The issue is that a sizeable underclass is being created that have no wealth, not least because what wealth they did have has been funnelled to the very wealthy. For example, medical bills. For example student loans. For example zero interest rates with zero wage inflation meaning accommodation costs don't fall as a proportion of income.

The solution is to address wealth inequality. This means taking wealth away from those who have amassed too much, and returning it to those who had it stolen from them.

The idea that there's enough housing but "in the wrong place" is like saying there's plenty of jobs, they're just in third world countries and Scandinavia.

The idea that the solution is "play Robin Hood with the global economy" is literally a fairy tale.

Not only that, the definition of "affordable housing" is skewed. In the big metro area near me, "affordable housing" means 1500 to 2000 USD per month. That is not affordable to any normal person. To me, affordable rent should be below 1000 USD.

You think this homeless crises is bad, wait 30 years and then you will see Cities with large slums like many "third" world countries have.

And yes, it is the Gov. job to fix this, but the politicians wants to continue receiving their "bribes" from companies, some of which are buying up rental properties as fast as they become available. Ever see "cash for your house" ? Those properties are probably being bought up for use with AirBNB or being turned into rentals for around 3000 USD.

[0]: https://www.propublica.org/article/ugly-truth-behind-we-buy-...

[1]: https://www.propublica.org/article/behind-the-scenes-of-we-b...

[2]: https://www.propublica.org/article/state-federal-laws-do-lit...

[3]: https://www.propublica.org/article/want-to-sell-home-for-cas...

Wealth taxes are not a fairly tale, though of course they are a nightmare for the excessively wealthy! In the UK we used death duties to finish off the aristocracy.

Shenzhen grew from 100,000 people in the 1980s to 13M now with no housing affordability crisis...by building. The whole pearl river delta region is essentially an 80M people megacity with no housing problems...because they continuously built. Tokyo is also a classical example of continuously building infrastructure to support millions more people per decade.

That's why we have governments, though.

I wouldn't use China as an example of solving the housing problem by simply building. There's currently a large oversupply problem [0] and, not entirely unlike the US (but more extreme), excess supply of housing has lead to people simply owning more than one property as an investment strategy.

0. https://www.wsj.com/articles/chinas-smaller-cities-struggle-...

Unrelated to the above, but China's excessive building isn't actually from central planning, but because real estate is the one of the only viable investment methods in China, and because selling land to developers is one of the only ways local governments can raise revenue. Chinese cities are quite expensive to live in (especially if you have Western standards)

Only in idealised markets. Housing markets are often not like that.

Tokyo is an example where houses are torn down every 39 years so a new one can be built. Also, given the lack of population growth in Japan as a whole, the growth rate in Tokyo is anemic. Tokyo metro area has even been losing a small amount of population in the last three years: https://www.macrotrends.net/cities/21671/tokyo/population

Rent is maybe 30% higher in Tokyo, even less if you live on the end of a train line. Can you imagine how many people would move to Bay Area CA or New York City or Boston or Seattle if their rent was only 30% higher? Pre pandemic my 3 bedroom in Boston area was 3500/mo. Since the pandemic rents have gone even higher. We have bidding wars of people trying to win a rental unit. Bidding wars. It’s ridiculous.

Also I don’t see your point about houses being torn down. If anything that should make it more expensive (since buying used and not rebuilding is cheaper). Realistically rebuilding is vital (in conjunction with subdivision) because that’s how you increase density

Osaka and Nagoya are losing people also. The changes are for metro areas, not city cores.

> If anything that should make it more expensive (since buying used and not rebuilding is cheaper).

It simply means that you can't compute new housing very easily by new housing construction rates (you have to subtract old housing demolitions).

Density currently isn't increasing (you tear down one three story narrow house and replace it with another three story narrow house, you need to buy a bunch of SFHs to make a new apartment building).

Where could you built 1M units in San Francisco? It is less than 50 square miles surrounded on 3 sides by water.

This is a good thing. If SF is so great, many more people will be able to go there.

The ideal situation is Tokyo, where a lack of culture in speculating on housing coupled with population decreases leads (going down in the metro area for the last three years) to housing affordability.

If you increase the supply by enough, that will tip the balance to where the market clearing price will go down.

Just like the entirety of Los Angeles couldn't move to Santa Barbara without Santa Barbara being changed forever.

The closest reasonable equivalent we can do is maintain the quaint "old town" and build a "real city" around it where people actually live and work, and the old town remains as a tourist destination, basically.

This is the case in much of Europe. The Paris you visit and the Paris people live in are often mixed, but they're noticeably different.

Rapid mass transit to city centers can hide the distinction.

There's no such thing as affordable housing[0]. Just housing. You can certainly argue that building a house is too expensive -- and due to NIMBYism, discriminatory policies, and anti-density regulatory environments, this is often true -- but affordability is not an intrinsic value of a building, and the problem is generally that housing stock simply doesn't keep up with demand in places which demand lots of housing (e.g., San Francisco, Seattle, NYC, London, etc.).

0. https://www.strongtowns.org/journal/2023/1/3/theres-no-such-...

Also, if you want to use it colloquially, then housing is, by definition, affordable for most of the people who live in housing and are not running a spending deficit.

Ah, more pithy, meaningless slogans.

Surely municipalities and landlords know the median gross incomes of households in the areas they serve. Surely there are bands of income where certain types of housing are classified as "affordable" and then "cost-burden", and the quantity of households which fall into these bands are well-known to those who serve them. Landlords set the market rent based on what the market will bear. HUD sets the allowances according to market rent as well.

Yes, to a homeless bum, all housing is unaffordable. To George Soros, it's all affordable housing. But you need to remember that the definition is proffered by Housing And Urban Development, a US Government agency which does things like subsidize rent and help people purchase homes, so I doubt that the state of feline vitality is entirely unknown to them.

You can "solve" the equation by reducing housing costs, but it is also possible that the "problem" isn't housing costs per se but wage depression, and that the "real" solution is to fix the gross monthly income.

"The" gross monthly income, as if there is one blob of income that we could turn a knob and increase, by say, 10%? Are we doing this across the board, from migrant farmworkers to the Fortune 500 C-levels? Does this dovetail with UBI so that people who earned $0 + entitlements, lose their entitlements and begin receiving cash instead?

If rental housing is the #1 monthly expense for the working class, or say, the socio-economic class who needs Affordable Housing, and you "fix" their income (which I think you mean raise it, rather than the financial term of art) if you raise their income by a given amount, and housing costs stay constant, then more people get housed?

I mean, the 50s/60s promoted the Nuclear Family for some reason, and it was probably intended to blow up extended family ties, which can make a populace harder to track and control, and because Nuclear Families tend to drive up demand for discrete housings, and also any and all household goods and resources that can no longer be shared. Hmm.

This is fantastic, and I do think this definition is meaningful, but what legally binds this definition to what politicians and interest groups discuss? Without a legal binding the term "affordable housing" will continue to be a floating signifier indicating housing that is somehow affordable to all people, conveniently without defining the mechanism by which this will be delivered.

Therefore, people will colloquially refer to HCV-participant communities as "Affordable Housing" because if a landlord charges $1801.00, they're not eligible to receive HUD payments and HCV holders literally can't afford to live there.

Therefore, the landlords are presented with a bright-line; either they're in this public housing "project" or they're not.

Speaking of Projects, the "old way" was for HUD to build the buildings and HUD more-or-less directly managed the Project Housing, and the way it's gone with commercial landlords is a relatively new development, if you will.

Adding one home at the top of the price range, increases the number of affordable homes for someone, somewhere, by at least one.

Developing in Vancouver is outrageously expensive. Its voters chose a lengthy approval process for new housing. High housing costs are a political choice.

At some point the market would flood and there wouldn't be as much demand anymore, but if every single person in Canada wants to live in Vancouver everyone is in for a world of hurt until Vancouver has 30 million dwelling units.

The building of dwellings has outpaced immigration so that alone is unlikely a silver bullet.

Several years ago I was living in a lovely, historic, but no-frills apartment in a desirable area (Cobble Hill, Brooklyn) when several new “luxury” apartment buildings opened nearby, all around the same time. They were only a bit more expensive but offered lots of amenities (doorman, elevator, gym etc) that my building didn’t have.

The impact was remarkable: when other apartments in my building went on the market they sat unrented for weeks, when they’d previously rented in hours. The landlord actually lowered the rent on them! In NYC! Our lease was up soon after, and we managed to negotiate that they gut renovate our kitchen in exchange for extending our lease.

Not to be a doubter, but it seems like this note completely changes the context of the problem they stated. A slightly more expensive housing is competitive with the current housing you had. A higher-end luxury building being built costing 10x as much would likely have different effects.

Value is, by definition, "An amount, as of goods, services, or money, considered to be a fair and suitable equivalent for something else; a fair price or return." Having the money to buy a house (for its advertised value) or not is what determines if you can afford it or not.

If you can't afford a house it's not affordable. If your city has housing, but a large population who can't afford said houses, then you have unaffordable housing. If you don't have any housing at all, you still don't have affordable housing.

This isn't really something worth debating. Affordable housing is a very well established part of the governance of cities, regardless of what contortions a blogger wants to use to reframe a discussion away from economic inequality.

> The calculators below are for use by administrative agents and developers of affordable housing to determine the initial sales prices and rents for affordable units in compliance with the Uniform Housing Affordability Controls (UHAC).

https://www.nj.gov/dca/divisions/lps/hss/calculators.html

and then act surprised when they get out with zero useful skills

They’re screwed either way, might as well get 4 years of college out of it.

They make 12-15 dollars an hour. That's 2400 dollars a month. That means at 30% of income (rental maximum in most areas), they can afford $720. (This assumes that they can work 40 hours. Their hours are often variable because they need two jobs - places mostly hire part time to avoid needing to give out health care.)

There are only a handful of apartments in the area that will rent a two bedroom for 1400. (I assume a roommate.) So, considering a moderate cost of living area, you are unlikely to ever make it out of sharing an apartment as nearly every job paying more than $30 an hour in this city requires a bachelor's degree.

Look around your job. How many people don't have a four year degree? It is near impossible to make it up the ladder without one.

Sure, some will be alright. However, looking at statistics, the best way of not falling behind in terms of income is to get a good degree. Because that’s what we are talking about: average wages have been increasing more slowly than inflation for quite a few decades now. So we are talking about a generation falling behind, not a greedy generation.

It’s less and less the case that a degree is the best path forward (depending on the field), but still.

We could reduce student usury by demanding that all loans be paid back at a maximum percentage of income for a set number of years. If the degree isn't worth 5% of expected job salary for 15 years, too bad. Obviously the numbers can be adjusted but the whole sale pitch is "spend $X, get a leg up on the pile and make twice $x yearly". Just codify that, and suddenly the loan companies are on the hook for $500k loans for basketweaving degrees that produce baristas.

So "forced"? Not with a gun to their head, but when every authority figure, parent and friend you've ever trusted tells you to do the thing at 17...

I won't convince you because you've got your anecdotes. Though I'd say if a public school counselor, parents and teachers all tell a 17 year old it's "college or bust", it's laughable to argue "ah, those teenagers should have been rational, informed consumers of professional training and eschewed the advice of every trusted adult in their life".

Bro, when did you last look at the cost of college, the 70s?

I went to a community college and then transferred to a state college that was also in my town, so I didn't have to pay absurd dorm expenses. I worked 30-35 hours a week while going to college.

I still came out with ~$45K in loan debt.

And you're proposing even the possibility of a four-digit loan?

> when you have low or zero income.

Have you missed the part where adults are lying to children and telling them that the high salary their degree will earn them will pay for the loan?

>Have you missed the part where adults are lying to children and telling them that the high salary their degree will earn them will pay for the loan?

Lying to teenagers who should, at some point, use their own judgment. You signed a paper for the loans, yes? Were you able to calculate that it would equal 45K or more of debt? How did you, yourself, think that you would manage to climb out of that debt with a job that you did not have, and would only have a chance of getting four years after graduating?

But when it's in the service of the finance industry - bam; all gone!

Children were told "you can be anything you want to be" and also "in order to get a good job you have to go to college" which, in effect, forced children who otherwise didn't need to go to college, to go to college.

In the same way a child cannot consent to sex, a child cannot fight social pressure coming from every institution they have access to. Your insistence on the word force is manipulative, pointless, and in bad faith.

It's like birthing an animal in captivity and setting up a snare trap outside the only exit to their cage and then claiming you are hunting when they step on it. Truly disgusting.

The younger generations certainly seem capable of that reasoning. They aren't taking on nearly as many student loans.

Except this was exactly what was offered. Schools used to brag about placement rates. This message came from your parents, the staff at your school, etc.

Setting up, I repeat, a literal trap for children to fall into, and then getting on this stupid high horse about how you didn't fall for it. I cannot begin to express how depraved that concept is, and I know you can't begin to comprehend it. Maybe one day you will.

> The younger generations certainly seem capable of that reasoning. They aren't taking on nearly as many student loans.

That is because they have the mistakes of 2 previous generations as an example and the rhetoric has died down dramatically.

Grow up.

Sure, nobody forced them to take out loans, but for me, the propaganda all throughout high school was "If you want a high paying job, you need to go to college!" and then was told not to worry about the costs and student loan payments, the higher paying job will pay for itself.

Four years of every adult you trust. Your parents, teachers, counselors, and other school faculty. The same message. Go to college. Go to college. Go to college. Don't worry about the loans, the higher salary will pay for it. It's an investment. It doesn't even matter what you get a degree in, employers just like to see you had the discipline and sense of responsibility to complete it.

And then we get out of college, and then we find out we've been lied to. We were children and the adults that we were supposed to trust were lying to us. The degree didn't guarantee a job by any means. Worse yet, many jobs require the degree, but then pay $20/hr, while you're trying to pay $700+/month in student loan payments.

And then dickheads like you come in and pour salt on the wounds.

In short, people with an attitude like yours need to get fucked. Children are being lied to by the adults they trust, and then getting blamed for not being able to handle the responsibilities they took on based on the lies.

Yes, these adults gave these teenagers terrible advice. But the fact of the matter is, they can see exactly how much they would have to pay, with a job that they had no guarantee of. Teenagers of the current age have stopped listening to that advice. If you are stuck with the loans now, all you can do is call out mom, pop, and teachers for misleading you, but also yourself for believing them.

It is a really interesting contrast though, that in Amsterdam where I now live (and many other parts of Europe), this divide doesn’t exist as strongly.

We have a perfectly happy and healthy ~40 year old woman come to the office to tend to the plants, and she’s paid a totally fair livable wage. The guy who works at the cafeteria for the office complex supports his family in that job (and I’ve talked to him about it). Same with many other “low skill” workers that I talk to.

Baristas at a cafe seem to still be mostly 20 year olds, but maybe a bit less so than in the US

We live in the stupidest timeline.

It's not because things are worse now than ever in human history; that's pure rationalization/delusion/cope.

Things on many metrics are likely better now than any point in human history, but people's perceptions of that are way off.

But it doesn't change that there are people who would like to start a family and feel they can't. Obviously they can, as the mechanics of it all hasn't changed in the last million years, but they choose not to.

If this kind of birthdate collapse happened in other organized animal societies we’d have lots of news pointing to specific environmental hazards, like that insecticide and bird eggs.

Yep: compelling alternatives and contraceptives have appeared, and the pressures to have children have diminished.

People in the past didn't have many of those, so they "chose" to have kids.

Having kids is hard. If you have other options, you're gonna take them. It's as simple as that. I genuinely think people complaining about the conditions haven't done enough introspection. In the abstract, they may feel that having kids is something they want or should do, despite their revealed preference being to not do so. They're just hoping that, somehow, someway, the prospect of raising families will finally seem ultra-compelling and they'll do it and live happily ever, having their cake and eating it too. But that won't happen. The sad reality is that the premise rested on more suffering than currently exists.

But it's okay:

> If this kind of birthdate collapse happened in other organized animal societies we’d have lots of news pointing to specific environmental hazards, like that insecticide and bird eggs.

Other animals won't be able to defy biology and grow transcended versions of themselves in pods, like we're surely gonna do eventually. That's the future, and it's unironically the solution to all the shitty Ponzi schemes our biological legacy left us with. :p Until then, all you can do is hang tight. (The only other solution is to go back to the Dark Ages, which is even worse.)

They also might not? Why are we structuring access to fundamental needs around this assumption?

I was mostly just trying to give a steel-man for the previous person’s thoughts before sharing my bit of info. Because it’s a complex issue and I don’t want to dismiss anyone acting in good faith.

The other part of my comment was, I thought, the more interesting part. About how this weird “able to support a family” vs “not” dichotomy seems to be a US problem that hasn’t hit Europe.

The Netherlands does have a more complex minimum wage law though, which starts low for a 15-year-old, and gets progressively higher until you’re a young adult (at 21) [0]. And it also has a clause that if you’re supporting yourself, then the highest level minimum wage applies regardless of age. I think that helps resolve the issue I mentioned above.

[0] https://www.government.nl/topics/minimum-wage/amount-of-the-...

Of course the job I do is by definition a "real job", as is any job I'd like to do.

Any job that is icky and I don't want to do is also a real job, of course. Even if paid less than fake ones.

(heh above is pretty accurate for most people, though they won't admit it).

This has happened in all of the industrialized world, and it's happening very quickly right now. The reasons you mention are very US-specific, but the funneling happens everywhere, usually by more traditional means such as rents and taxes.

Yes, taxes are greatly beneficial for the rich, just scrutinize any European government budget and you'll see it is in large part a scheme to pay out money to wealthy people that are in favour with the political class.

The reason for this massive wealth distribution is the inflationary monetary system, that's the common denominator in all countries experiencing it, and it's not hard to see how.

In the past, serfdom was at least more honest. You knew your tax payments went to the lord for his own benefit.

Inflation serves to reduce wealth (if just stuffed under the mattress), and encourages investment (to beat inflation). The real problem is that wealth begets wealth - if left to it's own devices the capitalist system will ensure wealth becomes concentrated in fewer and fewer hands. The only way this can be counter-balanced is with government regulation (e.g. anti-monopolistic laws, wealth redistribution).

Humans respond to incentives, and all incentives line up toward the merger of corporation and state in a democracy. I’d like to see a free market democracy that lacks corporate personhood to see if that changes the structure, but a human life isn’t long enough to really witness such a thing.

Every non-democratic form will be bought even faster, if it's not operated directly by the "buyers" in the first place.

Though I doubt that "in the absence of government intervention, wealth is more likely to tend toward the center". There are dozens of ways for the rich to get richer and fuck the poor/center over without government intervention.

As for anarchy, yes, you could have more or worse violent action, but the type you cite is directly how the current system works. In the USA, the US and its states have the greatest military strength and therefore set the terms. They also engage in military action on behalf of corporations like United Fruit, Coca-Cola, Exon, etc. The argument that "in the absence of a government the warlords would take over" ignores that the warlords are already in power. Further, I at no point advocated for anarchy. I merely stated that in the absence of government intervention, wealthy is more likely to tend toward the center. In the USA, the wealth gap has widened as government intervention in the market has increased and that is the basis of evidence for my argument. Today, the richest and poorest are further apart that any prior time in US history, and law/regulation is and has been in continuous expansion not retraction.

If anything democracy has only shown that it isn't a magic bullet for corruption. Part of the goal is that oversight by the voting public will eventually weed out the corrupt, that works somewhat and should certainly be better than no oversight from other forms of government.

I'd argue that I've never truly lived in a democracy, but I hope to one day. It's a system I would fight for if there were actually a semblance of a movement willing to stand up and say enough is enough. So far though I've been a bit sad, or maybe just disappointed, to see that the vast majority of our people don't seem interested in democracy, liberty, or individual freedoms.

I'm not sure what alternative you envision.

When Roman emperors inflated their currency, the first people to receive the new money created were their soldiers. Wealth of the rest of Roman citizens was in this way redistributed to the soldiers.

Today we have a fractional reserve system in banking, meaning that banks actually create money and inflate the money supply when they give a "loan". While a lot of this money goes to governments and some goes to companies, the wast majority of new money enters circulation by being lent to real estate purchasers. That's why real estate is so unaffordable. It's not more complicated than that.

> The only way this can be counter-balanced is with government regulation

Then start regulating the banks and take away their privilege of creating money from nothing.

Inflation, in the current form, transfers wealth to the first people to receive/spend the newly printed money (the financial system) from the last people to receive the newly printed money (this is termed the Cantillon effect). Since the end of Bretton Woods in the 1970s there's been a massive increase in USD inflation coinciding with a massive increase in wealth inequality, as would be expected from a system based around systematic transfer of wealth from the real economy to the financial industry. Technically inflation doesn't have to act like this; if it occurred via helicopter money airdropped equally into everybody's bank account, there wouldn't be a wealth transfer. But with the current system it's a systematic source of inequality.

I'd argue government is just the same. If you look at who holds office right now, it's predominantly the older generation [0]. They achieved that by becoming career politicians. Deng Xiaoping introduced capitalism which lifted generations of people out of poverty [1]. It has a good track record of doing that. The rich companies lobby the government to make competition for the little guy impossible and solidifying their concentration of power -- crony capitalism. I do think there should be a push and pull, but both sides are human and power hungry.

[0] https://theconversation.com/politicians-are-getting-older-sh... [1] https://www.nytimes.com/1997/02/20/world/deng-xiaoping-a-pol...

  > crony capitalism

Housing markets are local. Their supply and demand dynamics are local. Affordable housing in Kentucky does not help people in San Francisco or Seattle unless everyone can telework.

Unaffordable housing is a major contributor to inability to build wealth. In most cases it’s no high paying jobs or unaffordable housing, pick one.

It takes time and confidence that the remote work is widespread and durable, but it doesn’t have to be across every field.

doesn't have to be "moving to rural Montana" just a couple hours out of a city, and that would open up the market.

isn't this another effect of inequality of wealth distribution?

Suppose you live where high paying jobs are, but people getting high pays contribute proportionally and schools, medical bills, etc. are affordable, there would be a lot more families that could funnel the money saved to housing, instead of having to chose.

The main reason people move into the expensive cities chasing the high paying jobs is because they cannot afford to live in the rural communities or small town they grew up in, since wages there have stayed low while cost of real estate has exploded.

This drives prices up, though. Not just price of homes, but, similarly to fuel, prices of almost everything. Not many people are in the correct stage of life to evenly distribute themselves across the US's geography.

> For example, medical bills. For example student loans.

I doubt the baby boomers have student loan debt. They existed in a time long before the current university bureaucratic infrastructure was put in place and drove up costs (and thus prices), and they were far less likely to get a degree with no job prospects. Medical bills, sure, but they have always been around.

> The solution is to address wealth inequality. This means taking wealth away from those who have amassed too much, and returning it to those who had it stolen from them.

You have to be aware of all the massive, country-breaking problems this approach all but guarantees. We need a system that works, not a system that doesn't work with a heavy-handed thumb on the scale.

The actual obvious candidate is not punishing people who create so much value they have a load of money, because that value is worth that money, and without it we might be stuffed. The big reasons are: fuel prices, which are actually driving inflation, the post-Covid economic impact, and investing giant sums in defending Ukraine's border. You could say land and medical legislation give the worst of both worlds in those sectors, probably less efficient than public running or private markets.

You might say all of those things are worth it. But it's silly to just assume we can raid piggy banks on an ongoing basis, even if you had no moral issue with it.

> Medical bills, sure, but they have always been around.

Prices for medical care have increased disproportionately in the last few decades[0].

> Investing giant sums in defending Ukraine's border.

It's barely 1% of your budget. It's 3% or so of your military budget. That doesn't move the needle. I mean sure; you're spending too much on the military, no doubt about that. But that doesn't have anything to do with Ukraine.

> We need a system that works, not a system that doesn't work with a heavy-handed thumb on the scale.

You already have that. Currently is is heavily biased in favor or the upper 10% of the population.

> The actual obvious candidate is not punishing people who create so much value they have a load of money,

That's assuming that people that "have a load of money" necessarily created that value. Given the current socio-economic conditions, I doubt that is usually the case. [1]

[0] https://www.in2013dollars.com/Medical-care/price-inflation

[1] https://www.weforum.org/agenda/2020/09/social-mobility-upwar...

Other than generationally wealthy families (very few) or thieves or people making laws that then make them rich in the stock market, there are plenty of wealthy people who got wealthy because people chose to give them money in exchange for something worth that money to them.

Alas, that's not been the case for a long time. Please look at the data.

https://www.brookings.edu/articles/thirteen-economic-facts-a...

I assumed you posted the link and said "look at the data" as it had some data with some bearing on what I was saying.

At least that my interpretation, let me know if I got that wrong.

Sure, let's have a look at

https://www.weforum.org/agenda/2020/09/social-mobility-upwar...

We can assume that industrious, ingenious people with the will to to greatness come from all parts of society equally. If productivity and ingenuity were the driver of wealth, we would conclude that throughout all economic layers of society, we have a constant percentage of people that are getting richer, i.e. that they get to earn more value than their parents.

If we look at the date we see that this was roughly the case for the 1940ies cohort. With each next cohort, people from lower-income households not only have a lower chance of moving up the socioeconomic ladder, but also a reduced share of total wealth.

At the same time you see agglutination of wealth in the upper levels of society.

https://www.bloomberg.com/news/articles/2021-10-08/top-1-ear...

Go figure.

Let's have a look at your example, Bill gates.

Bill Gates was born into an already very wealthy family. He enjoyed an top notch education, had access to promising early technology and - maybe most important, had connections through his friends and family that he could leverage.

https://en.wikipedia.org/wiki/Bill_Gates#IBM_partnership

His most important deal he didn't make because he creating a unique value, but because of - some might argue - somewhat shady business practices, where he ripped off the value created by someone else.

https://en.wikipedia.org/wiki/86-DOS#Creation_of_PC_DOS

He made money by arbitration of value. That is not the same as creating that value.

I doubt that there was anything uniquely special of value created by Bill Gates that justifies him having access to a million times the resources that an everyday citizen has.

I don't doubt that he's a hard and dedicated worker. But I've already made the argument that this is not the factor deciding whether you get rich or not.

Luck, preparation, luck, endurance, luck, risk-taking and luck are. By being rich, you can make sure you have the preparation, the endurance and the capacity for risk-taking. You still need luck.

It doesn't matter if someone was a millionaire and took a risk and made loads of money, or whether Bill Gates worked hard or not. When they made that new money, they did so by creating value, because people paid them for their product or service.

When it comes to Bill Gates, Microsoft made and supplied the software that has computerised almost all businesses worldwide and home computers for decades. That is obvious, and enormous, value.

That's all I've been saying. Does it make sense?

None of the products that Bill Gates made himself were uniquely brilliant. He did not make money by himself writing software that provided unique value. He made a very good Basic compiler, but that's not where his wealth comes from.

His breakthrough deal with was with IBM, where he arbitrated between IBM and Tim Patterson - without either party knowing of the other. That's not value he created, that's value he arbitrated.

Now, you might say, but that is the value he provided, the arbitration. But that is not value created by any means and it's not necessarily a function of ingenuity or hard work or perseverance, but it's a function of well-connectedness, of knowing-the-right-people, of moving-in-the-right circles.

And that again are areas where being wealthy and connected, going to the right schools, speaking the right lingo and knowing the right people will give you an invaluable advantage.

Things don't have to be unique to create value. They just have to be worth their price. And if you charge people a price and they pay it, you can be pretty sure you created value for them. And so if someone like that is super rich, you can be sure they likely created a lot of value.

You still seem stuck on "it's easier for some people than others to create value", which is still not relevant to this point.

So no, I'm not stuck on the position "it's easier for some people than others to create value", I'm stuck on the "arbitrage is not creating value" position.

He did that via a series of voluntary (again, this is the private sector, where you have to make a voluntary agreement with someone - you can't just throw them in jail if they don't pay you the taxes you decided you want) agreements with other businesses, and with employees, and with customers.

Let's once again go back to the Microsoft/IBM deal; what value exactly would have Bill Gates able to "create" for IBM, if not for the exiting work of 86-DOS?

Nothing. Because in this case there was no value created by him. He would have had to write he required software to actually deliver the value instead.

And that's the case in many of such dealings. You could get rid of all the gatekeepers and arbitrage-takers and there would still be value to be sold. But get rid of the value-creators and the gatekeepers and arbitrage-takers don't have anything to work with.

Gatekeeping and leveraging of existing value is just another form of market failure.

Free markets operate under the assumption that all the market participants have total knowledge about the various offers at hand. If they don't know the various offers, then they cannot make an informed decision; the market fails. Gatekeepers and arbitrage benefit from this market failure.

We can of course to agree to disagree.

It's because they can't get a job, or don't have savings to retire on or to handle a health or other emergency, and can't afford neither rent nor mortgage repayments.

"Lack of gun control is preventing the state from forcibly redistributing the wealth of middle class families." (And this is bad).

NRA, eat your hearts out, I guess.

A caravan of excessively loud Harleys recently commanded my attention. Driven by aging pork lords ferrying humongous wives on the back, I could only take solace in that they would all be dead in a few years. However, our schools are still producing these people. You should check out the YouTube videos where these people show up at town council. All hope fades.

This is the entirety of the problem. Economic opportunity is here, affordable housing is there. If you want access to the economic opportunity you have to pay the wealthy landowning class. It’s a drain on the economy that brings us all down.

Instead of moving away people move further into the suburbs and commute so they can arbitrage the higher pay of the urban area with the lower cost of living.

We have a term for this, its called suburban sprawl.

The number of jobs in low cost of living areas can't support the cities, and lack of housing leads to folks moving just far enough away to make the math work.

The solution is for the government to stop doing that.

So... the issue is supply and demand then, because the supply is not where the demand is.

Have you ever actually run the numbers to see how little each person would get if you did this?

> to those who had it stolen from them.

Talk about nailing your colors to the mast.

Who, exactly, stole what from whom, and when did this allegedly take place?

This is what inflation does, partly. Assuming of course that wages keep up.

Letting the government (especially the current system of governance) do such a task is an extremely dangerous move. This will most likely result in pulling more wealth from the middle-class to the upper-class.

There is no reason to believe that the government that enabled this will suddenly turned around 180 degrees. Almost always why a communist/socialist revolution results in more misery to the common man.

This happens all the time in government. Every politician who campaigns on “we’re going to raise taxes on these other peiple to do this thing” is campaigning on this effect. Sometimes it’s this direct; other times it has extra steps. Surely this can’t be the first time you’ve seen this happen.

The body that created and enforces the regulations can also change them to make things easier. It's not a one direction street.

Additionally I don't see much data (certainly none you point to) that supports much of what your claiming. How certain are you that your position is one based on the information at hand vs your feelings on the subject?

Those people aren't around anymore to vote anymore. They're scrambling to find the next apartment to be priced out of in a few more years.

> The problem is government regulation. In some places, it's almost impossible to build new houses due to regulations.

Regulation yes, but it's not the lack of building; we're building like crazy all over North America. Many new homes are "lost" and become second or third homes for the wealthy or airbnb rentals. Regulations are not building for high capacity, preferring to sprawl and build monster homes that house few, wealthier people. Regulations are preferring condos to low income rentals.

> I think we have a situation where part of the population is literally voting to appropriate wealth from another part of the population.

Yep, but unintentionally. Governments are cutting taxes on the wealthy while transferring remaining tax money to their investments in the form of corporate welfare.

> Voting for more immigration which drives up demand for houses and voting for more regulations which constrain the supply of housing.

One of the parties in the US and a couple in Canada are literally running on "Immigration is bad" platforms. People aren't voting for immigration, they are getting immigration despite how they are voting.

> t the same time, those people who do not own a house are wising up to the scheme and so they increasingly refuse to work or provide value to society. Instead, they resort to financial schemes, illegal activity, freeloading government benefits; they've checked out from the system.

Ah yes, the welfare queen rant. People aren't "refusing to work", many are sick (physically and/or mentally) and/or homeless and can't take on jobs, not because they are lazy but because no one hires someone who smells like they haven't showered in a month. Companies are the ones resorting to financial schemes and illegal activity; wage theft and union busting is big business. Companies are freeloading FAR more than sick people.

People have "checked out from the system" because the system has abandoned them. When homes are $1M or more, there is no point working a second or harder job in order to afford a home, for many people owning a home is now forever out of reach.

> It seems that we are headed for an economic and political disaster.

We are and the biggest part of the problem is people who have fallen for the "it's big government and poor people who are robbing you blind" story.

(for the people who are fortunate enough to "have a venture" goes unsaid - the rest will be left poor, and they deserve it, for they weren't good / useful enough)

There is absolutely an argument to be made here about regulatory capture with respect to zoning laws, parking minimums, etc making building dense housing impossible. The parent comment started fine and then devolved into typical libertarian drivel about how if we just remove ALL regulations to business, this will definitely get resolved.

How can there be regulations to remove if it's unregulated? There are hundreds of thousands of regulations.

The parent comment looks at regulations on home building (zoning, etc) that are harmful, and extrapolates from that that all regulations are harmful and that the root cause of inequality is regulation preventing poor people from starting venture businesses. Because everyone knows that the startup world is definitely not inequitable at all, where some people walk away with hundreds of millions and others lose everything.

I don't think this is necessarily the case either. In the cases where there are harmful regulations, the answer isn't "more regulations". You might well say "incorrectly regulated", and put the blame where it belongs: on the people writing the regulations.

I'm not arguing that removing regulations will solve it, but it is possible to have an island of misery in the middle of two more pleasant extremes. Meaning that both more and less regulation would make the problem better, just in different ways.

To your point, you can't simply ridicule the solution you don't like and call that an argument.

There is a decent argument to be made that I would agree with that regulatory capture on home building is a serious problem. But that's not the argument that was made, instead the parent comment went on to claim that the actual problem is "freeloaders" and all that government regulation preventing the few worthy people from getting off the ground.

Where on Earth with a housing crisis is "unregulated capitalism"? It can take years simply to get development approval in Australia. If it's anything more than a single family dwelling get ready for a long lengthy process with hundreds of submissions, some even from suburbs over demanding it doesn't get built.

The entire system has been captured by vested interests who know how to drive their own unproductive asset prices up at the expense of society.

But I'd be 100% for us to give everyone housing if and only if we stop incentivizing the unproductive to multiply or letting in the whole world. Sure take care of the suffering, the orphans, the disabled etc. But don't go around paying people to multiply as if they're a cattle herd, it's demeaning and makes people's value trend to zero.

After it trends to zero we then turn around and complain how the "capitalists did it".

So you’re saying regulations are blocking new home construction. Got it.

What you describe is exactly what people mean when they say you “can’t build housing.” In reality you kind of can but only a few homes and only at the very high end. You can only build at the high end because of density limits and zoning and also because complicated regulations and battles with NIMBYs increase costs. When the cost to build is high only big luxury homes can be profitable. Lower margin per unit affordable homes and apartments can’t be funded.

> So you’re saying regulations are blocking new home construction. Got it.

Oh come on, new home construction is doing just fine ... but the homes are 5600 sq ft, $2+ million and 30-40 minute drive from city centre. And it's not regulation requiring it, developers prefer to build condos and monster homes because the ROI is much higher. Regulation is allowing it.

> What you describe is exactly what people mean when they say you “can’t build housing.” In reality you kind of can but only a few homes and only at the very high end.

New housing starts in the US[1] have climbed steadily for the past 10 years until inflation and interest rates in 2022 caused it to drop.

What you are saying is not happening. Maybe some housing development you wanted to happen got blocked, but we ARE building new housing and when we do stop ... it's not regulation that stopped it.

[1] https://tradingeconomics.com/united-states/housing-starts

Whenever a dense block of housing is proposed, people abuse zoning regulations here to shut it down. They add on tons of extra costs (mandatory parking etc) and then complain about how much the houses cost.

Go look at your city and see if it's actually legal to build a new mid rise apartment in the city center. I'm guessing, if it's anything like every city I've ever lived in, it's not.

We might just be disagreeing on terminology, there is a difference, in my mind, between regulations that require something bad to happen and regulations that ALLOW something bad to happen. If the regulations ALLOW something bad to happen that's a "lack of regulation"

> Go look at your city and see if it's actually legal to build a new mid rise apartment in the city center.

This might be a US vs. Canada thing ... we are building mid-rise and high-rise in multiple cities around me right now: Toronto, Kitchener-Waterloo, Cambridge, Hamilton, Burlington.

What we are NOT building is a lot of apartments. Developers want to build and flip if they are allowed to.

This is good, but even at the peak in 2022 housing starts were lower than they were 20 years ago. Given that the population has grown significantly since then, housing starts per capita effectively never recovered from the 2008 recession.

The point is, you can be frustrated about zoning laws being abused for protectionism by people who want to increase the value of their asset by limiting what can be done by their neighbors, and not immediately go off and claim the actual problem is that people are freeloading off the government and that regulation is keeping the "few people" who want to work from rising to the top.

In the past decade I've seen a ton of young labourers who just do seasonal work and then spend the rest of the year backpacking or living in a cheap country Asia. These are talented and very hard workers, but they have little chance to make a life for themselves in the country they grew up in.

They will loose money if they stay and work the whole year, because of the cost of living, and the progressive taxes, not to mention that all-year employment is usually the 9-5 with no overtime. Better to make a quick buck working hard in the season and then go travel and have a much higher quality of life for much less expenses. You'd be dumb not to do it.

The people who have a chance of owning a home are either those whose parents help them financially or those who manage to get a government or corporate full time job that the bankman likes. The rest are completely screwed, and have been for decades.

No, we really haven't been. It doesn't seem to be well appreciated just how deeply housing construction collapsed at the end of the 2000's and has only recently returned to something approximating the long-term averages. https://fred.stlouisfed.org/series/HOUST

However, there's a still a whole lot of deficit from the decade of underproduction to make up for in that sense.

As you sort of get at - housing production "where the jobs are" has been far shakier. Many of the metro areas that did the best with job creation in the previous decade were among the worst with housing creation. SV, Boston, NYC, etc.

I really need to emphasis an aspect of this for anyone else reading: Wage theft is larger (in dollars) than the next biggest type of theft (robberies) by around 300%.(https://www.epi.org/publication/wage-theft-2021/) Its not even close. Corporations are literally the biggest thieves in America by a tremendous margin.

In the last two years the following has happened: The same box of cereal increased from ~$3.75 to ~$6.59 and gone from 19oz to 17oz.

The electric company got an 11% rate increase approved and an additional ~$20 storm surcharge added. (The surcharge is in addition to the existing ~$8 storm protection fee which was supposed to cover storm damages and infra improvement).

Vehicle insurance rates increased by ~20%.

Homeowners insurance increased by ~40%.

Health insurance and prescriptions have increased by insane, unquantifiable amounts. (Rates didn’t just increase, but benefits on plans were changed so significantly as to completely invalidate any previous cost-benefit-analysis. Coverage is no longer predictable due to ridiculously arbitrary rejections of coverage. A single asthma prescription increased from ~$20 to nearly ~$150 a month.)

What you see a problem of government regulation I see as a problem of rampant greed and market manipulation to benefit a single class of individual. I watched the market respond to a crisis by increasing customer costs and turning the last couple years into their most profitable ever.

I agree with you however that housing has been essentially weaponized, and I believe we’re quickly entering the age of the landlord. It’s preposterous that any person can be homeless while another person owns 50+ properties and provides little, to zero, value to society. It’s preposterous that we’re allowing collusion and price fixing in the rental market via 3rd party property management companies. It’s preposterous that rent amounts for a modest home or apartment require incomes and credit scores that only ~5-10% of the population has.

Your claim is that cereal has experienced 96% inflation? Over what time frame?

Kellogg’s Fruit Loops “Family Size”

01/16/2020 21oz $4.79 ~$0.23/oz

Today 18.4oz $8.59 ~$0.47/oz

So yea, over a 100% increase…

I point this out because it always seems weird to me that discussing housing / utilities / healthcare / education costs somehow get boiled down to grocery store pricing disparities, when grocery stores allow you to comparison shop (and real estate / electricity / oil / etc don't).

Real inflation is what happens when my behavior doesn’t change at all, but my costs increase.

If I keep making adjustments to my behaviors then I’m just trying to counteract inflation, it doesn’t mean inflation isn’t happening.

I’m diehard Publix but I may look elsewhere for boxed kids items.

There are many other examples though, goldfish crackers, nacho chips, tortillas, ground beef. All of it has increase between 20% and 90%.

If we only judge inflation and cost increases based off the necessities, or based off the cheapest variant of an item, then we ignore the quality of life aspect.

If you base inflations off a fixed set of items, then companies would avoid adjusting those fixed set of items to justify not increasing employee pay. Our government has already been doing this to avoid the truth of how bad inflation is by using “equivalent” substitutes for staple items.

I've seen a similar price increase in the branded cereals, so I am not disagreeing with you in that sense.

--------

However, the store brand cereals, which are cheaper, haven't really gone up at all. At this point the branded product is more than double the unit cost of the store/no-name brand version in my local stores.

This suggests to me that it's not an actual increase in the cost of producing the product. If it was driven by commodity/input/manufacturing cost prices we should be seeing price pressures coming through in the cheapest cereals.

I think price gouging is a major part of all inflation we're seeing. Nothing "just" about it; it's the central problem. Corporate profits are at an all-time high, while prices rise and lots of people struggle to get by.

The only reason it's happening is because corporations think they can get away with it. There's not enough players on the market for someone to be willing to compete on price; it's all one giant cartel.

I believe price gouging is behind most of the inflation we’ve encountered the last couple years. Companies reduced the workforce, forced the remaining employees to maintain the same amount of production and increased prices. They then turned around and gushed to shareholders about their record profits.

I don't know about cereal manufacturers specifically, but in general, it costs 25% more now compared to pre-Covid to produce food[0].

The amount Americans spend on food relative to their income has gone up in that same time period, but only from slightly under 10% to slightly under 12%[1], and is still well under historical levels as well as compared to other countries. Not bad for an economic system full of supposed "price gougers".

[0]: https://fred.stlouisfed.org/series/PCU311311

[1]: https://www.ers.usda.gov/data-products/chart-gallery/gallery...

All companies exist to make money, that is absolutely all there is to it. So they're making more money by jacking up prices as far as they can to make...more money. In the US, this will continue until it can't anymore...it will happen things like food, electricity, healthcare, education, infrastructure. The only thing that could stop is might be government intervention, but the politicians are bought too now, so maybe direct civil disobedience would be the only other thing that might bring on a change.

And since it's government creating most of this, it's hard to imagine that there's any relief to be found by looking towards government for a solution.

[0]: https://educationdata.org/public-education-spending-statisti...

[1]: https://nces.ed.gov/fastfacts/display.asp?id=38

If they want to incorporate religion and/or alternative education, it should be on top of the same requirement the public school systems follow. (i.e. They should be required to teach the standard classes without religious influence or bias. Let their religious teachings be separate classes. No student receiving a publicly funded education should be taught exclusively that the earth is only 6000 years old or supplied with publicly funded textbooks that outright reject evolution in all forms.)

Anywhere that has property taxes really needs to have a clause similar to what Oregon has that states that the assessed value of your property cannot increase by more than 3% per year for property tax calculation purposes.

It's pretty bonkers that people can very quickly, over the course of less than 5 years, get priced out of a place that they own, just because the market became white hot.

I bought my house in 2015 for $340K. It's currently estimated to be $600K. Yet I'm paying taxes assuming a $250K value.

Granted, I think the 3% limit is too low. I think 4-5% is more reasonable.

Maybe not the government you're electing.

Except for Seattle / Portland, not many companies really invest in the NW. Except all the residential prices just rise and rise. ex: "66% (8331) of residential properties in Post Falls saw a property tax climb between 2019 and 2020. Yet only 6% (71) of commercial properties (6%) experienced an increase".

So when the pandemic was ramping up, all the property tax burden dropped right on top of the homeowners.

Annnnnd: If you don't pay your property taxes, it doesn't matter if you own your house. Title. Everything. Can take it away for a couple years of property taxes. In many states, they don't even have to pay you the sale price difference.

Also people aren't homeless because there are no "homes", it usually runs much deeper than that

There's a community near me that has enormous housing shortages and yet they maintain a 1 acre minimum lot per single family house only to "preserve character". Does that sound like a safety issue to you?

https://www.bostonglobe.com/2023/04/13/business/with-high-co...

It could or it couldn't. It depends on how many people currently live there and how many people are _trying_ to live there, and how much is available for sale at any given time (e.g. real estate liquidity).

I'm partly joking, partly serious. The current state of affairs is roughly by design. At some point USA is going to be forced to have this conversation: how much socialism are we going to have? Are you going to deal with angry "homeless" or is universal housing availability so fundamentally good for society as a whole, that the government is going to enforce it some way, even if it comes at the expense of already housed?

I.e., state-sponsored usury.

The benefit of owning a house should be that you get to customize it to your liking. The benefit of a rental should be that you can switch up relatively quickly.

Houses being an investment vehicle is slowly poisoning society. Having a decent roof of your head is a human right, just like access to clean water or healthy food is.

This is clearly impossible. I think everyone can agree that a house is worth something. It's a roof over your head, so that's worth something nonzero.

So if you own it, you own some value. Might be low, might be lower than what you paid initially, but it's worth something nonetheless.

If you perpetually rent you own nothing, so your equity is always $0.

I don't want to generalise things, but since you're doing it yourself:

In France migrants and descendant of migrants are between 50% and 100% more unemployed than the rest of the population.

They also represent 28% of social spending despite being 12% of the population

https://www.insee.fr/fr/statistiques/6793274?sommaire=679339....

https://www.marianne.net/economie/economie-francaise/le-vrai...

1. Migrants and their descendants are poorer than average.

2. Social spending is higher among poor people, because that’s the whole point.

3. Disproportionately poor people represent a disproportionate amount of social spending, duh.

The reality is that a lot of them struggle to find jobs, and a lot of them end up working illegally for unscrupulous bosses. And yes there are a whole lot of reasons for that, but at the end of the day it's the reality we have to deal with

> Generally immigrants are job creators and entrepreneurs, and take less from the system than native born people do

And this is (at least in the context of many European countries) not true.

It is not relevant if this is simply because they are poor, and poor people receive a disproportionate amount of social spending.

The observation is that immigration in that case drives up housing demand, while at the same time being a net-negative in financial terms for society.

That being said, I would be interested to know if the social spending stay disproportional after controlling for socio-economic factors. I personally have no idea, as far as I know immigrants could be either under- or over-funded. And if they are, it could be interesting to investigate why.

In effect, the desperation of immigrants spreads to the locals. To the locals who are used to a certain way of life, it's quite a shock that they now have to go to extreme lengths just to make ends meet.

Even immigrants who eventually manage to become citizens after several years, eventually find themselves forced to compete with the next wave of even more desperate immigrants.

When you let 5-10 million +/- people into the country in a short amount of time - where are they supposed to live? Of course it drives up homelessness and home prices - use your common sense.

Despite adding several Boston’s worth of population at the time.

So I’m not sure it’s as simple as arguing it’s only the demand side when clearly the supply side hasn’t kept up.

The combination of a generation that pulls up the ladder as soon as they have something, plus a government that caters to local homeowners has created a catastrophe for all but the wealthiest. Housing austerity benefits the wealthy (by which I include all homeowners) by extracting economic rent from everyone less wealthy.

> a generation that pulls up the ladder as soon as they have something

This is a generally dangerous catalyst for stagnation. It has happened in technology much more than in the broader economy.

The successful don't want to play by the same rules as the upcoming, even though they were once in the same position. They do this by changing the rules as soon as they have power, to lock out any contenders.

Sure, homeowners have hacked the system to keep their "assets" rising. But tech is a better example. It was very fluid and disruptive in the early days. The victors, the Big-5, got there by quickly realising, as Lessig noted, that code could be used to modify the playing field. Sure, they bought regulatory laws like the DCMA, but even without that, non-interoperability, embrace-extend-extinguish, standards breaking, patent trolling and knowledge destruction, acquisition and mothballing of competition... all part of the same play-book to stop _you_ from doing what _they_ were able to.

I don't think the problem of the pulled-up ladder, of self-modifying code, is given enough attention in dynamic macro-economics.

Nevertheless, if we look at how the Boomers acted, they:

- Presided over a bunch of aggressive and needless wars.

- Led the slow decay of the US economy, weighed down with regulation, struggling to build things and stuck in a money printing spiral.

- Have done a terrible job of letting up the political reins to new blood, and generally allowed liberty to backslide in some stunning and catastrophic ways (pointing particularly at the monetary system that has been consistently getting more repressive and the surveillance state).

In some sense it is impressive that they only got a few things wrong, as a generation there was some amazing technological work done. But it is hard to recover from political and economic mistakes that profound. There isn't enough real wealth generation, retirement savings have been blown up in a lot of exotic foreign countries like Iraq and someone is going to have to do without. It'd be fairest if the blow fell on the Boomers, they set this up. The next generation can pay for their own mistakes.

Sorry, help me out. What "bunch" of wars did they "Preside" over? Boomers were born 1946-1964 (per Wikipedia).

You don't have to like it.

Similarly, age-based discrimination is illegal in the workplace, but only against older people. It is perfectly legal to discriminate based on age against younger people! This, despite younger people having less power and getting paid less on a group level.

Very odd how all this concern only flows one way...

My reply already states this in other terms. It's impossible to be for equitable treatment without seeing individuals instead of groups.

What happens online doesn't matter for these things. What matters is who shows up and shakes down city council members by being angry and claiming to represent concerted voting blocs.

Well, that and those who are changing the state level regulation of local municipalities to force them to build more housing. But that is a strategy pursued by younger groups advocating for housing (which also includes Boomers!).

But the opposition is nearly uniform in their age, largely due to who has the free time to set city level policy.

https://archive.ph/G3br6

Also, if you look at local democracy, it's mainly boomers voting.

On top of that, the number of homeless people is usually understated.

It's definitely a supply and demand issue.

This in the face of a fertility collapse across the developed world and a rapidly aging population. Most of the youth is waking up to the idea their pensions will be worthless when it comes retirement age. A lot of social services are feeling the strain (and exploding costs).

It really is the biggest issue of our generation.

Demographically (and by proxy political divide) though things are far from improving, we are just getting started. Just look at the massive social unrest caused by European states attempting to raise pension ages. God forbid we try and unwind some of the ZIRP associated housing inflation (in a democracy where the older homeowners hold a political majority it will never happen willingly).

1. https://www.youtube.com/watch?v=pvlq3oMvEm8

I've always found it odd that societal/financial problems are seen as insurmountable when they are really just human inventions; we could forgive all/some portion of debts, and all the people and infrastructure who exist today would be exactly the same tomorrow. But the very air we breathe contains a third more carbon today than it did when my parents were born; it's an awesome (in the bad way) feat of humanity that we've altered the very atmosphere of our planet in such a dramatic fashion, and there's no simple way to remove it.

> I've always found it odd that societal/financial problems are seen as insurmountable when they are really just human inventions.

Very true!

1. https://www.youtube.com/watch?v=qjya_arTWjs

Zoning law in some places makes building new homes very difficult, so I would like to see less/different local regulation there. But other than zoning it seems it would help more if the government would step in to disallow large leasing companies buying up giant swathes of the housing stock just to flip into rentals. Maybe incentivize those companies to increase their ratio of new construction, to help solve this supply issue.

While I bear zero animus towards immigrants, this seems obtuse. Why are those companies willing to pay so much? Because they predict they can charge enough rent to make it profitable anyway. Why would they think that? Because immigrants can compete down at the level of rents.

This seems like the same mistake people make about "luxury housing," but on the other end of the market. Building housing at the top of the market does indeed make things cheaper at the bottom of the market, and bringing in people at the bottom of the market does indeed make things more expensive at the top.

Because they are buying assets with debt just like everyone else, and they don't actually care about ROI via rents, either due to "appreciation" (really, further inflation), or they're expecting the financial system to collapse.

In reality, the economy has been booming for the "haves" and those people are the ones bidding up homes and pay $50k over asking with a 6.5% mortgage. Corporations don't care much for home rentals when treasuries are paying 5% with zero overhead and zero risk.

Sucks to be poor and sad to be poor and still eating the "evil corporations" delusion.

On a per house level, undocumented immigrants can often pay more than others because they are willing to live many more people to a house with rents being charged on a per-person basis. If the house is all male workers, homeowners can charge $100 per week per person (now, it used to be $50 and before than it was $25) and can have up to 4 people per bedroom and often multiple in the living-room. If families, there can often be 3-4 families in a single house, all paying less than they normally would to rent an individual house but much more total than the house would ever rent for otherwise.

Homeownership rates haven't changed by more than a couple percentage points since the 1960s: https://fred.stlouisfed.org/series/RHORUSQ156N

"Large companies" could be having a significant impact on some number of urban markets without shifting a country-wide statistic in a way that's unambiguous against trends driven by larger forces like population age and economic trends.

I understand your perspective; there's a reason the term "rent-seeking" has a negative connotation. But I don't really see an alternative that wouldn't be worse. Different tax rates for primary residences sounds like a potentially okay compromise (though it would make renting more expensive, by design).

The state/county/city/whatever entity could provide those and make it a +/-0 thing for their books. They don't need to make money by doing that. "Social housing" is a concept that has been pretty much lost, I think.

There is literally no reason a municipal government can't run high quality social housing. That's why it happens, outside of the US.

Yes, the "secret capitalists hiding in the woodpile" theory of why communism sucks.

You, of course, are immune to the other side's propaganda, and your own brain is a perfect simulator of the real world so you've run mental experiments that prove to you irrefutably how awesome it would be. If only other people paid for it for you.

> That's why it happens, outside of the US.

This is shit throughout all of western civilization. Go check out Ireland, or any place in Europe right now. It's shit everywhere.

As I specified in my previous post, I was talking about public housing in the US.

> This is shit throughout all of western civilization. Go check out Ireland, or any place in Europe right now. It's shit everywhere.

The poster child counterpoint is Austria, proving it's possible. Hard to do? Mostly on a political front.

Anyway, I apologize for escalating the tone of the conversation.

The other day, this happened: https://www.msn.com/en-us/news/crime/portland-area-mom-gets-...

That doesn't happen in Austria.

That happens in https://m.youtube.com/watch?v=pe4d6aPhbHo

Are you saying the United States is secretly ran by communists, and that there is a conspiracy theory that those secret communists are secretly ran by secret capitalists?

Ignoring, of course, that there are so many other factors that make those look bad, that would continue to make them look bad even if they were properly funded (whatever that absurd number might be).

I just summarized what he was saying.

Not that they shouldn't exist but for profit, rental only apartments shouldn't be the predominant form of apartment. Apartments for purchase are perfectly valid and housing cooperatives are also a solution that should be far more common.

https://en.wikipedia.org/wiki/Housing_cooperative

Houses can be cheap, or they can be a good investment. Not both.

I think I read that here on hacker news a few years ago, and it has stuck with me.

> I think I read that here on hacker news a few years ago, and it has stuck with me.

It's repeated in every HN discussion about housing.

Also, it's too simplistic. It's basically impossible (barring a complete market meltdown like Detroit back then) to not increase your net worth owning a house.

You have to live somewhere. If you buy a house you (very slowly) end up owning it. A house has nonzero value. Now you have some equity, aka wealth. Even if the price depreciates it's not zero, so you built some wealth (vs renting where you could've rented for 60 years and still own nothing).

It's insane to me that my hometown of 1M people in Brazil has more tall apartment buildings than Philadelphia, with incredibly better amenities.

Would you mind sharing what the amenities are that you are referring to--both the in-building and neighborhood amenities? In the US I've seen gyms, swimming pools, shared hosting spaces, and some child-friendly spaces, to name a few.

In PHL unless you’re paying big money in a new or refurbished building in center city (and there aren’t that many) you’re out of luck.

Doesn’t help that schools also suck and are heavily segregated, which ended up forcing us to move to the suburbs into a single family home to raise our kids as we knew we wouldn’t have enough money to send them to private schools and didn’t want them on the public system there.

Developers want equity because it is financial security and passive income for them. Regular Joes want it so they don't pay rent in perpetuity; that they may have a place to live in old age without working, among other reasons.

If there wasn't an endless drive to increase the value of homes, this would all be moot.

All my friend's parents that didn't own their homes are completely fucked now that they're old, retired and their pensions didn't keep up with inflation. If you don't own the place you live you're just a rent hike away from the streets.

We own a single family home and it kind of make me feel bad. We rarely use our yard, it is just maintenance for no good reason. Inside the house, we have also so much useless space, just costing money to heat or cool it.

If not, I suggest that the root problem is still not enough houses.

b) Investors turn around and rent/sell those houses, so they aren't actually eating into housing supply. What they are reducing the supply of is the bottom level of the rent seeking pyramid. Property ownership is simply so profitable that the average person now can't afford to buy in.

In pretty much every major city in North America, it is illegal or there is too much red tape to build the affordable housing people actually want.

Why is it that living in a tent on the street costs $0/month but the entry-level apartments cost ~$2k/month? Why are there no price points between $0 and $2k? The answer is bad government policy.

Sure. We are nowhere close to that floor. Voters who reject supply and demand pay the consequence for their ignorance.

It's an interesting question, because I can imagine lots of possible housing solutions that would be way cheaper than $2k/month and more pleasant than living in a tent on the street. So the question is why haven't those solutions been built?

The trouble is that local government is coerced to eliminate people who don't directly or indirectly pay a lot of property tax, especially if they are minors and require school.

The federal government should be required to pay general costs per head to local government from it's excessive collection of income tax to put an end to this nonsense of states and towns trying to evict the poor and steal the rich from each other.

My first "apartment" was a 100 square foot bedroom rented in a 4 bed / 2 bath unit with 3 other residents. At the time I moved in, it was only $350/month plus utilities, in a market where the median rent for a studio was $1750/month. That room would have been affordable for a single person working full-time at minimum wage. Was it code compliant? Hell no! Was it better than living on the street or in a car? Unquestionably.

If you raise the floor to require every adult to have their own kitchen and bathroom, then you've consigned this segment of the market to homelessness. Someone who can pay $350/month certainly would need a massive subsidy to afford a $1750 studio, or you can just get out of the way and allow them to rent a room for $350.

That's called having roommates, why do call it not code compliant? It's done all the time.

The building itself was over a hundred years old, and had countless violations of modern building codes, health codes, and fire safety codes. It was pretty much a disaster waiting to happen, but it was affordable!

China serves as this counter factual and it's facing an even larger housing crisis. Massive building of houses lead to many people buying up property for investment reasons and now there is a pretty clear oversupply while plenty of people still struggle to find housing.

I don't really understand why HN is obsessed with building unlimited housing as though this will fix the problem. For years people clamored that this was the solution to all of SFs problems, but as SF starts to shrink it already looks deserted, I can't image what happen if the HN fantasy of building unlimited massive apartment housing had materialized.

The situation for non-housing assets is not quite as bad in the US.

There are entire towers that were never used as residences, but just used as investment vehicles based on faith rather than any sort of realized value.

This is really a story about the dangers of using housing stock as an investment vehicle.

North America has a related problem of financialization, but is complicated by rules constraining stock in the places where people would like to live.

I would argue that you need rules around financialization (punitive capital gains taxes on market based gains for non primary residence), as well as rules around allowing people to do reasonable things with their property (infill, single family zoning, etc) to increase the amount of allowable stock.

I don't think we've been to the same city, vacancy rate is around 7%.

And the unspeakable little problem that people don't want to live around the people who will be living in the affordable housing people actually want. Hence, NIMBY.

I don't have anything concrete to substantiate this assertion though (no more than you gave anyway), so I guess we'll just agree to disagree on this point...

Side note: that's part of what I meant by "crime". Usually in the states there are laws or ordinances enforcing such things even if they're not necessarily criminal statutes.

That's the funniest thing I've read all week.

Developers build expensive luxury units because they can rent them for $2k a month by scalping tenants from nearby buildings who are currently paying $2.1k per month, because the buildings really don't cost that much more to build, the higher forecasted income from said renting makes it easier to sell to banks and get financed, and because every local politician is happy to have a new set of expensive units to tell the public about, especially if it's near a new commercial development they can hype up for bonus points. Because at the end of the day: people aren't housed because people need housing, people are housed because it is profitable to do so. And housing the middle class is always going to be more profitable than housing the poor. Which paradoxically means, as long as the motive is profit, it is incentivized more to cater to a smaller group of buyers with more money than a larger one with less. And, the ability for investment groups to write off losses means they are incentivized, in turn, to keep housing that the poor can't afford empty instead of lowering the rents, because too many renters at a lower rent would make them less money than simply holding onto the appreciating asset and writing off the lost rental income.

This is not to say that government policy couldn't do a ton to fix this, but it's basically all policies that go against financial motivations in a system where money and power are incredibly well correlated with one another, so it's practically a non-starter. Low income housing benefits people who are low-income and will attract them as a result, and no city in the entire fuckin world has a financial incentive to cater to poor people, because they're, you know, poor. If they did we would have a ton more options for things like reliable and well priced public transit, not more bloody freeways.

You could make this argument for any product. Of course it’s more profitable to cook steaks for the rich. That doesn’t mean nobody poor has ever eaten.

About one percent of Americans are poor on a global scale [1]. Unaffordability of housing is a political choice. It is driven by an alliance between cynical and ignorant interests.

[1] https://en.m.wikipedia.org/wiki/List_of_sovereign_states_by_...

Yeah you can, because the vast majority of products are built and priced for the middle class, including

> Of course it’s more profitable to cook steaks for the rich

Food, which is why we have vast areas in the USA where it is impossible to buy groceries without driving 40 minutes or more, which means fresh food is basically out of the question, which is fine anyway because those people probably can't afford anything but over-processed calorie dense foods that store well. Because again: producing food is not done because people need food, it is done because it is profitable. Or in the case of food deserts, it is not done because it is substantially less profitable.

And Americans being rich on a global scale doesn't mean shit when median expenses for said "rich" Americans are getting more expensive all the time. Cars are basically entirely a poor tax on Americans, so yes, we all drive enormous and ridiculous vehicles, but those same vehicles are also slowly driving us all into fucking poverty because a century ago, the car companies killed any decent public transit in the vast majority of cities, and people like Robert Moses used building highways as a way to fuck over black people on a scale not seen since the abolishing of slavery.

Our houses are certainly nicer than most people's too, which is why we're spending upwards of 1/3-1/2 of the money we make on them, oftentimes not even earning equity in the process: half the money you make, just dumped in a damn hole, never to be seen again. And each time the housing market crashes more of the supply ends up in the hands of banks and hedge funds, ensuring it'll be just as expensive in the future for us to pay to live in. The rich get richer, the poor get poorer, almost like everything is doing exactly what it's supposed to be doing.

You could live a comfortable lifestyle on an American full-time minimum wage in the Republic of Vanuatu, that's fucking irrelevant to everyone because no one who makes that wage lives there.

> And Americans being rich on a global scale doesn't mean shit when median expenses for said "rich" Americans are getting more expensive all the time.

This is a political choice.

Can you name where these reasonably densely inhabited areas are? That's difficult to believe.

Sure, there are vast areas in the USA where grocery stores are far away, because vast areas of the USA are nearly empty from inhabitants. But can you name a few towns with reasonable population where they have to drive >40 minutes to the grocery store?

It's equally as profitable to cook steaks for the poor. The margin on the steak is the same, regardless of the wealth of the buyer.

This is not true for apartments. The renter holds the apartment hostage for the length of the lease, so the behavior of the renter determines the margin. Someone who leaves the apartment as it was is high margin, someone who trashes the apartment can leave you with negative margin. Even for the entire apartment building.

Reality is that people who are rich are often required to be functional, you don't get to keep the $400k/year job if your suit smells like cat urine from the 19 cats in the apartment whose litter box you never change. If you slam back 5 or 6 cases of beer every weekend starting Thursday at 3pm, and toss the empty cans and boxes in the living room until they pile to the ceiling such that you can't get to the bathroom and so you just start shitting in the corner or the kitchen sink... likewise, you tend not to remain wealthy.

Renting to a poor person allows for alot more dysfunction, and it can cost you. You can't discriminate blatantly though, but raising the price filters them out pretty well.

Poor people who don't trash apartments must not only be the majority, but a gigantic majority, of course. But there's no way to tell one of those from the assholes who do trash apartments. And landlords aren't in the fairness business anyway, so they don't care.

You’re arguing a steakhouse in rural West Virginia is as lucrative as on in New York’s financial district?

You aren't going to ever have cheap housing in a desirable urban core, but the vast land area of inner ring suburbs can house many more people if upzoned.

I don’t understand how the consolidation of the housing market doesn’t create a feedback loop that prevents that counterfactual reality?

A few asset management companies have been purchasing the entire supply chain. From land to homes, from builders to agents.

These companies have a large amount of capital to deploy to make sure their assets go up and to the right.

It also seems like that capital being deployed to create a positive feedback loop pricing buyers out of the market is being funded by … buyers in the market. It’s partly their retirement assets. It seems that, in a very real way, buyers are bidding against their own retirement accounts trying to maximize returns in a decelerating market.

I very much agree that it’s government policy that gave rise to this, and that the counterfactual reality would normalize prices, but I’m not sure you can separate off corporate buyers from the feedback loop.

It all seems to be part of the same death spiral.

Asset management companies don't buy houses and leave them vacant. They rent them out. There is no net-loss in supply. There is no effect on rents, only purchase price.

> These companies have a large amount of capital to deploy to make sure their assets go up and to the right.

These companies are required by law to share their investment strategies. They explicitly state that they are only interested in buying housing in areas with strong job markets and _restrictive supply policies_. It makes no sense to buy housing in an area where the bottom can fall out on rents because other people with money can just build more housing.

Blackstone et al. are a convenient boogeyman, but they are merely taking advantage of our housing crisis, not creating it.

>Large institutions owned roughly 5% of the 14 million single-family rentals nationally in early 2022

>Institutional investors, referring to entities that purchase 100 or more properties, accounted for under 3 percent of home sales in 2021 and 2022, according to Freddie Mac. So-called “mom-and-pop” investors, who own fewer properties, are growing at faster rates, and according to the National Rental Home Council, only 1.16 percent of single-family rental homes were owned by rental companies. Americans for Financial Reform estimated that as of June 2022, private equity firms owned about 3.6 percent of apartments and 1.6 percent of rental homes.

When you start looking in cities that are under around 400k population you start to find plenty of price points under $2k.

This seems more like the market's fault. If homes in a particular area are going for $2k/mo, then that's what they are going for. If this is the government's fault, are you proposing price controls?

But if we suddenly built a million “luxury” apartments in each major city, then they couldn’t all charge high prices because there would be a bit of competition for tenants. Prices on the “slightly less luxury but still nice” apartments would have to drop faster.

It's not supposed to saleable or rentable. But it does take up land that could be used for real housing. And it also drives up the perceived value - and price - of both rentals and outright buys.

Rent control may or may not be a solution. But many of these schemes are run through shady shell companies, and aggressive enforcement of financial reporting and taxation would go some way to fixing the problem.

That's what I'm asking: Exactly which laws? Nobody seems to be specific.

1. Land costs

2. Labor costs

3. Material costs

4. Zoning laws

5. Building codes

For example some zoning laws have a height restrictions, which limits my development to 3-story buildings, when I would actually want to build a 5-story building

For building codes, some would require me to put in $100 breakers, when I could do with simpler $20 breakers, etc. etc. for a LOT of items, which also feeds into the material costs.

If you want more specifics than that - open up your county/city website and start reading. It's not up to HN to do the legwork for you.

1) Developers want to continue in their business, so they cut costs. This means factory built components, vertical integration, the same things that cut costs in every other industry. Today they have no incentive to actually compete.

2) Without zoning, any privately held land becomes available for housing, so you see completely new business models. A developer builds an entire neighborhood from scratch, for instance - this is how many of our late 1800s / early 1900s neighborhoods happened, before zoning, and they're often some of the best walkable urban centers now.

3) New entrants bring innovative solutions at scale. Modular buildings explode. People come up with shit you cannot possibly think of today.

This is actually entirely backwards -- it's much more common for me to hear examples in informal conversation that show some understanding of how producers of household goods might want to avoid oversupply because it drives prices down and volume on smaller margins is a tough game, sometimes well worth the rewards, sometimes with its own undesirable consequences.

I literally never hear this from anyone ever who talks about housing supply, to the point where I'd be willing to bet the majority of people talking about it online are only tangentially familiar with the concept of diminishing marginal returns at all and the other 90% it just never occurred to them it relates.

> Today they have no incentive to actually compete.

As long as you've got competition you have incentive to compete. Along with the incentive that cutting production costs in the world we have produces greater margins as surely as in some imagined counterfactual world where there's no zoning or something.

> Without zoning

Without zoning you might get out of having to account to a municipality, but nothing changes about the demand for different kinds of use in a given area or the economics of providing it.

> Modular buildings explode. People come up with shit you cannot possibly think of today.

because markets, right?

Modular design and prefab have been a thing for decades. Where they have advantages, they should (and in some cases are) already thriving.

How would you realistically "suddenly" build a million apartments? Is there enough labor in the country to do that? Enough land in each major city? A million is a lot. Some ddging suggests San Francisco has about ~400K housing units, is adding a million realistic? Let alone suddenly?

> there would be a bit of competition for tenants

But no builder will build apartments that might have to be rented at a loss if the bidding war takes prices too low.

To stick close to the example, rooming houses (SROs) are effectively illegal in most cities these days. You simply can't have a commercial venture that rents out cheap barebones bedrooms with shared bathrooms. That's due to regulations that were designed to get rid of rooming houses. Bedrooms are also required by law to have a window and closet with doors in many places.

I'll admit that living in a place that looks like a college dorm isn't the best thing, but we are at the point where there is no middle ground between an apartment and a tent on the street.

Where's Adam Neumann when we need him!?

Windows are required for fire escape, there are good reasons for that.

Multistory buildings with running water, electricity, heat, and other “basic” requirements are expensive to engineer and build. No one wants to build something and then lose money, but that’s where we are at with new construction.

Make no mistake, it is entirely the government’s fault. It is illegal everywhere to build something that costs less.

Zoning laws like single family zoning, requiring parking spots for every unit or even every bedroom, disallowing zero lot lines on lots that allow multiple units. All of these things add cost that may not pass along any value to people in the market.

Aside from the engineering complexities of modern buildings, we've also limited ourselves to building either single family or 200 unit apartments when most cities have a ton of space for 3/4 unit homes which are considerably cheaper to construct. We built our zoning laws on the idea that we could just always expand outward into suburbs forever. But that approach is broken as people start to move back into cities.

Parking minimums, minimum unit sizes, long and costly “environmental review” (a classic in Seattle, where it’s sadly almost never used for environmental purpose), lengthy “community design review” (another classic for Seattle, which typically has the effect of allowing only extremely conservative design), zoning restricting how much can be built (Seattle is famous for having the highest percentage of land zoned SFH of any major city).

Seattle rental prices increase over the past 10 years is extremely correlated to the housing deficit (population growth minus housing built). It’s not just a matter of “homes going for $2k/mo”, it’s why they’re going for $2k/mo.

Are you saying it’s too many or too few?

I just don't buy this argument. The reason there's not a $500 apartments being built is because by expanding the residence out just a tiny bit you can charge $2000 for the same space that 2 $500 apartments would occupy.

I'm seeing this play out where I live that has practically no zoning laws or regulations (LOTS of building in unincorporated land). There's almost no $500 housing going in but a lot of new luxery apartments.

Boise ID, for reference.

Still, it mostly comes down to a developer's understanding of the market. We're so housing starved that there's demand at all size levels. Why would they choose the less profitable path?

This is generally caused by strict land use and single family zoning. In a situation where you can build a duplex/triplex/4plex on every single family lot, you can run an excess of housing in the areas that people actually want or need to live in which allows people to compete on other market factors like price.

Laser eye surgery - I wasn't even aware this is a category and there is much to differentiate between service providers on the surgery specifically. Plus, it's another tightly-regulated space, countering natural market tendencies.

Passenger air travel - you must be traveling first-class only to not notice that everything below is bottom-tier and getting noticeably worse every year. Sure, it's more affordable - I don't dispute that - but it's a question of how bad can quality go before it trumps price.

Smartphones, televisions - all examples of what I'm talking about. A huge amount of bottom-tier products, a few high-end flagship products. There's a degree of market segmentation so there's still some middle-tier options, but my impression is, they're rapidly dragged to the bottom.

As specific examples of what I have in mind, most of which I observed personally: everything not regulated about private healthcare; bikes and bike parts; food across the board; manual tools and power tools; clothes; toys; just about every commodity electronics. It's all low-quality noname brands, low-quality fake pseudo-brands, brands tricking people with old reputation, then nothing at mid-tier, then pricey brands that didn't start "capitalizing on their reputation" just yet.

Overall, what I'm saying is that the natural tendency of the market is to optimize offerings to be the cheapest and shittiest the market can bear - and I think this is a problem; there's a mid-point we can't seem to be able to keep in established markets. And in arguments for deregulating housing, I don't see anything addressing this tendency.

That's just because customers want something different. If the law requires 25 MPG and the carmakers can either give you a smaller, slower car that gets 60 MPG or a bigger, faster car that gets 25 MPG, lots of people pick the second one. Then you say they're barely meeting the minimum fuel efficiency but really the customer is the one making the trade off.

> Passenger air travel - you must be traveling first-class only to not notice that everything below is bottom-tier and getting noticeably worse every year. Sure, it's more affordable - I don't dispute that - but it's a question of how bad can quality go before it trumps price.

Air travel is a really weird market because the capital investment is huge but the market is fairly competitive, which is a recipe for bankruptcies. Make a bad prediction about customer demand or future fuel costs and you're not making enough to pay back the bank. Then they have to get creative or go out of business.

They tried price fixing for a while and got in trouble. The current trend seems to be cost cutting so they can lower the price and keep the seats full. It's the same thing as the cars: Customers keep picking the one with the lowest price, so they keep finding ways to lower the price.

> Smartphones, televisions - all examples of what I'm talking about. A huge amount of bottom-tier products, a few high-end flagship products. There's a degree of market segmentation so there's still some middle-tier options, but my impression is, they're rapidly dragged to the bottom.

This, and really most of the rest of your examples, is a result of China's long-term strategy to dominate manufacturing. Which is, use profits from one industry to subsidize another one until it dominates that too.

When they enter an industry their products are crap because they don't know how to do it yet. So no one would buy them. So they subsidize the price until they're cheap enough that people do. In a normal market they'd go out of business, but the government is financing their losses, so they don't.

Which destroys the middle tier products or forces them to slash quality and compete on price, because customers would pay more for them, but not infinitely more. And the low-end junk gets subsidized until it's cheap enough that people choose it.

That doesn't really apply to real estate. Real estate is already heavily tiered by price. If the 20th percentile house in a city is $200k and the 80th percentile house is $800k there will also be plenty of everything in between. It's not like the 20th percentile house is $200k and the 75th percentile house is $210k and the 80th percentile house is $800k.

Meanwhile most of the housing is still going to be the existing housing. If they build luxury housing, affluent people will buy it. If they build tiny studios, price-sensitive people will buy it. In either case you now have those people not bidding against you for the housing that already exists.

You are also under no obligation to wait for them to build something and then take whatever they offer. You can go to a construction company, tell them what you want and have them build it for you. You can get whatever you want -- if the zoning doesn't prohibit it.

https://web.archive.org/web/20201130142349/https://www.reddi...

>Cars are made to be recyclable now.

>Overall, the last 30 years have seen a revolution in automobile design. Better materials, longer reliability, and yes ease in repair.

>My grandfather restores classic cars, and I've been driving for 20 years. My first car was a '73 Volkswagen Beetle and he has Fords from the 50s-70s. I don't think he's even ever been in a car that wasn't a Ford. His daily driver is a F150, and my grandmother's is a Crown Vic-- both of which are a decade old.

>Nowadays, cars are built to survive, and they survive for years longer than cars from the 50s, 60s, or 70s. And once they're done for, they're designed to be easily recycled for reuse in other cars or products.

>Looking under the hood of my Outback, I see that the entire wiring harness has thick plastic coating, ABS plastic weatherproof connectors, and every inch of free-floating wire is wrapped in a wire loom.

>Compare that to a 50s-60s Ford or Chevy, with cloth-wrapped wires and bare metal compression fittings that corroded after six months.

>In my Subaru, the metal is galvanized, and heat/weight sensitive bits on the undercarriage are made out of aluminum.

>In a 50s-60s Chevy or Ford, the metal would have been bare steel, maybe with a coat of paint that would chip and flake off the first time you drove down a gravel road, and the bottom would rust out after the first wet winter.

>The engine in my Outback is 2.5L and outputs about 175 HP. It has gone over 120,000 miles without a single problem. The only maintenance I've done is an oil and air filter changes. It's about 25% over mileage for its timing belt replacement, but I'll get around to that eventually.

>A 50's-60's Ford or Chevy V8 might be around 5L and might put out about 210-250 HP (FACTORY STOCK NON-MUSCLE VERSIONS). It would also require religious maintenance every 2500 miles or so (monthly). Not only that, but after just a couple of years the seals would start going and it would start burning oil like a thirsty camel refilling its hump after a long desert trek.

>People are also replacing their vehicles less often now. Back in my grandfather's day and age, he would get a new car every other year. Now people are keeping their cars for 8-10 years.

>Average Age of Vehicles Reaches Record High, According to Polk [1]

>Back in the 70's, the Honda sedan was REVOLUTIONARY because it would go 30,000 miles without a major problem. Overnight people were introduced to a small, reliable car that wouldn't cost an arm and a leg to maintain. Now it is considered completely pedestrian, unremarkable, average even, for a car to hit 100k with no problems whatsoever. Back in "the day" this was something Mercedes-Benz sent you a metal medallion to affix to your front grille to celebrate.

>That plastic bumper won't rust, won't deform after a brush up against a light post, is easy to recycle, and doesn't need to be welded or riveted into place, just pop out some retaining clips and replace the bumper. Plus, it won't kill someone if you hit them at 15mph, and it will absorb much more impact than the ungalvanized steel plate that used to be used in bumpers and fenders. The old "good" metal bumpers and fenders would transfer near 100% of collision energy to the passenger compartment, and they would start rusting the minute the paint got chipped in the wheel well.

>If you took a "good 'ole" metal car like a Galaxie 500 or Chevelle from back in the day and crashed it at 40mph head-long into a 2012 Toyota Camry, the Camry driver would walk away with scratches and bruises, and the EMTs would be prying the steering column out of the metal car driver's sternum.

Air travel at any quality grade is more affordable. It's true new budget tier offerings with fewer amenities have been created, but that has made air travel vastly more accessible than it once was, so I don't see it as a negative.

Laser eye surgery along with cosmetic procedures are vastly less regulated than the rest of healthcare, and coincidentally, the only areas of medicine where costs have declined for procedures after adjusting for inflation. [2]

Bottom tier smartphones are far more capable than the first generation of smartphones, which was the $800 (inflation adjusted) iPhone.

[1] https://web.archive.org/web/20150309023831/http://press.ihs....

[2] https://www.healthworkscollective.com/wp-content/uploads/201...

Additionally, if you look at historical cheap rentals of the past, you see things like tenement buildings, which were arguably horrible, but provided a cheap alternate to homelessness.

You can also see examples of what low rent places look like today in Asian countries, such as Hong Kong tiny apartments. Many of those types of residences are not allowed by local government policies.

An actual $500 a month rental is going to be really tiny, might have a shared bathroom and kitchen with other units. And these are all things that are often disallowed by government policies.

With 13 years of inflation, that'd be $850/month. That apartment now goes for over $1200/month (Almost certainly hasn't been renovated). [1]

The issue is oligopolies. Few large businesses that own the majority of available rentals and thus can set prices to whatever they like to rake in the profits.

And the way you can tell it's not government policy driving up prices is this trend has been seen across states. There's no federal zoning laws, so why would everywhere from California to Idaho see the same drastic spikes in home prices? Why are existing units that have existed since at least 2010 (and I believe back to 2005) commanding $400 premiums over what inflation would dictate? Do you think back in 2010 they were losing money renting to me?

[1] https://www.camdenliving.com/apartments/irving-tx/camden-val...

If rent has gone up faster than inflation it just means that demand has increased or supply has decreased in that time.

You can build apartments for ~$250 per sqft. The issue is that local governments make it really hard to build more apartments. If you disagree I implore you to go get a construction loan, build some housing, and rent it out.

Arguments that boil down to "government policy" can basically be translated to "big companies policies". Whether it's through illegal or legal bribing (lobbying), it's what we see after decades of influence.

Those retired agents and teachers have exactly zero influence on local and state politicians.

Those big companies who host fund raising dinners at the CEOs mansions and contribute millions? Yes, a lot of influence. To the point where we've seen plenty legislative bills which turn out to be just cut & paste from what some corporate sponsor wrote.

It is actually the local voters who decide who governs the town. But when residency in the town requires you to own a house, the existing residents vote for people who make housing prices go up.

There is no such place in the USA. Residency means you live there, which you can do also by renting a place. Then you get to vote on all local elections.

Not quite. Landlords have the ability to fake demand in order to raise prices. One of the ways they do so is by leaving units intentionally empty (as they've done in NYC), which artificially restrains supply and allows them to raise prices on the units they own much higher than they'd normally be if they were releasing all units to the public. They can do this because these large apartment units are all owned by a small number of companies.

That kind of thing only makes sense if the city is imposing some kind of rent control or similar so they can't rent them out for the market rate and start getting weird incentives for rich people accounting chicanery.

Keep in mind the majority of the value is in the property too, not the amount made from rent. They can effectively sit on the property and still grow value, then withhold apartments in order to either force legislative changes or force rent to go up. The loss of value from leaving those apartments empty is less than the gain in value from being able to raise rent, which results in perverse incentives.

Sufficient supply is not being added to meet demand -- that's why prices keep going up.

> For example, NYC's population has remained relatively static or even gone down, but the rent prices sharply go up, far more than inflation.

NYC's population grows by about 0.3% every year:

https://www.macrotrends.net/cities/23083/new-york-city/popul...

COVID was an outlier for the obvious reason, during which it dropped by <0.1%/year, and is already back up to the high water mark.

Meanwhile the city has added less than that amount of net housing with the obvious result.

The housing market is also in a very weird state right now, because the fed raised interest rates, which long-term lowers housing prices by making it harder to borrow for a mortgage. But because the lesson people took from 2008 was to get a fixed-rate mortgage, now most existing owners have below-market mortgage rates and can't move without taking out a new mortgage at the higher rate, so they stay put, which means there is no inventory on the market and anyone trying to buy has to be desperate enough to outbid anyone else for the scarce inventory. But that can't last forever because eventually people will either be forced to move for any of the usual reasons or will have paid off enough of their existing mortgage for this to be less relevant -- or interest rates will go back down. Which, counter-intuitively, could actually lower housing prices by increasing inventory, especially because by then there would be pent-up demand for sellers to be able to move.

There is also some uncertainty in the stock market -- it had pretty much been on a bull run since right after the crash in 2008 until COVID but post-COVID has been a rollercoaster -- so you have a lot of investors looking to diversify and buying up real estate. Which they might be stupid to do because housing prices are crazy -- look at this graph and realize that 2007 was a massive housing bubble:

https://fred.stlouisfed.org/graph/?g=kYEb

> Keep in mind the majority of the value is in the property too, not the amount made from rent.

They still get that whether they rent it out or not. It's like saying well, I could get a 9% return from this investment, but if I refuse to rent it out then I'd still get a 5% return, so let me do that and set the rest of this money on fire for no personal benefit.

> then withhold apartments in order to either force legislative changes or force rent to go up.

But this is the part that makes no sense. To be profitable, you not renting out a subset of your units would have to make the rents on the other units (i.e. rents city-wide) go up by more than the entire amount of the rent on the units you withheld. How are they going to do that? The largest real estate investor in NYC owns far less than 1% of the real estate.

For that to make sense would require some enormous disadvantage to actually renting out those units, like rent control or laws that make it hard to evict destructive or non-paying tenants. Because that would make renting the units a significant risk to your investment, since a buyer wouldn't pay full price for a building full of tenants paying below-market rent or trashing the building who can't be removed.

But then the cause of the rent-increasing behavior is the inept laws that increase the cost of providing rental units by so much that it's not even profitable to do it when they're already built, and the solution is to remove the laws creating the perverse incentives.

Self-serving politicians like to take offense when investors respond in predictable ways to toxic laws, but umbrage doesn't lower the rent.

Like I get the feeling you don't rent. When I was living in Austin, my apartment rent shot up over 30%, in an area on the outskirts of Austin near nothing. It's nice to think that this problem could be solved by simply dumping supply on the market, but even in areas where that's being done or where there isn't significant demand rent is skyrocketing. And even when supply is dropped, it's bought up by said large corporations and investment groups that price fix it anyways.

It's occurring throughout the entire US regardless of local laws, though some areas are gouged even further. We know large landlords collude on this sort of thing to the point there's an actual term for it called warehousing [1]

[1] https://www.fox5ny.com/news/nyc-warehousing-empty-apartments

Austin's population has been increasing by ~4% annually for decades, which is high. Construction responds to that but it has a lead time. And Austin has zoning restrictions, but notice that it also has lower rents than cities that have more.

> It's nice to think that this problem could be solved by simply dumping supply on the market, but even in areas where that's being done or where there isn't significant demand rent is skyrocketing.

Can you name any US city where the amount of net housing growth exceeded the amount of population growth over the last 30 years?

> And even when supply is dropped, it's bought up by said large corporations and investment groups that price fix it anyways.

Most of them are buying it to rent it out, which adds supply to the market. The problem, regardless of who the buyer is, is that they're not building enough pretty much anywhere.

> "They're sort of not advertising their full inventory," Walkup said, "simply because they don't want to overwhelm the idea of what the supply currently is."

That's something else entirely -- they have a bunch of empty apartments and they wait to put some on the market until they fill the others, because why pay to advertise multiple units when they're all about the same? They're effectively all still on the market because as soon as anyone actually rents one they start advertising another one.

What you should be asking is, why don't they lower the prices some so they can rent them all out quickly and get some rent instead of none?

But that is the bad laws. If there is a short-term reduction in demand for urban apartments because of COVID, normally the incentive would be to lower the rents to whatever it takes to fill the units and then raise it again if the demand recovers. But if you have rent control or similar, once they rent it out they'd be stuck getting the short-term lower prices for decades to come, so they'd rather stick it out until they can find a tenant at a higher price.

Get rid of the bad laws and that incentive goes away.

But you still need to allow more housing to be built, because otherwise the rents would go back up as soon as COVID is over and people start moving back into cities.

Urban landlords don't have any kind of market power outside of control over zoning boards -- there are too many of them and none of them own a high enough proportion of the units to make a dent. Which is why they capture zoning boards to prevent supply from increasing to satisfy demand.

The 2 bedroom apartment I rented in college (ended around 2013/2014) was $719/mo. It is now $1699/mo.

It wasn't exactly in a nice area, either. Recently the news caught a story about somebody's drug dealer setting off fireworks in his apartment, which I suppose is pretty exciting if not in the worst ways.

Even if it's true that a few large businesses own most rentals, that kind of oligopolistic behavior should be undercut by new people entering the market by building more apartments - unless there's a big barrier to entry, like the difficulty in building things when there's restrictive zoning!

> There's no federal zoning laws, so why would everywhere from California to Idaho see the same drastic spikes in home prices?

The incentives that produce NIMBYs - wanting to keep supply low so that housing prices stay high, and not wanting to deal with any of the annoyances of increased density - are the same everywhere.

> Why are existing units that have existed since at least 2010 (and I believe back to 2005) commanding $400 premiums over what inflation would dictate? Do you think back in 2010 they were losing money renting to me?

No, but now there are more people who want to live there and they haven't built enough housing to keep up, so the bidding is more intense.

You're missing the forest for the trees here. The 'new people' entering the market sell the apartments and buildings they create to the big businesses in question. I've lived in apartments for my entire life, eventually they all get acquired by Greystar. Even the smaller ones.

If it costs twice as much to build a residential structure as it did 10 years ago, then rent will cost twice as much. There's no conspiracy, it's not Blackrock buying up all the houses, it's not the greedy politicians. It's caused by government spending beyond its means, expansion of the monetary supply, and the increased regulations that create more risk for investors and causes prices to go up.

I think the bigger problem is that land value is insanely high in The Netherlands right now, but there's probably a truth in the middle as well. Land costs might be lower in the US, but maybe not closer to metropolitan centers?

Lot size and location will matter but now they put houses right next to each other now.

Townhomes with shared walls are even cheaper!

Builders will also complain about inspections though since time is money… but if you don’t have them they will take shortcuts.

Some cities, like Seattle, go so far as to set an explicit minimum apartment size. It's obviously going to be challenging to build a brand new $500/mo apartment if it cannot be less than 500 sqft.

All that said, looking few brand new cheap apartments is generally the wrong approach. There's a whole filtering process of older apartments that's supposed to assure that. Similarly, nobody expects brand new cars to be price-competitive with fifteen year old Honda Civics.

Compare this to places in the Bay Area, where it's not practical to spread out any farther (no good public transport because of a dozen or more transit agencies that are always fighting and Caltrain, which is a hugely dysfunctional organization that can't even run trains at a piddling frequency). We have houses being blocked using CEQA and other nonsense, all because people who work in unproductive industries or not at all (non-tech, retirees) have decided to get more than their share by denying permits for new construction.

What's better? Some housing being built or none at all?

Yup

> What's better? Some housing being built or none at all?

Loads of housing is getting built but what we've not seen is subsequent drops in housing prices (the opposite in fact). This speaks to problems beyond a housing shortage.

Who knows, maybe in 10 years that will reverse and the market will correct back to pre-pandemic levels. Doesn't look like it, however.

Googling around it looks like the population of Idaho has gone from around 1 million in 1990 to around 2.2 million today.

Total housing starts from 1988 to today are around 400k (https://fred.stlouisfed.org/series/IDBPPRIVSA). So assuming that Idaho had "enough" housing in 1988, they've only built 1 unit of housing for every 3 new residents since 1990.

This doesn't seem like loads of housing to me.

Just in the past 2-3 years started to build as many homes as we need but the rate will take 15-20 years to catch up assuming it stays at the current rate.

Basically if you're 40 now you will be 60 by the time it's okay again and that's if we even keep the current build rate for that long.

No it doesn't. The only thing that would indicate a problem beyond a shortage would be if total supply was greater than and increasing greater than total demand. Building "loads" doesn't bear any of that data.

Read more.

The realistic path is that apartments become $500 apartments late in life cycle. It's extremely rare to build low-end housing, but not so unreasonable for units to filter down-market over time when new construction provides adequate supply at the upper end of the market. The logic of updating vs. repairing changes when new housing is a regular occurrence.

> “We have kept our rent increases to about 1% whereas the rest of the country was looking at 31%,” Mayor Jacob Frey said on Monday, citing data from The Pew Charitable Trusts.

> “That’s a drastic difference. And in part, it’s due to the policies that we’ve passed.”

> It’s mostly simple supply and demand, according to Mayor Frey. An explosion of housing, made possible by eliminating single-family zoning requirements, has kept prices down.

https://kstp.com/kstp-news/top-news/rising-rent-costs-slow-d...

The neighborhood I live in has six-ten unit apartments on the same streets as six-to-ten bedroom mansions. In some places, you can see where the owner of the mansion had an apartment building constructed in their front yard.

I could never imagine this happening today. Yet everyone in the region knows of this neighborhood as being prestigious, with the best schools in the state, huge sidewalks that are packed with people, and a nice little downtown with a coffee shop, dairy whip, a public library branch, and some restaurants.

People have no problem recognizing what a great neighborhood looks like. But for some reason, local politicians can't seem to enact zoning laws that allow them to be built in modern times.

People show up at the city council meeting and scream at them that the construction will destroy the neighborhood.

I think it's fair to say they've made progress in slowing the growth of the housing problem, but it is a big stretch to say they don't have a housing affordability problem.

Get most cities to do what they did and you get less of this net migration and housing becomes more affordable everywhere.

Some of this also takes time. You let people build, they start to build, that doesn't mean they've stopped yet.

> In his budget address last week, the Mayor recommended $18 million in the city’s budget for 2024 go into new affordable housing and another $5 million in ongoing funding for building and maintaining going forward.

> Statewide, the legislature invested more than a billion dollars to the cause. Exactly how far that’ll all go remains to be seen.

This is not due to a change to zoning laws — the construction is dependent on substantial public funding. As you’ve demonstrated it is “bigger government” that is the solution to this problem.

Basically all of them? All you need is minimum parking + a height limit. Since the ROI of the lot is a function of units *average price, and a height limit + parkinng requirements caps the # of units per lot, the average price has to be higher for it to make sense to an investor.

Also it’s worth noting that supply is just incredibly constrained vs demand in every major American city. Anything to help the supply side decreases housing costs across the board, even if it’s luxury housing.

China built too much (due to certain regulations being too lax it seems, and corruption probably).

https://www.reuters.com/world/china/even-chinas-14-bln-popul...

But I wonder/think that in the past infill targeting $500 apartments would be an older house that gets subdivided. Like all those brownstones in NYC that were turned into SRO, or the mansions in Pittsburgh that were chopped into four-plexes, etc.

Look at the inputs to construction, there's no difference between low end and high end. Everything has to meet building code up to an extremely high standard due to modern building regulations. New laws mandate things like low-e glass, tougher insulation codes, solar panels (California requires them on new builds now), seismic, radon mitigation, AFCI, firewall requirements, etc. The average 50 to 100-year-old apartment has none of those things, and it would be illegal to build such a thing today.

At least in the UK, it's because there's pushback against perceived "luxury" flats being built rather than affordable places. That luxury flats are still 2-bedroom 600sqft starter homes doesn't really come into it, it's the class of people each is perceived to be for.

So local governments block mid-and-high end housing in favour of fewer, worse, cheaper homes instead.

Bans on single room occupancy: https://en.wikipedia.org/wiki/Single_room_occupancy

Requirements for parking spots. Parking spaces are not free to construct or to maintain.

Requirements for windows.

And no, of course I don’t wish to live in a windowless single-room apartment without a kitchen, private bathroom or space for my car. But were I broke, I would rather live in that than pay money I don’t have for a nicer place.

> The reason there's not a $500 apartments being built is because by expanding the residence out just a tiny bit you can charge $2000 for the same space that 2 $500 apartments would occupy.

I understand that the typical pattern is that new construction is luxury, and over time those units wear down and become more and more affordable. Adding new $2,000 units to the market reduces the value of existing units.

https://www.nytimes.com/2023/09/11/opinion/editorials/tokyo-...

https://resources.realestate.co.jp/rent/tokyo-budget-apartme...

Whats their secret? Sane zoning laws created at the federal level that separate industrial use from residential, but don't segregate humans based on race or class.

If only people could point that out in the US without being accused of racism.

We have plenty of examples of what happens in your fantasy land, you just choose to reason from ideology instead of researching them.

Parking minimums are a chicken and egg problem. My suburb has started allowing new apartments to build about half the parking that would have been required a decade ago. Trouble is, those tenants still own cars since the transit system isn't robust enough to go without. Now those cars flood the streets of the single family residences nearby. Eliminating parking minimums has been mostly successful in the city core but expanding it out to the entire metro doesn't work with how we've built America over the last 70 years.

We don't have to take things like "the cost of a parking space in the system we've created" as a fact, we can change the value of the parking space.

Shanghai and Beijing built huge amounts of dense housing (also Shezhen, Chongqing, Hefei, Ordos) and what happened to property prices? They spiraled out of control since they were considered investments (that only go up) with many of them vacant. What happened to prices in Tokyo (notably after the '89 bust and not before)? Housing became relatively affordable since it's not considered an investment (even with near 0% interest rates).

1) Curtail companies and LLCs from acquiring Single Family Residences (SFR). 2) Dramatically step up incentives for builders to increase quality control and build quality while increasing punishment severely for fraudsters.

In my opinion flipping, rentals, and "fixer uppers" have gotten out of control. I see the only way of curtailing this as penalizing those types of lenders in interest rates or taxes to push them out of the market. For those unaware, flippers seek out private money lenders aka hard money lenders and pursue crazy high interest rates that balloon after 3, 6, 9, or 12 months. The idea is by taking on loans while they flip properties they can take on risk/liability, but spread their assets out and purchase/flip more properties. It happens for almost all property types, but typically is done for SFR/MFR because commercial has a lot more risk since property prices are much higher. The quality of repairs and renovations these flippers typically perform is well known to be absolute god awful. Flippers make short term investment choices on home improvements needing long term solutions.

To my second point, I've heard of so much fraud from home builders it baffles me they aren't in prison. Full neighborhood developments where builder's sold 30 year roofing, but built roofs with materials known to fail in 10-15, and the building company dissolves into the wind leaving homeowners with little to no recourse other than some couple hundred dollar settlement check whenever some class action suit eventually settles. There are plenty more examples of things like this, but my point is I think the only win to have is promote tax incentives for builders to build using quality processes and pass inspections, but I will admit I'm chasing a solution and am ill equipped to be presenting a solution. I am more focused on calling out the problem.

Now you know why the red tape exists.

It is true that there's way too much (and way too costly) red tape to build housing. At the same time, it's also true that even if you skip all that, building is expensive due to materials & labor in any urban or suburban area. Look at building costs in your area by sqft, just for labor & materials. Building cheap units (for a local wage-adjusted level of cheap) is very difficult without some form of external assistance (e.g. like low-income units subsidized by other units).

There was a timely video about this yesterday from Oh the Urbanity: https://youtu.be/BRqZBuu_Ers?si=NlavrFpm8sNTUcYp

Summary is that Rotterdam did just this, and the effect was that the price to purchase a house did not measurably decrease, and that rents rose. The neighborhoods regulated in this way had fewer immigrants and skewed wealthier than those that were not.

So, not the effect we're looking for.

2. Buying a house makes sense if you're a starting a family and/or setting down roots, but that's not everyone's situation. Students or young professionals get utterly shafted by lack of rental housing, because they don't have the income or the credit to buy a house, and they don't intend on staying long they'll get eaten by the transaction fees.

Hell I know guys that went straight into the workforce after high school, nothing stopped them from financing 6 figure pickup trucks, and those depreciate badly in comparison and are harder to repo and re-sell.

Problem is, most places with work that won’t get you a place to live. Houses used to be 3x the median income, nowadays it’s more than 10x.

The idea of housing only being for very established people is new, and only due to its staggering costs nowadays. When my father moved to a town to wash dishes at a pub, he bought himself a house. Cost him 3x his salary.

Take them away and private "mom & pop" land lords quickly fill the void, and usually are much more stringent about who they will rent to and what they think a fair rent is.

This would place more downward pressure on rents and decrease the investment upside on buying.

I'm sure this is a bad idea in a number of ways I haven't considered.

Vacancy rate statistics include things that are pretty natural and you wouldn't really want to penalize, like an apartment being briefly vacant after the previous tenant moves out and before the next tenant moves in. So you can't just look at the rental vacancy rate in a city being (say) 3% and conclude that those 3% of units in the city are being held vacant and off-market. There may be some of those, but it's a far lower percentage.

Which is to say, institute a vacancy tax if you like (it won't really hurt if done sanely), but realize that it won't be a silver bullet here.

In California, for example, you have reports of people who move and use their old home in the Bay Area for storage because they're paying the same nominal property tax rate from 40 years ago. If they were paying a yearly 1% tax on the value of their property (instead of <0.05%), they'd rent or sell it immediately.

Same deal in China, except more extreme. Property _is not taxed_, so there are/were a lot of people building apartments and leaving them vacant, waiting for prices to rise over time.

Neither of these situations serve the material needs of people today who need cheap, high-quality, and abundant shelter.

Plus, your vacant property tax proposal excludes the (500k+?) many empty bedrooms in occupied homes. If someone's kids have grown and moved out, their old rooms are now vacant. How many people simply leave these rooms vacant for years and decades? A blanket property tax increase would strongly incentivize the renting of these rooms.

This is a myth. Nobody is paying the same property tax from 40 years ago. Property taxes in California go up 2% every year under Prop 13.

It can be argued whether costs should increase faster or not, but in any case it is factually incorrect to say someone is paying the same as 40 years ago.

But there still wouldn’t be any more houses for YOU to buy.

Corporations and landlords aren’t the problem, lack of building is.

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

And that has a simple cause: they created too much money to prop up both the housing and stock markets.

We're in an inflationary debt spiral that has a very high chance of going the same route as every other one in history; completely devaluing the currency, defaulting on debt, and issuing new currency. The rational play in such a scenario is to take on more debt to buy assets, because the debt will be wiped by inflation. Which is exactly the energy powering the debt spiral. It's nearly impossible to fix.

What makes you say that? As someone who's currently dating a Chinese immigrant I have been made aware of an entire world I didn't know existed. They often have much better family support so their parents will send money from home to help them buy a house.

From her masters program at university, which was all immigrants because universities here seem to be taking advantage of the fact that this is an easy path for immigration, everyone in her class (80 people) already have a house. From my group of friends at university, only 1 of them has a house, and 1 a condo (out of the ~50 people I loosely keep in touch with, all with good careers). We would too if my parents had been willing to meet her parents partway and give us a 50k loan, but they preferred to buy a 100k luxury car for themselves instead (they also refuse to acknowledge the current housing situation).

She also found out from WeChat that there are a number of Chinese landlords in Toronto who own blocks of houses by investing money on behalf of friends and family back home to get around regulations here, and nothing is being done to stop it.

My instinct is to disagree. That could create other problems and it's not a given that it would help prices. Encouraging growth by changing zoning seems preferable. We know that it works, since Japan has been doing it forever.

Out of curiosity, where? How do they know this?

I bought my house “cash.” It doesn’t mean I filed my car with paper. Just that I didn’t require a financing contingency. (Brokers typically don’t know who they lost a house to until property records are updated.)

I’m arguing they don’t. If a client looks likely to be soothed by losing to a corporate landlord, versus anyone else, there is a real estate broker who will sell them that line.

Does more demand drive up price or does it not? Large swaths of farmland are being bulldozed in my state to build townhouses that are largely populated by 1st generation immigrants. I'm sure this is not the only place.

Does that even matter? They don't have to compete on house purchases, they just have to increase demand on rentals, even at the low end. This pushes everyone in an income bracket above them to compete for the higher priced rentals, until those say "screw this, I'll just buy" find out that even that's no longer possible.

In this game, it's possible for everyone to lose.

Even if you own you could be forced to sell your house if you can't afford the property taxes and maintenance costs associated with your home, especially in states where they aren't strict limits on how much your property taxes can increase each year.

A $500k house in Texas is more than $10k in property taxes a year. Not cheap especially if you do not work or have limited income.

Who do you think the houses are being rented to? If there is an excess of demand, then it will push up prices or rents or both.

You've prescribed a byzantine series of rules in order to free up supply when the quickest step is to just free up supply, which will make "buying up whatever is on the market" a gigantic waste of money because it will not be possible to corner said market.

[0]: http://www.crosscurrents.hawaii.edu/content.aspx?lang=eng&si...

My personal experience in recent years, in the city of Atlanta, Atlanta suburbs, and Philadelphia suburbs, is that I do not see companies buying up all the houses to rent. In the Philly burbs in particular, I see traditional home buyers bidding up the prices. Even with the high interest rates, the low supply is still causing a good bit of competition for each new listing that is in good shape. The supply of rentals in this area is pretty low as well. So if there were these large swathes of homes going from family owned to rentals, I would think it would be pretty obvious when I'm looking for a rental.

Hold on long enough to get your money back plus a hefty profit, and then when it seems like the laws will change to outlaw what you're doing, then sell ahead of the wave for more than you paid to begin with and leave the next sucker holding the check when the bottom falls out.

It's worked so many times in the past and barring some sort of major legislation it will happen again.

But they do put downward pressure on salaries as the labor pool gets larger. Legal, or otherwise.

It all comes down to one simple problem. Housing is both investment AND acquiring housing is basic survival necessity.

As long as both are true, the problem will persist.

Imagine a world where rich individuals and investment bankers would decide they have too much cash and want to use it to buy out all food. They calculated this will drive food prices up and they could sell it with a profit. They bought it all and now they sit on piles of food that are increasing in price while majority of the population is slowly dying of starvation.

What's more, at some point some will start selling it and the food prices will suddenly go down and they will ask the government to somehow make sure the prices stay high. They already got used to the fact the prices of food will be exorbitant. Maybe they bought it when it was already high? Or maybe they took a loan to buy that mountain of food but the loan is contingent on the price of the food being high.

All the while people keep starving.

Ridiculous, and yet this is what is happening to housing.

There are as far as I know only two basic angles to solve this problem:

1) Make so that houses are no longer investments or at least not the best investment out there.

2) Make so that acquiring housing is no longer necessary for survival.

The problem is as you said -- majority of the population who have invested in a property and now think it is more important for them personally to benefit from increasing prices than solve one of the more important problems for the society.

To be fair, nobody wants to see their home value drop except in terms of tax liability. If you buy your house for 400k you don't want the value to drop to 350k

They also want to have media rooms as fewer people go to theaters and more people stream movies from home. Also private pools are still a popular choice, but more so after covid made public pool use off limits.

So of course new construction is expensive now. Because new floor plans are in demand.

And not just too much regulation, but the wrong kind of regulation, and a lack of regulation in areas that need it.

Someone in the article was forced out of her home because her landlord suddenly raised her rent by $500. That shouldn't be legal. Corporations buying up homes in order to drive up prices shouldn't be allowed. Lots of things are allowed that shouldn't be.

And yes, restrictions on building the kind of houses that people really need are also a problem. It's not a case of too much or too little regulation, but the wrong kind.

Rent gets raised by $500 because someone else would actually pay that much. Rent control is the ultimate "I got mine" - it rewards people who got in early while making it impossible for anyone else to have housing. The reason rent could go up that much is because supply is so artificially constrained.

Or naturally constrained, it doesn't have to be artificially constrained.

I am open-minded on rent control. I agree with your sentiment here, but it seems like the trade off for not having rent control then becomes as a society we have to be willing to accept people becoming homeless because of changes in rent prices like this.

In many cases, rent gets raised by $500 for the unit to be vacant so the landlord can claim to have $500 more in revenue per month (and get loans on that).

In some parts of the country - you have >50% of units in large population centers owned and/or operated by just a few companies.

Like KSA reducing oil supply by 10% to increase prices 5% - sometimes strange things make sense when you have a cartel.

In SF, I had many friends have their rent raised by 10% - move out - the unit sit vacant for 6 months, and then the price reduced back to what it was and still be vacant.

I wouldn't assume any time landlords are raising prices - it's because they had a bidding war on the unit and someone's paying more.

The shortage is more demand driven than people want to acknowledge and so we can’t even begin to solve the problem since it’s not accurately defined. It’s a demand issue, so the solution has become price increases. There will never be enough houses in Malibu to meet the world’s demand and have those houses also be affordable. If we let millions of new demanders into the market each year, prices have to rise because you can’t fit the worlds population in Malibu.

That’s more of a capitalist solution than a real solution. Instead of building additional housing we just move the access from millions via price increases.

We can resolve it by creating more supply, we already do by way of copious amounts of cheap plastic home goods that flood the purchasing landscape.

In plenty of countries, you can fight rent increases if you feel they're not justified.

As opposed to someone willing to sacrifice their health by working multiple jobs to live in a such a place.

Rent control works, the problem is we don’t build enough homes to resolve the “not enough” problem. The construction industry is working skeleton crews currently due to the 2008 recession where thousands lost their jobs and never came back.

Then you have the issue with exorbitant property values in metro-like cities which prevent nonprofits and local governments from sitting at the bargaining table. Building outside of the city has its own unique issues.

Arguing that rent control doesn’t work is pretty disingenuous.

Where the fuck is the priced out person supposed to go? They need to uproot their life because a wealthier person came along?

doesn't make it right! the free market is inherently unequal.

GP: "Government regulation is preventing the construction of more housing"

You: "So true. For example, we need more regulation that make housing a legally encumbered asset with uniquely constrained and inflexible financial properties"

What is your thought process here? Do you think this kind of thing will encourage the provision of more houses? Do you have a sense for how making housing an exceptionally financially risky asset will influence whether or not investors are interested in building more housing, and how they have to perform initial pricing to offset rent-fixing and regulatory risk?

That has been obscured and hidden from the public consciousness, but it's there (and it basically has to be, as if it's not, eventually you get insanity where nobody can afford to live in anything - some say we're close to this but it cannot continue, just like population simply cannot literally increasing forever or eventually the entire mass of the Earth would be made of people.)

Too many landlords have been buying long and selling short, and losing money doing so but it's hidden by (sometimes) apparent appreciation - that train is rapidly decelerating and will be at the station soon, as the low interest rates have dried on up.

The mortgage interest lack-of-deduction for most (because of the increase in the standard deduction) also affects things. What we likely should be doing is making it easier to build second homes and "dump" them on the market even for a bit of a profit, so as to increase supply.

If you don’t buy in to libertarian laissez-faire economics, which most people don’t, then this makes sense. (“Makes sense” is a much lower bar than “has the effect that we want it to have.”)

I wouldn't even complain if all houses halved in value, despite being a homeowner. That my home would be worth less is irrelevant, because I'm not selling it, and if I was, I'd have to buy a new house anyway. People who see houses as investment would hate it, of course.

I agree that you are accurately describing the economically illiterate thought process, just not that it's correct.

Price controls are one of those interesting things where there's a phase transition from near-universal support to near-zero support at a certain knowledge level.

My point here is that housing is not only a financial asset, and should be treated as more than just a financial asset. Or if you want to take an economic approach here, you need to come up with a utility function that more accurately reflects what we care about—we think that two people who have housing is a better situation than one person who has two houses and one person who has none.

More construction isn't the ebd goal, (except for developers and investors I guess), if anything, it's a means to an end. The end goal is affordable housing.

People have been complaining about not having the home they want in the location they want since the beginning of mankind.

Cities need the non-owning class to function, and cities function better when the non-owning class has some degree of stability-- letting landlords juice their tenants for as much as possible is counterproductive to this.

(Sadly, when you see "rent to own" on houses, they're almost always a scam preying on poor people. The trick is to get them to pay MORE than fair market rent for an "option" to buy that you know they'll never be able to execute on, or if they can, said execution is in your favor. If you care for more details, https://johntreed.com/products/sisgle is worth the price, as it details exactly WHEN an investor can make money buying these "lease options" and how they're usually unprofitable and almost scammy.)

It does naturally occur in some cases - long term tenant who is comfortable renting is offered the house "off market" when the landlord decides he's done and wants to retire from the hassle of property management and sometimes is even willing to take back a mortgage (a great way to convert a rental income stream to a financial interest scheme and remove the property maintenance factor).

However, the issue in congested areas is a matter of physics and people unwilling to relocate. Its not from renters simply fulfilling the pricing demand. I mean what exactly is the long term play in areas like this? Just keep stacking people on top of each other into infinity? Its obviously not realistic.

Rental increase caps are not something designed to make the overall housing prices more affordable. That’s just not the goal in the first place. The goal is to provide additional stability to renters. That additional stability will, of course, get priced in.

Is it primarily then people who invest in real estate outside of their primary home?

People who move from an expensive area to a lower cost area benefit while alive.

People who intend to leave an inheritance benefit after death (and therefore psychologically while alive).

People who borrow against the property (via a cash-out refinance or HELOC) benefit while alive.

People who sell their individual condos and move in together might benefit from price appreciation (depending on how much more expensive the shared place is).

People who do none of those things but who realize they could downsize or move to a cheaper area if things went sideways benefit from the psychological security aspect.

Do you have any examples I can read about?

Housing has been turned from "a place to live" to a "place we can extract rents to make bank". And with the nature of landlording, the rents are priced to "mortgage+profit", so they get their mortgage paid on our backs and grow their personal wealth, and top it off with even more profit.

Policies that include a highly progressive tax after 2 homes should definitely be enacted, along with proper policing of flop houses (airbnb) in non-hotelier situations. Time to de-profit-ize housing.

Can you cite an example of where this policy has worked out well? It seems counter intuitive because removing the profit incentive seems like it would remove investments + labor and therefore reduce housing construction.

Sure. Let me get right on that, after I get elected to be a Congresscritter.

Also, what do you mean by de-profit-ize housing? Do plumbers and tradesmen no longer get to profit from building homes? Surveyors? Architects? Electricians? Financiers? How do you get homes built if no one is allowed to profit from their trade?

My terms are as follows:

- you must write a clear, concise policy proposal

- you must post the proposal on HN

- A randomly selected (my selection) HN reader of that post will grade if your proposal is clear, persuasive and well cited. If you fail to pass, then I owe you nothing. You may keep retrying as long as you wish.

- your total billable hours for this concise policy proposal should be no more than 4 hours.

Are these terms acceptable?

I was with you right up to this comment.

No, most of us who do not own homes do not descend into some weird shadow economy. We just keep showing up to work and giving all of our money to landlords and imagine what it would be like to have retirement savings.

Yes, sure.

> At the same time, those people who do not own a house are wising up to the scheme and so they increasingly refuse to work or provide value to society.

This seems more like a fringe conspiracy theory. I don't think it's true in an anecdotal or statistically measurable sense.

2. The electrical regulation requiring AFCI breakers increases the panel cost from $500 to $2500+ for a negligible safety increase. This is a problem!

Construction contractors don't really care if you die. They might shrug, feel bad for an hour.

The current regulations are for "MINIMUM" standards. And those already get pushed. If we reduce the regulations, then those will also get pushed beyond.

Then we become like third world countries were buildings just collapse.

Perhaps, but I think the more difficult issue in communities is how developers take over city councils and hamstring especially high-density development to benefit themselves personally- to eliminate competition and only let their or friends' own pet projects see the light of day.

Also since they are almost always wealthy, they do not want housing to assist the poor or nontraditional housing that takes advantage of alternative energy to be built near their properties because in their mind it devalues them.

I think they are going to be tragically wrong in the near future, but the bubble around capitalist-oriented real estate is VERY strong and unlikely to burst until it's catastrophic.

Great post, but isn't that the definition of government?

> they've checked out from the system

Everyone checks out of participation in a group that does nothing to benefit them. Rich people complain about taxes taking "their" money, but the system is taking something much more precious from the poor. It's taking their time and their ability to experience the things that make life worthwhile --- time with friends and family, time in nature. You can say all you want that people need to work for it, but they also need to enjoy the fruits of their labor, and that's not happening.

With varying degrees of subtlety, I think this is most of politics. Corporations and small business/asset owners lobby or vote for laws that favor or subsidize them all the time. Homeowners are a very large class of voter that all own the same type of asset.

But at least for people with kids it seems very short sighted to cripple your own kids' lifestyle just for a higher number in your bank account.

Compound that with the “die broke” movement that extolls profligate spending in mid life over saving, the urbanization of the populace, cost of health care, and unwillingness of people to relocate to much less expensive locations (I’ll leave affordable housing out of the equation, as there is affordable housing, just not in the hyper growth cores and the debate in those cores is toxic and intractable), and you have a situation where an entire generation is unable to afford life at their age, let alone retire.

My parents are well educated, successful in their healthcare career, saved their entire life eschewing vacations and nice cars, and were self employed so didn’t have access to employer match, benefits, and paid double taxes on their business income then personal income. They have enough, and live in a very inexpensive part of the country. But even then it’s a just barely situation. I have to help them with repairs and wonder if they have enough for 15 or 20 years. I figure at some point they’ll be dependent on me.

At some point we have to acknowledge the free market doesn’t work for everything. That what sounds good in a screed doesn’t always work well in the real world, where every permutation plays out in a human life but without do-overs, where the average experience isn’t a sufficient metric, where optimal expectation isn’t the singular goal, where it’s not just someone else, someone else’s parents, it’s you and your parents. And one day, it’ll be your kids. How many generations will we subject to this 1980’s republican dystopia?

The demand side of rent prices is generally based on the surplus value created by an area for its residents. The value of rent prices is all about providing signals about relative utility to potential residents. This is key because it means that absolute rent is largely unimportant, the relative rent is the key. All rent paid above actual services provided does not create economic value, it instead captures surplus value from its residents and delivers it to rentiers. The issue with rent control and other similar regulation is not that it limits overall rent levels, it’s that it distorts the relative signaling. However this needs to be balanced with the negative effects large rent increases have upon tenants. A world where people are constantly forced to move due to a rapidly changing market might be price efficient, but it creates lots of negative externalities. The key here is establishing rent rules that are loose enough to create accurate price signaling, but tight enough to minimize these externalities.

The demand side for purchasing for individuals is based on individuals and companies evaluating on a range of criteria which largely boils down to the utility it directly provides, the rent you can charge others for their utility in the properly (or conversely, the rent it allows you to avoid), and its value as a speculative investment. However it is clear that in the problematic markets we are discussing, the prices are extremely dominated by the latter two.

This leads to the supply side of this also being somewhat counterintuitive. People seeking to invest their capital in property actually have two primary ways of profiting: via rent collected or by appreciation in property value. If you own property, and you have additional capital to invest, do you invest in improving your existing housing stock or into buying additional property? The answer is you invest in whichever has the highest rate of return. In low housing stock environments the answer is going to typically be to invest it in additional property over improving existing properties. You might think that rising rents would change this ratio, but this gets it backwards. Rising rents leads directly to increased property values and so largely has the opposite effect, it encourages investment in buying property over improving it.

This makes it clear that to increase investment in housing stock, your best method is to discourage speculative investment in favor of investments that raise the quantity and quality of housing stock. The way you structure regulation, incentives and taxation should reflect this. Everything else is noise, and doesn't actually solve the problem.

Side note: An exception here happens in cases where development leads to massive differential between start and end value. This is why in these sorts of high speculation environments development becomes highly slanted towards turning low density buildings into massively high density, high margin buildings. This is generally not ideal, as this type of construction has lots of negative externalities on its surrounding neighborhoods, and tends to make communities averse to further development. Making lots of small incremental improvements in housing stock is far less disruptive to neighborhoods but will only really happen in environments slanted towards improvement over speculation.

Skyscrapers and high rises only work for luxury apartments or shitty soviet style blocks.

Single family homes only work in rural areas.

The vast majority of cities and housing demand is in-between, which is entirely missing in the US.

You'd expect 90% of housing to be row houses or 3-4 floor apartment buildings, but in the US, that's just not existing.

Sure, the housing market in Europe is struggling as well, but it's not even close to the situation in the US because so much affordable housing in mixed-use middle density buildings is available.

And with small shops on the bottom floor, offices on the second floor and 2-3 floors of housing above, this greatly reduces traffic (and in turn, infrastructure cost) as well.

I believe the US is finally wising up to this with "5 over 2" style housing, but I don't know enough about that to actually judge how well it works.

Housing affordability in Europe is, in most places, way worse than in the US. Not sure where Americans get this idea that it's better there.

Renting in the US also is very cheap outside of cities. You can rent in New Jersey and take the train into NYC, or rent in Vallejo and take the train into San Francisco. Over all the income/rent or mortgage ratio, in my experience having rented and purchased in both countries, is much more favorable in the US. Quality of life is a different story.

You're again quoting income vs the price to buy property. You're arguing against a strawman with that.

The argument is about the cost to rent, combined with the monetary and opportunity cost of commuting associated with that.

> The government should not allow itself to be weaponized against part of the population for the benefit of another.

That is literally the point of the government.

Regulation isn't the problem, or even part of the problem. Wealth inequality is. Which is counterbalanced by progressive taxation.

But none of you want the rich to pay taxes, so here we are. Quite literally, this Silent Depression is your fault - the titans of the tech industry.

Since we can't rely on our last best hope for breaking this generational trauma we're trapped in to bring actual solutions like UBI, then tech and the financial system it metastasizes may be the enemy. I've had this feeling for a long time, at least since the Housing Bubble popped, 9/11 and the Dot Bomb, but probably as far back as the Savings and Loan scandal of the 1980s, and even before that with the disingenuous messaging coming out of the Reagan administration before I was old enough to understand politics. I remember the news being filled with imagery of tanks rolling through the Middle East and starving children, asking myself why the world would even have wars or hunger when we have nuclear weapons and billions of dollars that could help people. Until I learned that financial elites stoke those fires to further US hegemony to prevent the owner class from being toppled.

I dunno, I just have this feeling that it's probably over. Young people are looking around and asking why they should take that third job to make rent and feed their kids this month, when that money just goes to paying Boomers' retirements in Vanguard and BlackRock. Maybe they can just take this year off instead, by taking this month's income and camping indefinitely, pulling the plug on the rat race and just living. Eventually forming small communal city states that provide for their citizens while the business world consumes itself since it doesn't produce anything like workers do.

So it's looking like the working world will probably go communist in some fashion for survival. Not just in the US, but in Asia and the Global South. That's what I see in the red state I live in, with the influx of financial refugees, flying the libertarian flag in the frontier towns they've constructed without understanding their own communist tendencies.

While with even the slightest central planning, continuing FDR's New Deal and Johnson's Great Society, we could have been living like the Jetsons in 2023. Instead of selling out for trickle down economics and colonizing our own country with the poors propping up the service industry so that billionaires can richsplain to us how if we just worked harder we could be rich someday too.

Play stupid games, win stupid prizes.

> Regulation isn't the problem, or even part of the problem. Wealth inequality is. Which is counterbalanced by progressive taxation.

> But none of you want the rich to pay taxes, so here we are

Where did the above poster say that wealth inequality wasn't part of the problem. Restrictive regulation is likely a cause of the consolidation of wealth (scarce, essential assets tend to go up in value, and when the supply is restricted and demand unbounded, even more so). If access to drinkable water was privatized and regulatory bottlenecks restricted new entrants from producing and distributing it, you can imagine how that would lead to more dramatic wealth inequality also (and poor people dying of dehydration).

GP said:

> > I think we have a situation where part of the population is literally voting to appropriate wealth from another part of the population.

Housing is one of the tools (and by no means the only one) that the plutocrats are using to widen the wealth gap.

> But none of you want the rich to pay taxes, so here we are

I don't know why you're assuming this, but I agree with GP and, of course, also want the rich to pay more taxes. Based on everything they've said, I can't imagine they feel differently.

> Maybe they can just take this year off instead, by taking this month's income and camping indefinitely, pulling the plug on the rat race and just living. Eventually forming small communal city states that provide for their citizens while the business world consumes itself since it doesn't produce anything like workers do.

> > At the same time, those people who do not own a house are wising up to the scheme and so they increasingly refuse to work or provide value to society. Instead, they resort to their own financial schemes, illegal activity, freeloading government benefits; they've checked out from the system.

Sounds almost like the two of you are saying the same thing here, though GP is using words which lean more negative in connotation

There was open land inside cities in the bay area 50 years ago. All zoned for housing. And there were tracts of open land between cities.

It's all gone. There isn't any infill to be filled.

In the meantime it's become obvious that development model, convert another 100 acres of farmland to single family housing and add another lane to the freeway is terrible.

And which regulations are you talking about specifically?