The private homebuilding sector is not going to build at the rate required to improve supply, because excess supply will cut into their margins. Deregulating will just allow them to build a ton of cheap low quality housing and still charge enormous amounts for it. Landlords would just pass that on.

The solution is quality social housing, built by the state in large enough quantities to disrupt the market.

What do zoning changes have to do with quality of housing?

R1 zoning prevents the creation of affordable housing. Since you can only fit maybe two or three households per acre, and land prices are sky high, the only affordable housing is in the middle of nowhere, 2 hours from anything.

Something like this would be a huge improvement and reduce housing costs.

https://www.strongtowns.org/journal/2018/6/6/toward-dynamic-...

I agree with this. But the person i responded to was implying that relaxed zoning rules would leave more shoddy houses by developers. Despite building regulations being completely different than zoning.

Ahh! Yeah I was thinking the same thing. It makes no sense that zoning would affect building quality.

This is being downvoted, but it’s actually what countries that have solved this problem have done. Even everyone’s favorite “no zoning, build, build, build” paradise Japan accomplished this by also building a large amount of public housing:

https://en.m.wikipedia.org/wiki/Danchi

Housing didn’t become a depreciating asset there over night. It was the express result of the state intervening in the market.

It can be a 'yes, and' thing. You can do both. You can't build a bunch of Japan style public housing if you do not have Japan style zoning.

Sounds a bit too commie for the yanks.

The younger generation is coming around. In a hundred years or so things may change, but until then we're stuck with our current political economic system.

https://www.pewresearch.org/politics/2022/09/19/modest-decli...

> The private homebuilding sector is not going to build at the rate required to improve supply, because excess supply will cut into their margins.

I don't know if this is correct since historically houses were built by a combination of smaller and larger developers who were unable to collude on production and pricing; there would be cycles of boom and bust where they would build a huge surplus of housing, the prices would crater, and a bunch of developers would go bankrupt.

At least, that's how it went in the '80s and '90s when I was homebuilding-industry-adjacent, maybe the whole thing is corporatized and financialized now to the point where there's basically a cartel that controls prices. If so, we should maybe investigate what incentives led to that.

If you convert 10 single-family-homes worth a million dollars each into a skyscraper with a thousand units there's plenty of room for profit, even if the thousand units are cheaper than the current median cost for a condo (or rental).

Cities have been writing laws and zoning that prevent economies of scale from kicking in for decades. If they just stop doing that, we'll get more housing.

> Deregulating will just allow them to build a ton of cheap low quality housing and still charge enormous amounts for it.

You're stating this like it's a fact, but you haven't explained why. In a free market, competition is on the basis of price and quality.

Allowing existing homeowners to increase their revenue by densifying housing will drive prices down. Although developers for single family dwellings will not be as happy about it, if you have a 1/3 Acre lot 10 miles from downtown S.F. which you can turn from a single family $3000 a month rental into a multi-unit $30,000 a month rental then you will be happy to do so. Even if it drives down the value of your $800/month rental in the middle of nowhere.

Imagine if you are currently owning and occupying a house and have a chance to pay your mortgage by building a rental property on the unoccupied half of your lot. A lot of people would be very happy to do so if it were legalized.

Edit: But you are totally right that socialized housing would be an excellent solution.

> Until we make housing into a much less attractive "Investment" we will see obscene pricing levels. The only way to do that is to increase supply of housing.

That isn't the only way.

We could eliminate the many tax benefits like: accelerated depreciation, 1031 exchange, step up cost basis for inherited property, etc.

> step up cost basis for inherited property

Heck, there's no policy justification for having the stepped-up basis at all.

People who have houses like it. Doesn't mean it's good policy.

Even without those tax benefits, I still made $60k in equity just by owning my own house. Probably more in the time since I last checked. There just is too much money and not enough houses.

Supply and demand.

Decrease the benefits for owning an investment property, then the number of people purchasing investment properties will be lower and prices will likely fall.

> Until we make housing into a much less attractive "Investment" we will see obscene pricing levels

Yeah same for health, education, insurance, internet, medicine etc.

No, the best way is to build housing. As long as we try make developers build housing through whatever incentives we can invent, they'll always be an investment. Developers aren't going to make new housing out of the goodness of their hearts. It is a business deal, an investment with an expected ROI. Making it a less attractive investment is going to end up with less of it being made. If the government builds housing, or subsidizes it (improving ROI for developers), we'll have more housing.

GP said

> The only way to do that is to increase supply of housing

And gave some examples of reduced regulation (zoning, parking) that would make it easier to build. They didn't say anything about government subsidies.

You said

> No, the best way is to build housing

Aren't you both saying the same thing?

I think you might have stopped reading at "don't make housing such a good investment" and not considered the substance of their argument.

And yet when I actually go building the only place I could afford it was to go to a place with no code or safety inspections. This make HN mind melt, many folks here want to maintain the house crushing regulatory machine because all said they'd rather an extra homeless guy freeze behind a dumpster than elevate risk of fire spreading to their home.

OP is talking mostly about housing being considered an 'investment' for the average homeowner, I think. Homeowners, on paper at least, are the biggest beneficiaries of the housing crisis:

https://oregoneconomicanalysis.com/2021/03/16/who-benefits-f...

Granted, those are paper gains, but still, better to have that option than to be priced out of the market completely, as many are.

America sucks at socialized housing to be honest. We always build sprawling tracts of public houses in the worst locations so as not to piss off their neighbors.

Soviet style block housing with mixed use development would be awesome but rich Americans would HATE it. Especially when you are building on a 10 acre lot next to their $2M 3 bedroom house, 3-5 miles from downtown, to build 4,000 units for the poors that make them coffee and deliver their Uber Eats.

It's much more politically viable to allow them to build a 20 unit apartment building on their 1/3 acre lot and rent it for $40,000/month to help pay for their $2M mortgage.

People don't understand this yet:

The only way to increase the housing supply is to increase the price of the house. So you're left with a death spiral. Build to lower prices, but the actual building is costing more than what people are willing to pay for a house, let alone the markup needed to justify KB homes (or others) to get involved at all.

Sure they're building, and you can go to job sites, but they're not going to charge what you think they will at the end. Long gone are those signs that say NEW HOMES LOW $400s!!!

And if you do, they're undesirably small condos. The sales cycles are extended or, unfortunately, they're just going to keep selling at the $800 prices you're seeing for a new home.

The problem is that it is illegal to build more housing in cities because of zoning restrictions. No matter what the price.