They're competing with VCs trying to build developments and companies trying to turn a profit. Gone are the days of the "Fixer Upper" that Tim Taylor would buy, drop a reasonable amount in repairs, preform the repairs themselves, and then turn a modest profit.
Everyone who buys a house today wants the value to go up. Nobody who can afford a house needs one. They are not commodities that you utilize and repair. They are now investments, vehicles to grow your money.
That's great for all the snobbish out of touch retirees. But the middle class needs somewhere to hang their hat so they can rest up and make it to work tomorrow.
You want to increase the supply. I want to tank the demand. The price will come down when the demand shifts from mcmansions to regular, affordable housing. It will be funny to see all those $1m+houses sit on the market as the correction unfolds. Nobody asked for them in most places. They were added by developers seeking to gentrify small towns like Rowley MA.
And taxes will come down too because towns will have no choice but to tax property owners more reasonably.
What data do you have to support this?
> As of 2022, investment companies own about one-fourth of all single-family homes in the US, accounting for 22% of American homes sold, down from 80% in 2020-2021
Naturally, the homes bought are all in the most densely populated areas with a relatively new construction (gentrified neighborhoods). I think it's gonna be a couple years before prices drop.
Large institutions own 5%. Most of these "investors" are house flippers and small landlords trying to "make it big in real estate". It's not the 1% strangling the working class, it's the 10%. Any solution that doesn't hit them the hardest won't be a solution. Infact, we want more density, we need more gentrification, so I don't want to discourage large institutions from investing in a new apartment. But at the very least, if you claim to care about housing prices, don't prevent the government from building more housing.
Individual home owners and business interests have a vested interest in maintaining a very tight grip on the status quo with regard to zoning, which is the primary tool for driving housing reform.
They will continue to do everything in their power to prevent the construction of affordable housing, because it will destroy their current real estate investments.
The non-landed folks have zero leverage within the political system.
Unfortunately those sorts of structures are banned by most municipalities.
It does not have to be this way.
So the other fundamental problem is that it is impossible to save money because it is constantly being debased.
I think if we allowed house densities to increase and changed zoning laws to allow houses to be built. The cost of housing would fall significantly especially if VC saw a wave a new house they would be prompted to sell before the wave (at a lower prices) or risk significant loses.
Whether you could actually build enough houses to fix the supply inversion is another question. However, without changing zoning laws I don't see how you'd even be able to try catch supply at this point because the places where houses need to be sold prevent multi family units which are much more efficient at soaking up demand per unit than single family houses
What you're trying to say is that it would be less profitable and that may be true but as long as it tracks with inflation it would be worth it as an investment tool.
good luck with that.
Can you point it out for me?
This isn't all land. It's just desirable land - in cities basically. The urban to rural migration has been going on for many decades now and doesn't seem to show any signs of slowing down.
If there is a housing shortage then the unaffordability is reflective of proper valuation.
If people need more housing than they are getting, a free market would indicate valuations to go higher. I would suspect that you’d like to see housing revalued lower, though
Housing supply is not a free market. At least in the US, there's a committee reviewing each parcel deciding how many sqft of interior space, how many kitchens, how tall, and what uses.
I thought there was more housing sqft per capita in the US than just about anywhere else? If so it seems more like a distribution problem.
I don't think it's realistic to expect that multiple families will start living in houses intended for one, so the amount of sqft doesn't help as much.
That is common in other countries, though it is usually a single extended family.
We were turned down for a mortgage at the first bank we tried because we refused to finance enough to improve the landscaping. The bank wanted to see what the ROI on the home was. We were buying a forever home. Increase in value is someone else's problem after I'm dead.
It was. Well. Fascinating.
The bank would just be tasked with handling the paperwork (underwriting) of ensuring it is a conforming loan by getting an appraisal done and verifying your income/assets so they can get paid by the US government (fannie mae/freddie mac/ginnie mae/etc).
Not to mention that a lender does not get a piece of the collateral's sale price, so why would they care what improved landscaping would do to the price of the home if and when a homeowner wants to sell it?
Your scenario only makes sense if the lender was also getting a piece of the equity.
Not saying we should evict random people, but it is objectively a terribly inefficient allocation of societal resources.
Growth in the developed countries with housing shortages keeps getting revised down.
If two single-family houses were torn down to make room for one new-build, single-family house, then it is a loss of housing. Not to mention natural disasters, condemned housing, rural housing being torn down for farmland, urban housing being torn down for new highways. I do wonder how many houses were destroyed in that same timeframe.
https://fred.stlouisfed.org/graph/?g=1aeIa
If you want to understand the housing price problem, look no further than the irresponsible monetary policies of the last 20 years.
Simply looking at median house prices to median household income we can clearly see the impacts to housing prices from the stimulus following the dotcom bust, the stimulus following the housing bust, and the stimulus from the pandemic. Hint, they're the big upward slopes.
https://fred.stlouisfed.org/graph/?g=1adYW
Take away the irresponsible and unnecessary stimulus and you have a reasonable housing market at 4x income, not 6x.
I live in "flyover country" and we don't have those problems here.
https://www.buzzfeed.com/suzystrutner/how-much-you-need-for-...
Housing / land valuation is wildly off from the needs of the people. For more than literally my entire life there has been a chronic shortage of housing, with less built than is necessary for multiple decades of time. The issue has compounded.
We are at the point where the solution is to literally build housing non-stop and just do that for years.
Edit:
The buzzfeed article mentions National Low Income Housing Coalition as the source of it's infographic. Here are some additional links. https://nlihc.org/oor/report-graphics
One bedroom home in hours worked by county: https://nlihc.org/sites/default/files/oor/2023/2023OOR-ppt-f...
Two bedroom rental in dollars per hour: https://nlihc.org/sites/default/files/oor/2023/2023OOR-ppt-f...