/28/austin-be...
[1] - https://www.nytimes.com/1986/09/14/business/john-connally-s-...
Austin is not what people pretend. Same with Denver or SLC.
There are no tier 2 cities. Its like countries. There are first world, and third world. And thats it.
Hey, here's a good way to improve 'housing affordability' locally: dumb down schools. People with cash will move out and prices will fall. Something suggests me it's not the solution really lol.
Affordability is relative. System always balances itself on the level that barely over 50% of people can afford housing (because it's a democracy). There's no fixing to it unless one abolishes either democracy (so no one cares what people want and developers have a free roll building as much as they want), or market economy (when the Party provides housing as it pleases).
He says that building housing does bring prices down, but not very much. In his paper they argue that income inequality is a big driver of making housing unaffordable. (Not billionaires, but more those making more than the median income vs the rest) Because (among other reasons) those with higher income have leeway to spend more on housing versus those at the lower end of the income scale who can’t spend more on housing even if they get a raise.
https://www.youtube.com/live/ai76174930Q?si=R-FYO86COepRADhE...
Building a little reduces prices a little. Building a lot reduces prices a lot. If the prices are very high, then it's very profitable to build, so unless stopped by regulation, you will get a lot of building. Even if building merely keeps the price from going up as density increases, the value provided by living in an area goes up from agglomeration effects as it grows.
Even adjusting for inflation, and even if the measurement of inflation is decent, it would still need to go down by another 20%.
What this article says: *The median apartment rent in Austin has dropped X% over the past 5 years*
What this article does not say: *Apartments in Austin cost X% less to rent now than they did 5 years ago*
It's completely possible for the cost of the average apartment in a city to go down, while the cost of existing apartments increases. How does this happen? The enshittification of rentals. Units get smaller (apartments in Austin are shrinking), they get built near highways (air pollution), they lose amenities like parking, they pop up places where they previously weren't allowed (smaller ADUs, basement units, see article), they get subdivided (landlord throws up a wall and turns a large 1br into a cramped 2br).
If supply and demand were really working the way its heralds claim, then we'd see the price of existing units going down. This article offers no evidence that this is happening. I don't believe for a minute that it is.
Instead, it's the same story as always: your rents will keep going up. You can move somewhere cheaper and shittier if you want. The people who profit will congratulate themselves while decrying the thing they actually fear: rent control.
https://www.statesman.com/story/business/real-estate/2025/05...
They show Austin rents going down, eg Zillow's Observed Rent Index: https://www.zillow.com/research/data/
Not sure the idea of housing being an asset which endlessly accrues value is good for anybody involved, long-term. Open to disagreement, though! I’m no economist.
They want to flow as much as possible - so if there are unlimited building spots you get a smattering of various options being built as they all find there niche.
If the building lots are rare, then they all will be built into the most expensive possibility.
The idea that supply and demand don't apply to housing is quite popular:
https://www.jstor.org/stable/27397156
And the very few academic articles that try to refute housing supply lowering prices get a lot of press:
https://hellgatenyc.com/take-that-ezra-klein/
Even when it's not peer-reviewed and contradicts a ton of more serious research attempts, a bid of research which rarely gets popular press coverage.
It's like climate denialism, there's huge demand for denialist positions and very little research to back it up, so the press does not reflect the research.
Very broadly speaking, people mis-estimate effect sizes in economics by orders of magnitude. Induced demand is just their foothold to claim an effect exists, before they go about claiming the effect size they want to see.
Also, even if that were a problem, which seems dubious, you can regulate it. Massive tax hikes for second and subsequent homes are a thing in some places.
No one is complaining about a housing shortage today in buffalo which used to have twice as much housing stock as it does today, because the demand simply isn’t there now.
New businesses the sprout up that market themselves certainly induce a bit of demand, but more lanes and stoplights doesn't exactly motivate people to want to go somewhere.
Yeah, and when we add lanes to roads, the average speeds increase and commutes get shorter. Right?
Also, if the government gives me $1 billion, then I'll be rich. But what happens if the government gives everyone $1 billion? Everyone will be rich, right?
In your first example the "cost" in the form of traffic etc. was reduced so more people "buy" in the sense that they go on the road until you reach a new "cost" equilibrium. In practice that equilibrium is quite close to the original cost so it doesn't fix the issue traffic. But if that same number of people had driven before the high way expansion traffic would have been way worse; the cost would have been too high so they previously opted not to drive.
In your second example by increasing the supply of money the money ends up costing less; it becomes worthless due to inflation.
When there's more of a thing it cost less.
To be fair, building more housing can be like highway example. If there's tons of pent up demand of people looking to move somewhere increasing supply dramatically can fail to move the needle on cost because there's many marginal buyers who all have basically the same price. If you've got a million people who want to move somewhere and are all willing to pay up to 500k for a house the price of a house won't fall under 500k until you've built at least a million more homes.
That perhaps you shouldn't assume that kindergarten-level theories always correctly describe complex markets?
> In your first example the "cost" in the form of traffic etc. was reduced so more people "buy" in the sense that they go on the road until you reach a new "cost" equilibrium.
So go on, do continue this line of thinking. You built more houses.... then what?
Feel free to refer to my explanation: https://news.ycombinator.com/item?id=47433743 - as usual, downvoted by people who can't face the truth.
Even then, I’m curious as to what point you were trying to make with the building roads thing.
Isn’t it a good thing that more roads are built even if induced demand is observed? More people are able to use the roads.
You got more people into the place. Now more employers move in, as they have access to a bigger pool of employees. What's next?
Put yourself into the shoes of a real estate developer.
The rents are supposed to reduce only temporarily. But the goal is to not reduce is permanently. The goal is to increase land utility. Building houses helps with that cause.
No, it's not good. It leads to nothing but urban decay.
That's how you get Tokyo with a crazy price bubble, while beautiful traditional houses decay into dust just 3-4 hours away.
> The rents are supposed to reduce only temporarily.
Except that they don't even decrease. If your population is growing, so is your rent. And it doesn't matter how much you build (for large enough cities).
Again, this is simple observable truth.
> The goal is to increase land utility. Building houses helps with that cause.
Yeah. The goal is social engineering to force people into shoebox-sized apartments, to be ruled by their benevolent masters.
That's also why we're getting a global pushback against it.
This is subjective and loaded. I don't see any concrete point you are making.
>Except that they don't even decrease. If your population is growing, so is your rent. And it doesn't matter how much you build (for large enough cities).
They did temporarily in Austin - 19% after accounting for inflation.
Overall, making a city like NYC is preferred for any country. Even if the prices are really high, it reflects the economic activity of that city. Why would a house cost ~$800k if the person living there won't make multiples of it with their wages?
Are you really making an argument that rents in a place like Tokyo are not supported by real value creation? Are we supposed to all live in "beautiful, traditional" heritage houses? Those houses are often a luxury, and favored by the wealthy who can live with the resulting inconveniences. They're not a sustainable solution for the masses.
As annoying as NYC (and driving) are, there are downsides to unlimited housing and lack of zoning - as it turns out, the same states that do this sort of thing we all praise, are the same laissez-faire philosophies that oppose communal public transportation and walkable urban communities.
Small incremental changes probably just get absorbed without visible impact on rents.
This has been studied to death. But just like soybean farmers in Idaho voting for tariffs on China it seems a category of urban renter is more wedded to ideology than self interest.
The Austin metro area's population is up [1][2]. Austin's GDP is up [3]. Migration per se doesn't explain a phenomenon that is robust across cities, countries and centuries.
[1] https://www.macrotrends.net/global-metrics/cities/22926/aust...
[2] https://en.wikipedia.org/wiki/Austin,_Texas#Demographics
Of course rents will crash if everyone anticipates 20-40% growth and it’s suddenly 0 . Let’s see in a few years if the pricing trend continues downward or upward.
If it’s downward, yes we’ve solved the rent problem by “building”. If it’s upward, as it has been, it’s not just about supply .
For reference, I moved to Austin in 2018, my rent for my apartment was about 1200/month. In 2022 (the year I left), my rent jumped suddenly to 1600/month despite new apartments near me, and all of the apartments I looked into had similar jumps. And anecdotally speaking my coworkers all reported similar massive rent spikes.
It feels more like this is associated with the tech industry cooling significantly in Austin so they can't get away with pricing bumps. This isn't to say new housing doesn't help, but it certainly didn't prevent me from getting fucked on rent.
I say this with a bit of righteous anger though because the moronic democrats in California want to virtue signal about housing and homelessness but they make it downright as difficult and expensive as possible to increase housing supplies. The democrats in California have done nothing but make our problems worse, even as there are states we can look to with proven examples to solve our problems. Nope... more housing lotteries and BMR units will be required instead of just making it easier to actually build..
And then they'll act so surprised when the populists without a plan show up and win the national elections.
So what did? Likely COVID. The _only_ way to decrease the housing prices is to decrease the population. As proven by countless cities, including the world's most liveable Copenhagen.
So does my prediction hold for Austin? Let's see.
Austin TX population in 2019 (ACS estimate, data series ACSDP1Y2019.DP05): 979263.
2021 (ACSDP1Y2021.DP05): 944658
2023 (ACSDP1Y2023.DP05): 979700.
2024 (ACSDP5Y2024.DP05): 979539.
So yep, my prediction holds true. The housing prices in Austin were stagnant because its population decreased during COVID and barely recovered to pre-COVID levels.
Want another prediction? Seattle's home prices will fall down, because its population is now (likely) decreasing. Not because of a rush of new construction. We'll see updated population released stats in April.
Edit: I sent a letter to the editor of Pew. We'll see if they have a shred of honesty (doubt it).
Edit 2: honest researchers take care to control for other factors before jumping to conclusions. For example, they could have found a comparable city that also had falling rents but _no_ significant new construction.
And hey, I did that. According to https://vitalsigns.mtc.ca.gov/indicators/asking-rents the rental price in SF was $4060 in 2019, and it fell to the low level $3319 in 2024 before starting to climb in 2025. Can you guess what was happening with its population?
The population numbers you have reported are misleading because they use 5 year estimated numbers. The better estimate is 993,588.
The population actually grew from 2021.
Even if you were right, the rents fell down by more than 19% after accounting for inflation. I’m not sure what you are trying to say?
I specifically chose consistent data series. While each one of them can't represent the true population, they absolutely do illustrate the trend. The number you're quoting is from the Census, which only happens at 10 year intervals.
If you have better population estimates for these years that use the same consistent methodology, I'm all ears.
> Even if you were right, the rents fell down by more than 19% after accounting for inflation. I’m not sure what you are trying to say?
In SF rents fell even more. Without significant new construction.
Why?
False. You are comparing 5 year estimates with 1 year estimates so it’s not consistent.
With SF I agree that it went down because of population but I’m not sure how that explains 19% reduction in rents in Austin with higher population.
The 1Y series is indeed https://data.census.gov/table/ACSDP1Y2024.DP05?q=Austin,+TX at 993771. I believe this is a statistical outlier, and is not reflecting the true population.
So let's test my prediction, shall we? The 2025 data will be released in April. If my prediction holds, then the population figures for Austin will be nearly flat or falling.
I also made the same prediction for Seattle, its rents are now falling slightly. So its population will be decreasing.
> With SF I agree that it went down because of population but I’m not sure how that explains 19% reduction in rents in Austin with higher population.
As you see from my data, the consistent series up to 2023 indicated falling population. The 2024 data was the outlier.
How do you explain that?
If you want a success story, look a Vienna. That's what actual community and housing looks like and its because of the exact opposite of what econ clowns on here believe, non-market housing.
We need affordable housing, not more housing for rich people, made by rich developers. Just because my house is worth $3M and I have $3M in stock options doesn't mean I'm rich. I'm working class, I had to come back from paternity leave to log-in to Slack on my laptop every damn day, and tell Claude how to write this damn software!
Did you sign the petition to block the apartment building down the street? It would RUIN our neighborhood!!
As an aside, I am not part of the problem!! I care about poor people!!! I am a good person!!!!
Oh you want proof? Look at my front lawn: "In this house we believe black lives matter, science is real, love is love..."
Proof point 2: look at my Tesla! "I bought this Tesla before I knew Elon was crazy!"
Plus I voted for Kamala. I'm GOOD. People in Kansas are DUMB and BAD.
The quality of construction in these new builds is generally very bad. If you compare a Texas home built in 2025 with one in 2015, I can guarantee you will find shocking differences once you pull back some of the drywall or have kids jumping around upstairs. I had a 2023 build for a year before I realized I had a hot potato situation on my hands and decided to bail.
The new builds used to command a premium, but in some communities the situation has completely inverted. Buyers are coming in and explicitly avoiding anything built in the new millennium. Information is flowing so much more freely around real estate and the unspoken bullshit scams prevalent within. We've now got home inspector influencers on TikTok showing first time homebuyers exactly what to look out for. We didn't have these kinds of information channels when I was shopping for my first home.
