> And yet housing prices in much of Asia is still insane.

They're generally lower than the US, despite having a higher population density.

> Chinese housing market is completely messed up, with turn over almost halted since the government won’t let prices fall no matter what, while they have overbuilt like crazy.

A place with the government policy objective of not allowing housing prices to decrease isn't much of an argument that supply and demand doesn't work in general. China is just its own kind of broken.

Whereas prices are significantly lower in e.g. India, not just Japan.

They are only lower in the sense that incomes are lower, and often not even that much lower than American cities even if incomes are ten times less. India, for example, if you take median home prices and median incomes, they don’t match at all. Yes, an American moving to India who retains an American salary somehow will find it affordable. The locals are struggling, much more than Americans could ever imagine. Japan housing wins by being smaller, and having less requirements like central heating, that would never fly in the west. We really should have that lower end housing, I agree, but then we are comparing apples to Orenjis.

China is simply repeating what Japan went through in the 80s/90s. Maybe market sanity comes only after a period of crazy insanity.

> They are only lower in the sense that incomes are lower

The urge to measure everything by income leads to absurd results, like putting Saudi Arabia and the UAE near the top of the "housing affordability" list because they're flush with oil money, and for the same reason the United States.

> We really should have that lower end housing, I agree, but then we are comparing apples to Orenjis.

But that's the point. Someone in the US who makes 20% of the median household income still needs somewhere to live, and by refusing to provide smaller units, we make things cost more for everyone else too. Because now they have to spend their entire salary on housing and make up the rest with government assistance, which bids up housing costs for people in the middle -- who are also the ones footing the bill for subsidies made necessary by the high costs.

It's not just about the cost per square foot, it's also that small units aren't even available because the rules proscribe more units from being built on the same lot. The result is a de facto prohibition on smaller units because ordinarily it costs a similar amount to build a small number of large units and a large number of small units, but now the latter is unlawful and a small number of small units is uneconomical.

> The urge to measure everything by income leads to absurd results

If you believe housing is for people to live while doing the work they can get at the salaries those jobs are willing to pay them, then it is absurd not to consider income in housing affordability.

Exactly right. Ignoring income of local buyers in market would be ridiculous.

My family bought an apartment couple of hrs from Delhi for about $100K which is huge amount for locals considering it is center/ hub of nothing. And as far as fit/finish goes one can easily spend another $50K on it to bring it barely to level of basic rental apartment in US.

If it costs e.g. $200,000/unit to create a housing as 5-story buildings then housing should not cost more than $200,000 anywhere that isn't already saturated with 5-story buildings (which includes every metropolitan area in the US), regardless of what local salaries are. Only regulatory rules that constrain construction prevent this from being the case.

There is a minimum amount that it intrinsically costs to create housing, e.g. the cost of lumber, and in some places local wages are too low to afford that, and that sucks but the reason for it is low wages rather than housing scarcity. Then there are places where housing is unaffordable, not because wages are low, but because housing costs are artificially high, and that is a different problem with a different solution.

There is a lot unpack here.

First, it costs way more than $200k/unit for new builds where I live (Seattle). Unless they go for scale, then maybe they are getting $200k with lots of profit and a $1k/month HOA. The biggest cost these days is simply labor. Construction workers aren't cheap.

Second, the housing is not at all equivalent in Asia. The standard 30 story overbuilt concrete apartment buildings, completely un-renovated (but at least you can get that done for cheap), but it keeps migrant workers employed (they overbuild on concrete for less technical builds, at the expense of increased building maintnence and/or reduced building lifetime). China and India just don't magic up these buildings, and often times it is used as a jobs program (or they would move on to more expensive but longer lasting builds, the fact that the buildings will be torn down in 20-30 years is seen as a feature and not a bug). But those cheap to build flats are still going for $1 million/each in cities like Shanghai or Shenzhen.

> First, it costs way more than $200k/unit for new builds where I live (Seattle).

That's the point. If you restrict where they can be built, and how they can be built, they cost more to build. And then prices go up.

> The biggest cost these days is simply labor. Construction workers aren't cheap.

This is part of the regulatory cost. Rules that require labor-intensive construction methods (preferred by both labor and landlords because they both want new construction to be more expensive), and licensing requirements that statutorily take a long time or significant money to satisfy (e.g. multi-year apprenticeships, expensive licensing exam fees) rather than immediately licensing anyone who can pass the exam and not charging to take the test.

> China and India just don't magic up these buildings, and often times it is used as a jobs program

At which point it's a government subsidy, but that doesn't really get you out of anything at scale. Somewhere or another somebody is paying for the construction.

> But those cheap to build flats are still going for $1 million/each in cities like Shanghai or Shenzhen.

You can allow something to be built without allowing enough of something to be built.

You can also build enough of something and still have high prices because of some other constraints or regulations preventing the people paying the high prices from using some of the supply, so it goes to waste.

But these are not the reasons that a $1000/month flat in India is unaffordable to locals. The reason for that is that local wages are low.

> The urge to measure everything by income leads to absurd results

What? Measuring relative to income is the only criteria that matters. What would be absurd is not to compare to income.

There isn't any absolute number at which housing is affordable or not affordable. It is purely a function of what percentage you need to spend of your income to be housed.

If the global price of materials means that it isn't possible to build a housing unit for less than $40,000 then in places where $40,000 isn't an affordable housing cost, your only options are to somehow lower global commodity prices or somehow raise local wages. Both of which are hard, and neither of which are particularly specific to the housing market. It's just not a place where that problem can be solved.

Whereas if the global price of materials means that it is possible to build a housing unit for $40,000, but local regulations make it cost $800,000, and then as a result local housing costs are $800,000, that is a problem in the local housing market.

> Whereas prices are significantly lower in e.g. India

I don't think so. Ask any indians about the cost of buying a property in eg. Mumbai.

This really is a global phenomenon. I don't know where the reluctance to admit that comes from (not you specifically, but in general).

> This really is a global phenomenon.

It's global in the sense that it's present in multiple countries, often for the same reasons. For example, the costs are high in the UK for similar reasons as in the US. But many of the comparisons just don't apply.

If you look at a country with a very low median income, of course housing costs a lot compared to the median income -- everything costs a lot compared to the median income. And housing in particular requires skilled labor and global commodities like timber and steel, which put a floor on the cost regardless of what local incomes are.

So housing in India or Vietnam costs a lot relative to local incomes because wood costs a lot relative to local incomes, even though housing there doesn't cost a lot in absolute terms. Which is not the problem in San Francisco, is it?

It is more than that. In the UK we track this through a figure called HPI (house price inflation). It just means the cost of real estate. My guess is that the graph would look quite similar for most non war ravaged countries around the world. Rocketing HPI over the last few decades.

There is more to it than just "anglo countries don't build enough".

There are more components to housing prices than just not building enough, but in ordinary markets that aren't constrained by pathological factors (e.g. China), supply and demand operates and increasing supply lowers prices.

For example, suppose you don't have artificial supply constraints and then you lower interest rates. No problem, more people can get a loan to buy a house which causes more houses to be built and them more people get to be homeowners. But long-term prices stay the same, because it's easy to add supply, so it keeps getting added until prices fall to the construction costs, which acts as a long-term ceiling on prices.

Now suppose you do have artificial supply constraints. Prices are at $200,000 but you've made it cost $1,000,000 to create a new housing unit. Now if you lower interest rates, prices are going to go up, because you can't increase supply at the current price so people just end up having to outbid each other on the existing supply. And the same thing if local demand increases or anything else like that, because you've prevented supply from responding to demand until prices hit a million dollars.

But the problem isn't low interest rates or growing cities or anything like that, because the only reason those things are a problem is that supply can't increase until prices are unaffordable.

The difference is that China had a housing bubble. After it popped, housing prices started plummeting. In the US, housing is just expensive. Given the current supply and demand, there isn't a good reason why the price should be lower.

> After it popped, housing prices started plummeting.

Prices haven't plummeted in China. Sales volume has seized since the red families control the real estate agencies. They have added more incentives, like easier access to hukou, and have eliminated limits on how many homes you can buy.

The government is doing everything they can stop it, but home prices are indeed falling [1]. A 2.2% decline doesn't sound like much, but it's wild given the strong GDP growth over the same period.

https://www.reuters.com/world/china/chinas-new-home-prices-d...

I wouldn't take much credence in reported GDP growth. Tearing down a building that was built last year creates reported GDP. Also, you really really need to look at volume, since the party will just cut off sales if they have to (since they control the real estate agencies).

Chinese municipal governments are funded through the tax assessed on the sale of the home and not through a continuous property tax - or at least that used to be the case, haven't checked in a while. That resulted in municipalities encouraging higher prices for housing.

Some locales have experimented with property tax, but they haven't really expanded the program yet, and they usually exempt your first home. It isn't enough to fund municipal services, and cities are still screwed when it comes to income (the central government collects most of their VAT, they are expected to pay for a lot of services without a lot of income beyond taxes on property sales).