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The Folk Economics of Housing

113 points by kareemm 1y ago

mensetmanusman 1y ago
People don’t believe that snacking after dinner right before bed everyday is bad.
SilverElfin 1y ago
Is it that they truly don’t believe it or they don’t want more supply (since that changes their quality of life, neighborhoods, traffic, etc) but still do want lower prices in other ways (like by price caps or other things). One legitimate reason to not think supply reduces prices is because of big financial companies buying up lots of houses and having effectively free rein to price how they want. It removes the competitive piece. In many areas the new houses are built by a few large home builders doing a few large developments, and the new apartments are owned by a few large corporate owners. That can slow down prices reaching their market value.
- msgodel 1y ago
  I think what people want is less migration (both domestic and international) but that's not an option. Since it's the primary thing they want they're doing anything they can to get it including essentially destroying their own neighborhoods.
  - lokar 1y ago
    And then they complain (a lot) that their kids have to move away to afford housing.
  - supertrope 1y ago
    They want to keep freedom of movement for themselves and restrict other people. Be careful what you vote for: a border keeping “those people” out sounds good until the day you are denied passage!
    - msgodel 1y ago
      I'm already not allowed to just declare myself a Mexican citizen. We alone were unusual in allowing that and it turns out it was a mistake.
- potato3732842 1y ago
  >In many areas the new houses are built by a few large home builders doing a few large developments, and the new apartments are owned by a few large corporate owners. That can slow down prices reaching their market value. Because all the same voters (demographically, if not also frequently literally the same individuals) voted for a bunch of red tape that's only passable for the big vertically integrated businesses and even then it's only profitable when they're doing cookie cutter single family on .25ac or 5 over one apartments.
  - lokar 1y ago
    Yep. You need deep pockets to eat the carrying cost of a property while waiting years to get approvals.
- keeganjw 1y ago
  This is another huge myth in the US housing market, that big companies own lots of the housing and are jacking the prices up. It's simply not true. Large corporations own a tiny fraction of the market while the vast majority is owned by individuals and small landlords.
  - pphysch 1y ago
    There's a lot of synergy and overlap between small landlords, property management companies, rent-fixing companies, and Wall St. It doesn't matter to the renter that their slum is owned by a tiny LLC that is nevertheless part of the broader constellation of anti-social rent-seeking behavior that is bringing down this republic.
  - ruined 1y ago
    investor market share of homes is down from its peak of 20% a few years ago, but i wouldn’t call it a “tiny fraction” https://www.redfin.com/news/investor-home-purchases-stabilize-q3-2024/ https://www.redfin.com/news/investor-home-purchases-stabiliz...
  - pantalaimon 1y ago
    That is not limited to the US, in Berlin there was a popular vote to expropriate housing companies with more than 3000 units. Yet those large housing companies charge on average between 7-8 €/m² and are nowhere near to holding a majority of the housing share.
  - SilverElfin 1y ago
    Is it different in different places though? Like some places have more of this ownership problem and so it looks worse locally?
- TulliusCicero 1y ago
  > One legitimate reason to not think supply reduces prices is because of big financial companies buying up lots of houses and having effectively free rein to price how they want. Big corporations don't have unlimited money to do this kind of thing. And in practice, the expensive areas they do it in, are usually very limited in how much new housing goes up, they're still very much supply constrained markets. If what you're suggesting was really happening, then what you'd expect to see is an area with a relatively high vacancy rate (due to all the new supply), like 8% or even higher, but stubbornly high prices in spite of that. And I can't think of any examples where that happened. Can you?
  - jimbob45 1y ago
    This is the propaganda they were pushing about RealPage too until it turned out that it was happening and the market was being distorted. At any rate, if a buyer notices it happening in their area, then "it's not happening that much" is not only not going to make them feel better, it's going to also make them feel like you don't want to fix it.
    - TulliusCicero 1y ago
      Again, do you have examples where a ton of supply was added to a market, the vacancy rate shot up to high levels, but prices remained the same? I agree that the algorithmic price fixing needs to end, though I think it's mostly gonna be strong in a market where vacancy rates are still low. Harder to maintain the cartel the more options people have.
  - ruined 1y ago
    investors actually tend to purchase cheaper homes https://www.redfin.com/news/investor-home-purchases-stabilize-q3-2024/ https://www.redfin.com/news/investor-home-purchases-stabiliz...
- segphault 1y ago
  >One legitimate reason to not think supply reduces prices is because of big financial companies buying up lots of houses This just isn't true and isn't supported by the data. https://www.noahpinion.blog/p/corporations-arent-the-reason-your https://www.noahpinion.blog/p/corporations-arent-the-reason-...
- dragonwriter 1y ago
  > One legitimate reason to not think supply reduces prices is because of big financial companies buying up lots of houses and having effectively free rein to price how they want. No, its not. If only one big company was allowed to do that in each locality, and they had the ability to buy up all the supply no matter how much new housing was built, that would be a reason; absent monopoly power, they don't have free reign to price how they want, and can price higher the less supply there is, even if you assume all of it is owned by similar big firms and used as rentals.
- k2enemy 1y ago
  > Is it that they truly don’t believe it or they don’t want more supply If this comment section is anything to go by, there seem to be plenty of people that firmly believe that increasing housing supply doesn't actually increase housing supply, let alone the bigger leap that increasing housing supply decreases prices.
kube-system 1y ago
Colloquially you can see this in sentiments such as: "All these developers are building is just expensive new luxury apartments" And as the study mentions: > To the extent that ordinary people form loose mental associations between “housing development” and “housing affordability,” they may well associate more development with higher prices rather than greater affordability. New housing, being new, tends to be more expensive than existing, depreciated housing. It is just a perception bias thing. You don't really "see" everything around you aging because it happens slowly.
- stego-tech 1y ago
  Yup, and the kneejerk response from economists is that the housing cycle suggests that new luxury stock would be inhabited by buyers who own existing stock, and what they sell would be more affordable to those buyers, and what those buyers sell would become more affordable to the next rung down, etc. Except that’s not the reality. The reality is that a large chunk of the market (as much as 25% in some areas) is speculative in the form of PE-owned inventory and rentals. It’s not used as shelter, it’s used as a vehicle of growing capital. When that’s pointed out, suddenly economists blame the very same people who can’t get onto the “property ladder” for failing to “compete in the free market”. In a vacuum, their original idea makes sense. In reality, it’s heavily exploited for the gains of those already on the ladder at the ongoing expense of those they actively prohibit from joining them. It’s societal exploitation leveraging the singular most basic human need after food and clean water: shelter.
  - whall6 1y ago
    Curious for the source on the 25% figure if you wouldn’t mind sharing.
    - stego-tech 1y ago
      It was a series of studies earlier this year that made media rounds; searching for “Wall street housing 25%” returns a myriad of results from mainstream sources citing a number of different studies and papers: https://fortune.com/2025/07/08/investors-buying-25-us-homes-sold-most-5-years-traditional-buyers-struggle-afford/ https://fortune.com/2025/07/08/investors-buying-25-us-homes-... I’m on mobile and can’t dig into total ownership figures at the moment, but I do know that in the sunbelt states property acquisition by investment firms has been a real issue. Even slumlords are getting bought out at top dollar, and affordable housing is increasingly just a trailer rented on land owned by - you guessed it - PE or REITs at consistently inflating rents.
idontwantthis 1y ago
You hear this shit all the time from politicians and activists. Somehow high density housing is built for corporate greed and won’t lower prices. It’s self contradictory at it’s base level but is driving the narrative. It’s maddening. Edit: Here I am getting downvoted by people who don’t have the bravery to confront their own contradictions and realize that their own beliefs are being manipulated to ruin their own lives.
- LargeWu 1y ago
  It seems to be driving largely by anti-capitalist sentiment rather than understanding of economic fundamentals.
  - loeg 1y ago
    Anti-capitalist sentiment is a misunderstanding of economic fundamentals.
    - LargeWu 1y ago
      IDK, I think there's clearly arguments to be made against so-called "late stage capitalism", where capital is directed towards efforts that extract value rather than create it, and shareholder theory that prioritizes short term gains and creates externalities at the expense of other stakeholders. But at the end of the day, everything is subject to market forces and it's folly to deny that.
    - Lord-Jobo 1y ago
      Thinking a system is bad does not require a misunderstanding of the system.
      - loeg 1y ago
        You're rejecting a much broader claim than I made.
MBCook 1y ago
I can sort of understand that. They’ve been building houses in my area non-stop since 2010 or so. Prices haven’t gone down. There are other factors than supply. But most of the new supply is large houses. If you don’t want 4+ bedrooms and a 2000+ sq. ft. house the supply hasn’t changed much at all.
- mattmaroon 1y ago
  Well, you would have to compare it to an imaginary world in which they didn’t build those homes since 2010. Prices may not have gone down, but in the imaginary world, they might have gone up markedly so it has still reduced housing costs compared to if they did not build that much.
- kube-system 1y ago
  > They’ve been building houses in my area non-stop since 2010 or so. Prices haven’t gone down. Real or nominal? > There are other factors than supply. It is not uncommon for places with a lot of housing development to also be places with rising housing demand because it is a growing area. > If you don’t want 4+ bedrooms and a 2000+ sq. ft. house the supply hasn’t changed much at all. And many of the people buying large new home are moving out of a smaller existing home.
- AnimalMuppet 1y ago
  OK, that's an interesting point. There's not "the housing market". There are several markets, with some overlap. The market for starter homes is not filled by building 4+ bedrooms, still less the market for studio apartments. And my impression is that, when we talk about the housing shortage, we're talking about apartments to starter homes, not about 4+ bedrooms. So what we seem to have is a disconnect between what the market needs and what builders are building. But maybe that's only "seem". I'd bet that a 4+ bedroom house sits on the market a lot longer than a starter house. Maybe starter houses are being built, but not enough to satisfy the market, and so they're going almost immediately?
  - MBCook 1y ago
    I’m sure it’s not zero that are being built. But it doesn’t seem like a very high number, at least compared to the number of large homes being built in new subdivisions.
stego-tech 1y ago
It’s not that I don’t believe adding supply will reduce prices, rather that adding supply alone won’t reduce prices. As the paper gets into, it’s a combination of supply, and homeowner entrenchment, and government policies barring construction or teardowns, of zoning restrictions, but also of Private Equity acquisitions of housing stock and builders, of artificially manipulating supply to keep prices high and promote higher returns for builders or sellers at the expense of buyers. The problem is that demand for housing is relatively fixed, in that every human needs a shelter, and every human wants a home. That doesn’t change outside of population statistics: in a vacuum, all things being equal, every human would buy a home. The issue is that the supply side is so heavily gamed by existing players that the entire market is deliberately engineered for maximum extraction of wealth from new buyers to prop up valuations of existing owners and builder/landlord margins. Relatedly, this is why I’ve stopped fighting each niche front individually and instead focused on the “nuclear option” of mandating affordable housing as a human right. That would open the floodgates to lawsuits against communities, states, and companies that hoard existing stock and bar newer, denser construction. It would add a sorely needed lever of pain to deter hostile housing practices, by threatening things like rent/price controls or forced divestitures unless the supply problem was meaningfully addressed post-haste.
mattmaroon 1y ago
If arguing about this on Facebook has taught me anything, it is that most people definitely do not believe it. They always make the same argument, which is that new housing stock tends to be high priced homes, so if what we need is low price homes why are we building high priced homes? Anybody who understands economics knows why this argument is wrong, but most people don’t. Nonetheless, I don’t think this has much to do with the public policy as it stands because the people who make the policy do understand this. So while I think the assertion is correct, people do not believe it, I do not think that is a large factor and why the policies restrict housing.
SoftTalker 1y ago
I think that what contributes to this view is that new construction always seems to be at the high end of the market. This makes sense, it doesn't cost the builder a lot more to build a $500k house than to build a $250k house, and building two $250k houses will take twice the time and close to twice the costs. So builders/developers are going to build what is most profitable, which is the most expensive houses that they think they can sell in the local market. What is less obvious is that this still increase housing supply. It's not new affordable housing, but the people moving in to the new expensive houses are leaving their old houses, and the people who buy those are leaving their old houses, so eventually the price drops happen on the older, smaller homes at the bottom end of the market.
- entropicdrifter 1y ago
  This makes sense in a world where the market adjusts rationally and there's an unbroken chain of people from different levels of wealth who can afford to buy houses. Unfortunately in the US right now, that is not reflective of the present scenario due to the immense generational wealth gap and housing bubble.
  - pwarner 1y ago
    But that's a supply problem. Create the supply, prices will drop and that bubble and generational wealth challenge begins to heal.
    - entropicdrifter 1y ago
      The US has 28 empty homes for every homeless person. It's a market manipulation problem that's not going to go away for as long as we maintain the perverse incentive of using real estate as an investment vehicle. Japan has never had this problem and likely never will because housing depreciates in value there like cars. A 30-year-old house is often worthless or near-worthless in Japan.
  - morkalork 1y ago
    And in Canada there is a huge amount of backlogged demand. There are areas where rental listings for roommates show two beds to a room and 10 people crammed into a house. Unwinding that is going to take a long time.
HPsquared 1y ago
People don't understand economics, generally.
- dazc 1y ago
  I remember when house prices doubled in the space of 3 years and it wasn't a supply shortage that caused this.
  - LargeWu 1y ago
    Sure, because demand went through the roof. And demand is currently high again. So either we need fewer people, or more dwellings.
    - dazc 1y ago
      It wasn't a surge in demand either..
      - LargeWu 1y ago
        It was a surge of demand, driven by the availability of cheap money.
        cloverich 1y ago
        Yes but thats misleading because the demand surge was people who want to live in the homes AND investors.
    - frabcus 1y ago
      Supply of finance is critical factor in this not mentioned enough in this thread.
jmyeet 1y ago
Private developers aren’t in the business of lowering property prices. And homeowners don’t want that either. You need to also consider what is being built. NYC has built a lot of ultra-luxury property that really amounts to money laundering and will never increase the supply to ordinary residents. The private sector will never solve this problem on their own.
9rx 1y ago
If you could build houses for free then obviously adding supply would eventually reduce the price. But I have been looking at the cost to build a home, it costs even more to build than to buy a used one. Who, exactly, is going to be able to afford to buy the new houses while selling their current home at a lower price than it would currently fetch? Maybe if AI replaces all the software developers they can flood the home construction market in their quest to find new work and push the price of labor down, thus reducing the cost to build a house, but otherwise...
- TulliusCicero 1y ago
  Presumably it's cheaper to build a home when a developer is building a whole bunch at once in a neighborhood, as opposed to a single person or family ordering something custom built.
  - 9rx 1y ago
    Cheaper, sure, but not cheap enough to satisfy anyone who already cannot afford a home. Like cars, the used market is always going to be a reflection of the new market. Used houses are expensive because new ones are even more expensive.
    - TulliusCicero 1y ago
      I think it probably could be cheap enough. Part of the issue is actually just that new home sizes keep getting bigger. Like yeah, new homes are more expensive now even in relatively cheaper parts of the countries compared to decades ago, but it's also true that the homes are much larger than they used to be. A lot of the homes from the 50s and 60s that people talk about being very affordable at the time they are made, were very small things by today's standards.
      - 9rx 1y ago
        That is quite true. Early Americans had absolutely no trouble living in their 300 sq. ft. log cabin with eight children under foot. You don't technically need the behemoths we see today (or even what we saw in the 50s, which were still huge by historical standards). But it remains, if it was cheap enough, people would already be doing it. The law sometimes gets in the way, sure, but that's another subject entirely.
jonplackett 1y ago
While housing remains a great investment for rich people, I doubt anything else will make any difference. If you build houses, they’ll just buy them and rent them out for profit.
- jeffbee 1y ago
  "They will just buy them and rent them out" you have described investment. Funding the construction of houses using your capital and then letting them out to people without as much capital is how housing gets created. Just let it work! Let a guy build a house and rent it to someone.
  - jonplackett 1y ago
    You know it is also possible to build houses people buy and then live in, right? House prices are so high because some people own too many of them. A home shouldn’t be an investment strategy
    - jeffbee 1y ago
      The consequences of your policy are that people without a million dollars are sleeping in tents.
      - danaris 1y ago
        ...How do you figure that? No one's trying that policy. It's certainly not what's led us to this point. Building is nowhere near fast enough to keep up with demand, especially in the areas with lots of homeless people, and especially in the affordable price ranges. Seems to me the policy that has the consequences you describe is, in fact, the policy you described in the GP. Reminds me of all the posts I've seen with photos of things happening in America—a country which is, quite famously, under capitalism—with captions saying "this is what socialism gets you!"
        jeffbee 1y ago
legitster 1y ago
One thing few people take into account is that demand housing is much, much more elastic than people realize - per capita people are consuming far more square footage than they used to. Houses that were built to be house multiple generations under one roof now only hold one generation. Usually elderly empty nesters. In our area we also see people buying up lots of older duplexes or triplexes and converting them into single-family homes. So even areas where population is stable, and housing supply increases, it can result in very few tangible gains at the margin.
- clausecker 1y ago
  In the US, isn't this partially the cause of zoning laws banning anything that is not single-family homes from being built?
  - pantalaimon 1y ago
    This is not limited to the US in the slightest
- whall6 1y ago
  Curious for a source on the sq footage per capita if you wouldn’t mind sharing. That’s very interesting. Could that also be explained perhaps by the fact that people are willing to live farther away from cities (where land / homes are cheaper and larger) because they only have to work 3 days a week from the office? Or because commuting is less painful with newer cars?
  - wyre 1y ago
    I dont have sources, but the trend for larger houses was happening much earlier than the WfH trend. It's a mix of car culture, proprty value being lower farther away from cities so develops can create a high margin on building neighborhoods marketed on big, new houses.
    - potato3732842 1y ago
khalic 1y ago
This is not what the study says, it’s more nuanced. People do not believe that liberalising demand will solve the issue more efficiently than other measures.
JohnCClarke 1y ago
Thing is: people are correct. Central London monthly rent for a 3-bed house is around £3500, but a 1-bed flat rents for £2100. So split the house into two flats and the landlord makes more money. Hence relaxing zoning restrictions will push prices up.
- lokar 1y ago
  None of these models work at such a small scale. The economics are regional. It’s likely that highly desirable locations like central London and manhattan will always be expensive. That’s fine.
spy888 1y ago
Developers build new housing when prices go up generally. Therefore when people see new housing they see higher prices in their regional market. So although folks may mix up causality, the observation is quite rationale.
deleted 1y ago
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gamechangr 1y ago
interest rates effect housing affordabiltiy more than inflation. This video implies high interest rates might actually help real estate prices interesting video : https://www.youtube.com/watch?v=lH8_4AiIxeo https://www.youtube.com/watch?v=lH8_4AiIxeo
stephc_int13 1y ago
The housing market is different than most markets in many ways. - Building cost is often marginal compared to land. - Land value is highly correlated to economic opportunities around it. - Economic opportunities are following a power law around economic centers (highly non-linear). - There is a density ceiling, with some variations depending on cultural traditions but still constrained by transportation technologies and psychological factors. - The location of economic centers is not randomly distributed but constrained by geography, especially access to water transportation routes. Financial speculation and building restrictions are second orders effects of the inherent housing scarcity, amplifying it, but not a root cause.
majormajor 1y ago
Nowhere in the US does it at the scale to make a serious long-term dent in prices. Nobody with enough money and exposure to large amounts of real-estate wants to kill the golden goose. Look at the post-Covid-migration build stories. Rents start to soften and development dramatically slows. Like Austin - https://austinmonitor.com/stories/2024/08/as-construction-slowdown-continues-a-new-workforce-housing-project-takes-shape/ https://austinmonitor.com/stories/2024/08/as-construction-sl... Or Denver - https://www.denverpost.com/2025/07/24/apartments-housing-real-estate-rent/ https://www.denverpost.com/2025/07/24/apartments-housing-rea... You would need continued serious government investment to make sure focus continues to be on total units and consumer price instead of investor ROI. Because even adding four fancy town-houses or condos helps if what used to be there was single-family or duplex. But it doesn't help NEARLY as much as adding 100 units by converting an old shopping center or 30-unit apartment. But there are strong incentives against developers doing "too much" of the latter if they know they can make the same ROI by selling fewer, nicer units. Individual residential property owners take a lot of blame here but they're not even benefiting THAT much - every crazy price increase is putting any upgrade to their own situation further out of reach. And fighting low-density residential NIMBY-ism is a slow process if you still only can buy one lot as a time as it becomes available. So focus on underutilized commercial and industrial near major hubs or transit corridors where most of what you're displacing is ugly parking lots and empty storefronts that contribute to crime as well.
- taeric 1y ago
  This seems to be claiming something different, though? You are pointing at that development slows as prices go down. Which seems somewhat expected? That is, adding supply lowers prices. And lowering price reduces potential profit such that fewer people will build. With fewer people building, prices should go up again. Stated differently, thin margins reduce the number of people offering products in a market. Ironically, the main way to get more building is with bigger builders in that scenario.
  - majormajor 1y ago
    Well I'm saying that in practice adding supply hasn't lowered practice it has merely slowed the increase in prices. And that's mathematically essentially the same thing, but it's importantly different in two big ways: 1) If people see their costs going up while they also see new construction, the correlation machine's gonna jump to the wrong conclusions 2) If costs are still going up people are still going to be unhappy and worse off Supply can increase AND price can still go up, and so for people to be won over and convinced you need to crack the second part, not just the first part. In a libertarian "just reduce regulation" approach that's often pitched, the natural equilibrium will be closer to "supply increase and price go up slowly", and people skeptical of "just reduce regulation" as a solution are more accurate than they're given credit for. Gotta actively intervene to make supply increase enough for any sustained period of time - we only see it in cases of macro shocks. Like the 2008 recession, or the post-Covid-bullwhip.
kypro 1y ago
Immigration is a similar debate where supply and demand goes out the window for political reasons. Here in the UK it's really hard to convince people that it's really hard to address our housing shortage through building alone when we bring in about a million people every year. Even a lot of economists seem to think supply/demand doesn't apply when it comes to wages and house prices if you introduce immigration as a variable. Unless it's undeniable I find people will just believe whatever suites them personally. Which is fair enough. I guess I'm just surprised at how unconscious this bias is for most people. Or at the very least they seem to truly believe that the housing market is an exception to supply/demand dynamics.
- amanaplanacanal 1y ago
  The problem is an aging population. If you don't have immigration who is going to support all the retirees?
w10-1 1y ago
Adding supply would only reduce prices if it was added at the average or below. Even if the number of units increase, the price can actually go up. The relative market power matters most. A developer with cheap bridge financing and a large portfolio of unsold units has every incentive to hold prices to set expectations, while buyers who are occupiers generally are compelled to buy in a certain time frame and location.
lokar 1y ago
In the cost to build vs what would be affordable I think people on both sides over generalize. Liberal land use and other rules would eventually bring down prices to affordable levels for most families. But not all of them. Every country has to have some strategy to provide housing for the bottom of the income range, since they typically won't be able to afford "dignified" housing based purely on the Capex/depreciation/opex value of the housing (they will always be renters). So you need something like liberal land use to provide for 80%, and then some kind of government intervention for the bottom 20% (numbers will vary based on the location/nation/etc)
intalentive 1y ago
>Why is housing supply so severely restricted in US cities and suburbs? Urban economists offer two primary hypotheses: homeowner self-interest and political fragmentation. Homeowners, who outnumber and have organizational advantages over renters, are said to lobby against development to protect their property values. The fragmentation hypothesis emphasizes that development's negative externalities are borne locally while most of the benefits accrue regionally or nationally, leading localities to block housing. These two hypotheses sound like the same thing to me. Homeowners organize to protect themselves from negative externalities that affect their property values (and quality of life).
watwut 1y ago
The discussion under this article proves the title to be correct. Nice meta.
lossolo 1y ago
Housing costs mostly boil down to this stack: price of land + price of materials + cost of labor + margin + other (marketing, admin, fees, financing, etc.) When you try to boost the number of homes, you also boost demand for construction labor, materials, and buildable land. Those inputs tend to rise or at least not fall much, so there isn’t a big, easy savings there. That leaves soft "other" costs or developer margin. Other is a relatively small slice, and typical margins aren’t huge push them too low and projects stop penciling, so fewer homes get built. Even if margins were squeezed, the price drop would usually be too small to bridge the affordability gap for most households. The bigger issue is that household incomes haven’t kept pace with housing prices over the last few decades.
nis0s 1y ago
One problem that’s unaddressed is that there isn’t a house building, pricing and mortgage model for people making 50K or less. One piece of data I’ve found is that 65% of Americans are homeowners (meaning American families, not rentals or investments), which is also about the percentage of Americans who make $50K or more per year (~68%). For people with a middle class networth (not income, I mean networth, which is about ~1M-9M when compared with the top of US society), homeownership currently works as a wealth-building mechanism because of scarcity. There’s also the desire to live close to certain areas, but why not make more neighborhoods or areas worth living in? Regardless, if the goal is to maintain scarcity for wealth building, then I think the scarcity mechanism will remain intact if homeownership is increased to a high rate while balancing the cost of materials and labor, and building houses specially for certain income levels, as mentioned already in other posts. But no one seems to be doing materials innovation, or construction innovation. I don’t think 3D printing is there quite yet, and might be more expensive. Where’s the push on automating construction? Why not build with a genetically engineered bamboo that’s cheaper and more sustainable than wood? Seems materials innovation will help with both housing and sustainability goals.
- yupitsme123 1y ago
  In the past, people were able to buy a small piece of land and develop it themselves. Literally build the house themselves. Over a long period time if necessary to spread out the cost. They also built 2-4 family homes so they could bring in some rent or house a family member. None of this is really allowed anymore and it's very hard to find a piece of land to do it with. Enabling this sort of construction and forcing or incentiving small plots of land might open up options for people on the lower end.
cloverich 1y ago
People believe what they can see. New development happens in desireable areas and price goes up all around them. Meanwhile (mom and pop) investors buy and own significant chunks of the market. Together they tell a story. Disincentivize investor ownership, and it will be harder to tell the story of investors buying up all the property, and the rest may fall into place at best, and at worst you get marginally lower prices and less validation of the investor price inflation stories.
nathan_compton 1y ago
Wow, I'm totally owned. A few weeks ago here I argued that no one blames landlords and developers for this. I was specifically arguing that "the left" doesn't, but I'm actually really surprised to see anyone does.
- crooked-v 1y ago
  A huge amount of people on the left blame "greedy developers" for making housing too expensive.
dc1144 1y ago
No matter, it’s still a demand and supply issue. It just depends on where on the equilibrium point we are. This takes time. And yes, based on pure economics, supply will fill in the most profitable sections first.
lif 1y ago
hmm. What would happen if real estate investors/developers by law also had to dwell in the most dense type of housing they built? Hypothesis: Humans by and large are all looking for a bit more breathing room, privacy, and quality of life in their choice of home. (In other words, qualities diametrically opposed to the black hole compression cubicle end game of 'efficient housing for the masses').
barchar 1y ago
I'm sorta convinced we need to strongly discourage homeownership (of homes you live in) if we want to fix our housing issues. It just seems like once ~50% of the electorate are owner occupiers homes are treated like collectibles instead of normal productive assets.
BrenBarn 1y ago
I think another reason people think this is that people often do not notice there is a problem until rents have risen enough that they're noticeable less affordable. And when that happens, a small reduction due to supply increase is not really enough. It's not enough for rents to "go down", they actually need to become affordable. In places where a third of renters are spending half their income on rent (as some stats have shown for CA), it is implausible to believe that nibbling around the edges of the problem is going to result in enough of a reduction to make a difference. I haven't seen any estimates of how many market-rate units would need to be built to, say, reduce the number of rent-burdened households to 10% or 5%, but presumably it would need to be in the millions. I haven't seen any studies of supply/price issues that contemplate anything like that scale. Just as important, such studies generally ignore the issue of inequality. It doesn't really matter what rents are; if there is someone who can afford to own multiple vacation homes that sit empty most of the year, rents should be lower.

113 points by kareemm 1y ago

People don’t believe that snacking after dinner right before bed everyday is bad.

Is it that they truly don’t believe it or they don’t want more supply (since that changes their quality of life, neighborhoods, traffic, etc) but still do want lower prices in other ways (like by price caps or other things). One legitimate reason to not think supply reduces prices is because of big financial companies buying up lots of houses and having effectively free rein to price how they want. It removes the competitive piece. In many areas the new houses are built by a few large home builders doing a few large developments, and the new apartments are owned by a few large corporate owners. That can slow down prices reaching their market value.

msgodel 1y ago
I think what people want is less migration (both domestic and international) but that's not an option. Since it's the primary thing they want they're doing anything they can to get it including essentially destroying their own neighborhoods.
- lokar 1y ago
  And then they complain (a lot) that their kids have to move away to afford housing.
- supertrope 1y ago
  They want to keep freedom of movement for themselves and restrict other people. Be careful what you vote for: a border keeping “those people” out sounds good until the day you are denied passage!
  - msgodel 1y ago
    I'm already not allowed to just declare myself a Mexican citizen. We alone were unusual in allowing that and it turns out it was a mistake.
potato3732842 1y ago
>In many areas the new houses are built by a few large home builders doing a few large developments, and the new apartments are owned by a few large corporate owners. That can slow down prices reaching their market value. Because all the same voters (demographically, if not also frequently literally the same individuals) voted for a bunch of red tape that's only passable for the big vertically integrated businesses and even then it's only profitable when they're doing cookie cutter single family on .25ac or 5 over one apartments.
- lokar 1y ago
  Yep. You need deep pockets to eat the carrying cost of a property while waiting years to get approvals.
keeganjw 1y ago
This is another huge myth in the US housing market, that big companies own lots of the housing and are jacking the prices up. It's simply not true. Large corporations own a tiny fraction of the market while the vast majority is owned by individuals and small landlords.
- pphysch 1y ago
  There's a lot of synergy and overlap between small landlords, property management companies, rent-fixing companies, and Wall St. It doesn't matter to the renter that their slum is owned by a tiny LLC that is nevertheless part of the broader constellation of anti-social rent-seeking behavior that is bringing down this republic.
- ruined 1y ago
  investor market share of homes is down from its peak of 20% a few years ago, but i wouldn’t call it a “tiny fraction” https://www.redfin.com/news/investor-home-purchases-stabilize-q3-2024/ https://www.redfin.com/news/investor-home-purchases-stabiliz...
- pantalaimon 1y ago
  That is not limited to the US, in Berlin there was a popular vote to expropriate housing companies with more than 3000 units. Yet those large housing companies charge on average between 7-8 €/m² and are nowhere near to holding a majority of the housing share.
- SilverElfin 1y ago
  Is it different in different places though? Like some places have more of this ownership problem and so it looks worse locally?
TulliusCicero 1y ago
> One legitimate reason to not think supply reduces prices is because of big financial companies buying up lots of houses and having effectively free rein to price how they want. Big corporations don't have unlimited money to do this kind of thing. And in practice, the expensive areas they do it in, are usually very limited in how much new housing goes up, they're still very much supply constrained markets. If what you're suggesting was really happening, then what you'd expect to see is an area with a relatively high vacancy rate (due to all the new supply), like 8% or even higher, but stubbornly high prices in spite of that. And I can't think of any examples where that happened. Can you?
- jimbob45 1y ago
  This is the propaganda they were pushing about RealPage too until it turned out that it was happening and the market was being distorted. At any rate, if a buyer notices it happening in their area, then "it's not happening that much" is not only not going to make them feel better, it's going to also make them feel like you don't want to fix it.
  - TulliusCicero 1y ago
    Again, do you have examples where a ton of supply was added to a market, the vacancy rate shot up to high levels, but prices remained the same? I agree that the algorithmic price fixing needs to end, though I think it's mostly gonna be strong in a market where vacancy rates are still low. Harder to maintain the cartel the more options people have.
- ruined 1y ago
  investors actually tend to purchase cheaper homes https://www.redfin.com/news/investor-home-purchases-stabilize-q3-2024/ https://www.redfin.com/news/investor-home-purchases-stabiliz...
segphault 1y ago
>One legitimate reason to not think supply reduces prices is because of big financial companies buying up lots of houses This just isn't true and isn't supported by the data. https://www.noahpinion.blog/p/corporations-arent-the-reason-your https://www.noahpinion.blog/p/corporations-arent-the-reason-...
dragonwriter 1y ago
> One legitimate reason to not think supply reduces prices is because of big financial companies buying up lots of houses and having effectively free rein to price how they want. No, its not. If only one big company was allowed to do that in each locality, and they had the ability to buy up all the supply no matter how much new housing was built, that would be a reason; absent monopoly power, they don't have free reign to price how they want, and can price higher the less supply there is, even if you assume all of it is owned by similar big firms and used as rentals.
k2enemy 1y ago
> Is it that they truly don’t believe it or they don’t want more supply If this comment section is anything to go by, there seem to be plenty of people that firmly believe that increasing housing supply doesn't actually increase housing supply, let alone the bigger leap that increasing housing supply decreases prices.

kube-system 1y ago

Colloquially you can see this in sentiments such as: "All these developers are building is just expensive new luxury apartments" And as the study mentions: > To the extent that ordinary people form loose mental associations between “housing development” and “housing affordability,” they may well associate more development with higher prices rather than greater affordability. New housing, being new, tends to be more expensive than existing, depreciated housing. It is just a perception bias thing. You don't really "see" everything around you aging because it happens slowly.

stego-tech 1y ago
Yup, and the kneejerk response from economists is that the housing cycle suggests that new luxury stock would be inhabited by buyers who own existing stock, and what they sell would be more affordable to those buyers, and what those buyers sell would become more affordable to the next rung down, etc. Except that’s not the reality. The reality is that a large chunk of the market (as much as 25% in some areas) is speculative in the form of PE-owned inventory and rentals. It’s not used as shelter, it’s used as a vehicle of growing capital. When that’s pointed out, suddenly economists blame the very same people who can’t get onto the “property ladder” for failing to “compete in the free market”. In a vacuum, their original idea makes sense. In reality, it’s heavily exploited for the gains of those already on the ladder at the ongoing expense of those they actively prohibit from joining them. It’s societal exploitation leveraging the singular most basic human need after food and clean water: shelter.
- whall6 1y ago
  Curious for the source on the 25% figure if you wouldn’t mind sharing.
  - stego-tech 1y ago
    It was a series of studies earlier this year that made media rounds; searching for “Wall street housing 25%” returns a myriad of results from mainstream sources citing a number of different studies and papers: https://fortune.com/2025/07/08/investors-buying-25-us-homes-sold-most-5-years-traditional-buyers-struggle-afford/ https://fortune.com/2025/07/08/investors-buying-25-us-homes-... I’m on mobile and can’t dig into total ownership figures at the moment, but I do know that in the sunbelt states property acquisition by investment firms has been a real issue. Even slumlords are getting bought out at top dollar, and affordable housing is increasingly just a trailer rented on land owned by - you guessed it - PE or REITs at consistently inflating rents.

idontwantthis 1y ago

You hear this shit all the time from politicians and activists. Somehow high density housing is built for corporate greed and won’t lower prices. It’s self contradictory at it’s base level but is driving the narrative. It’s maddening. Edit: Here I am getting downvoted by people who don’t have the bravery to confront their own contradictions and realize that their own beliefs are being manipulated to ruin their own lives.

LargeWu 1y ago
It seems to be driving largely by anti-capitalist sentiment rather than understanding of economic fundamentals.
- loeg 1y ago
  Anti-capitalist sentiment is a misunderstanding of economic fundamentals.
  - LargeWu 1y ago
    IDK, I think there's clearly arguments to be made against so-called "late stage capitalism", where capital is directed towards efforts that extract value rather than create it, and shareholder theory that prioritizes short term gains and creates externalities at the expense of other stakeholders. But at the end of the day, everything is subject to market forces and it's folly to deny that.
  - Lord-Jobo 1y ago
    Thinking a system is bad does not require a misunderstanding of the system.
    - loeg 1y ago
      You're rejecting a much broader claim than I made.

MBCook 1y ago

I can sort of understand that. They’ve been building houses in my area non-stop since 2010 or so. Prices haven’t gone down. There are other factors than supply. But most of the new supply is large houses. If you don’t want 4+ bedrooms and a 2000+ sq. ft. house the supply hasn’t changed much at all.

mattmaroon 1y ago
Well, you would have to compare it to an imaginary world in which they didn’t build those homes since 2010. Prices may not have gone down, but in the imaginary world, they might have gone up markedly so it has still reduced housing costs compared to if they did not build that much.
kube-system 1y ago
> They’ve been building houses in my area non-stop since 2010 or so. Prices haven’t gone down. Real or nominal? > There are other factors than supply. It is not uncommon for places with a lot of housing development to also be places with rising housing demand because it is a growing area. > If you don’t want 4+ bedrooms and a 2000+ sq. ft. house the supply hasn’t changed much at all. And many of the people buying large new home are moving out of a smaller existing home.
AnimalMuppet 1y ago
OK, that's an interesting point. There's not "the housing market". There are several markets, with some overlap. The market for starter homes is not filled by building 4+ bedrooms, still less the market for studio apartments. And my impression is that, when we talk about the housing shortage, we're talking about apartments to starter homes, not about 4+ bedrooms. So what we seem to have is a disconnect between what the market needs and what builders are building. But maybe that's only "seem". I'd bet that a 4+ bedroom house sits on the market a lot longer than a starter house. Maybe starter houses are being built, but not enough to satisfy the market, and so they're going almost immediately?
- MBCook 1y ago
  I’m sure it’s not zero that are being built. But it doesn’t seem like a very high number, at least compared to the number of large homes being built in new subdivisions.

stego-tech 1y ago

It’s not that I don’t believe adding supply will reduce prices, rather that adding supply alone won’t reduce prices. As the paper gets into, it’s a combination of supply, and homeowner entrenchment, and government policies barring construction or teardowns, of zoning restrictions, but also of Private Equity acquisitions of housing stock and builders, of artificially manipulating supply to keep prices high and promote higher returns for builders or sellers at the expense of buyers. The problem is that demand for housing is relatively fixed, in that every human needs a shelter, and every human wants a home. That doesn’t change outside of population statistics: in a vacuum, all things being equal, every human would buy a home. The issue is that the supply side is so heavily gamed by existing players that the entire market is deliberately engineered for maximum extraction of wealth from new buyers to prop up valuations of existing owners and builder/landlord margins. Relatedly, this is why I’ve stopped fighting each niche front individually and instead focused on the “nuclear option” of mandating affordable housing as a human right. That would open the floodgates to lawsuits against communities, states, and companies that hoard existing stock and bar newer, denser construction. It would add a sorely needed lever of pain to deter hostile housing practices, by threatening things like rent/price controls or forced divestitures unless the supply problem was meaningfully addressed post-haste.

mattmaroon 1y ago

If arguing about this on Facebook has taught me anything, it is that most people definitely do not believe it. They always make the same argument, which is that new housing stock tends to be high priced homes, so if what we need is low price homes why are we building high priced homes? Anybody who understands economics knows why this argument is wrong, but most people don’t. Nonetheless, I don’t think this has much to do with the public policy as it stands because the people who make the policy do understand this. So while I think the assertion is correct, people do not believe it, I do not think that is a large factor and why the policies restrict housing.

SoftTalker 1y ago

I think that what contributes to this view is that new construction always seems to be at the high end of the market. This makes sense, it doesn't cost the builder a lot more to build a $500k house than to build a $250k house, and building two $250k houses will take twice the time and close to twice the costs. So builders/developers are going to build what is most profitable, which is the most expensive houses that they think they can sell in the local market. What is less obvious is that this still increase housing supply. It's not new affordable housing, but the people moving in to the new expensive houses are leaving their old houses, and the people who buy those are leaving their old houses, so eventually the price drops happen on the older, smaller homes at the bottom end of the market.

entropicdrifter 1y ago
This makes sense in a world where the market adjusts rationally and there's an unbroken chain of people from different levels of wealth who can afford to buy houses. Unfortunately in the US right now, that is not reflective of the present scenario due to the immense generational wealth gap and housing bubble.
- pwarner 1y ago
  But that's a supply problem. Create the supply, prices will drop and that bubble and generational wealth challenge begins to heal.
  - entropicdrifter 1y ago
    The US has 28 empty homes for every homeless person. It's a market manipulation problem that's not going to go away for as long as we maintain the perverse incentive of using real estate as an investment vehicle. Japan has never had this problem and likely never will because housing depreciates in value there like cars. A 30-year-old house is often worthless or near-worthless in Japan.
- morkalork 1y ago
  And in Canada there is a huge amount of backlogged demand. There are areas where rental listings for roommates show two beds to a room and 10 people crammed into a house. Unwinding that is going to take a long time.

HPsquared 1y ago

People don't understand economics, generally.

dazc 1y ago
I remember when house prices doubled in the space of 3 years and it wasn't a supply shortage that caused this.
- LargeWu 1y ago
  Sure, because demand went through the roof. And demand is currently high again. So either we need fewer people, or more dwellings.
  - dazc 1y ago
    It wasn't a surge in demand either..
    - LargeWu 1y ago
      It was a surge of demand, driven by the availability of cheap money.
      - cloverich 1y ago
        Yes but thats misleading because the demand surge was people who want to live in the homes AND investors.
  - frabcus 1y ago
    Supply of finance is critical factor in this not mentioned enough in this thread.

jmyeet 1y ago

Private developers aren’t in the business of lowering property prices. And homeowners don’t want that either. You need to also consider what is being built. NYC has built a lot of ultra-luxury property that really amounts to money laundering and will never increase the supply to ordinary residents. The private sector will never solve this problem on their own.

9rx 1y ago

If you could build houses for free then obviously adding supply would eventually reduce the price. But I have been looking at the cost to build a home, it costs even more to build than to buy a used one. Who, exactly, is going to be able to afford to buy the new houses while selling their current home at a lower price than it would currently fetch? Maybe if AI replaces all the software developers they can flood the home construction market in their quest to find new work and push the price of labor down, thus reducing the cost to build a house, but otherwise...

TulliusCicero 1y ago
Presumably it's cheaper to build a home when a developer is building a whole bunch at once in a neighborhood, as opposed to a single person or family ordering something custom built.
- 9rx 1y ago
  Cheaper, sure, but not cheap enough to satisfy anyone who already cannot afford a home. Like cars, the used market is always going to be a reflection of the new market. Used houses are expensive because new ones are even more expensive.
  - TulliusCicero 1y ago
    I think it probably could be cheap enough. Part of the issue is actually just that new home sizes keep getting bigger. Like yeah, new homes are more expensive now even in relatively cheaper parts of the countries compared to decades ago, but it's also true that the homes are much larger than they used to be. A lot of the homes from the 50s and 60s that people talk about being very affordable at the time they are made, were very small things by today's standards.
    - 9rx 1y ago
      That is quite true. Early Americans had absolutely no trouble living in their 300 sq. ft. log cabin with eight children under foot. You don't technically need the behemoths we see today (or even what we saw in the 50s, which were still huge by historical standards). But it remains, if it was cheap enough, people would already be doing it. The law sometimes gets in the way, sure, but that's another subject entirely.

jonplackett 1y ago

While housing remains a great investment for rich people, I doubt anything else will make any difference. If you build houses, they’ll just buy them and rent them out for profit.

jeffbee 1y ago
"They will just buy them and rent them out" you have described investment. Funding the construction of houses using your capital and then letting them out to people without as much capital is how housing gets created. Just let it work! Let a guy build a house and rent it to someone.
- jonplackett 1y ago
  You know it is also possible to build houses people buy and then live in, right? House prices are so high because some people own too many of them. A home shouldn’t be an investment strategy
  - jeffbee 1y ago
    The consequences of your policy are that people without a million dollars are sleeping in tents.
    - danaris 1y ago
      ...How do you figure that? No one's trying that policy. It's certainly not what's led us to this point. Building is nowhere near fast enough to keep up with demand, especially in the areas with lots of homeless people, and especially in the affordable price ranges. Seems to me the policy that has the consequences you describe is, in fact, the policy you described in the GP. Reminds me of all the posts I've seen with photos of things happening in America—a country which is, quite famously, under capitalism—with captions saying "this is what socialism gets you!"
      - jeffbee 1y ago

legitster 1y ago

One thing few people take into account is that demand housing is much, much more elastic than people realize - per capita people are consuming far more square footage than they used to. Houses that were built to be house multiple generations under one roof now only hold one generation. Usually elderly empty nesters. In our area we also see people buying up lots of older duplexes or triplexes and converting them into single-family homes. So even areas where population is stable, and housing supply increases, it can result in very few tangible gains at the margin.

clausecker 1y ago
In the US, isn't this partially the cause of zoning laws banning anything that is not single-family homes from being built?
- pantalaimon 1y ago
  This is not limited to the US in the slightest
whall6 1y ago
Curious for a source on the sq footage per capita if you wouldn’t mind sharing. That’s very interesting. Could that also be explained perhaps by the fact that people are willing to live farther away from cities (where land / homes are cheaper and larger) because they only have to work 3 days a week from the office? Or because commuting is less painful with newer cars?
- wyre 1y ago
  I dont have sources, but the trend for larger houses was happening much earlier than the WfH trend. It's a mix of car culture, proprty value being lower farther away from cities so develops can create a high margin on building neighborhoods marketed on big, new houses.
  - potato3732842 1y ago

khalic 1y ago

This is not what the study says, it’s more nuanced. People do not believe that liberalising demand will solve the issue more efficiently than other measures.

JohnCClarke 1y ago

Thing is: people are correct. Central London monthly rent for a 3-bed house is around £3500, but a 1-bed flat rents for £2100. So split the house into two flats and the landlord makes more money. Hence relaxing zoning restrictions will push prices up.

lokar 1y ago
None of these models work at such a small scale. The economics are regional. It’s likely that highly desirable locations like central London and manhattan will always be expensive. That’s fine.

spy888 1y ago

Developers build new housing when prices go up generally. Therefore when people see new housing they see higher prices in their regional market. So although folks may mix up causality, the observation is quite rationale.

deleted 1y ago

[deleted]

gamechangr 1y ago

interest rates effect housing affordabiltiy more than inflation. This video implies high interest rates might actually help real estate prices interesting video : https://www.youtube.com/watch?v=lH8_4AiIxeo https://www.youtube.com/watch?v=lH8_4AiIxeo

stephc_int13 1y ago

The housing market is different than most markets in many ways. - Building cost is often marginal compared to land. - Land value is highly correlated to economic opportunities around it. - Economic opportunities are following a power law around economic centers (highly non-linear). - There is a density ceiling, with some variations depending on cultural traditions but still constrained by transportation technologies and psychological factors. - The location of economic centers is not randomly distributed but constrained by geography, especially access to water transportation routes. Financial speculation and building restrictions are second orders effects of the inherent housing scarcity, amplifying it, but not a root cause.

majormajor 1y ago

Nowhere in the US does it at the scale to make a serious long-term dent in prices. Nobody with enough money and exposure to large amounts of real-estate wants to kill the golden goose. Look at the post-Covid-migration build stories. Rents start to soften and development dramatically slows. Like Austin - https://austinmonitor.com/stories/2024/08/as-construction-slowdown-continues-a-new-workforce-housing-project-takes-shape/ https://austinmonitor.com/stories/2024/08/as-construction-sl... Or Denver - https://www.denverpost.com/2025/07/24/apartments-housing-real-estate-rent/ https://www.denverpost.com/2025/07/24/apartments-housing-rea... You would need continued serious government investment to make sure focus continues to be on total units and consumer price instead of investor ROI. Because even adding four fancy town-houses or condos helps if what used to be there was single-family or duplex. But it doesn't help NEARLY as much as adding 100 units by converting an old shopping center or 30-unit apartment. But there are strong incentives against developers doing "too much" of the latter if they know they can make the same ROI by selling fewer, nicer units. Individual residential property owners take a lot of blame here but they're not even benefiting THAT much - every crazy price increase is putting any upgrade to their own situation further out of reach. And fighting low-density residential NIMBY-ism is a slow process if you still only can buy one lot as a time as it becomes available. So focus on underutilized commercial and industrial near major hubs or transit corridors where most of what you're displacing is ugly parking lots and empty storefronts that contribute to crime as well.

taeric 1y ago
This seems to be claiming something different, though? You are pointing at that development slows as prices go down. Which seems somewhat expected? That is, adding supply lowers prices. And lowering price reduces potential profit such that fewer people will build. With fewer people building, prices should go up again. Stated differently, thin margins reduce the number of people offering products in a market. Ironically, the main way to get more building is with bigger builders in that scenario.
- majormajor 1y ago
  Well I'm saying that in practice adding supply hasn't lowered practice it has merely slowed the increase in prices. And that's mathematically essentially the same thing, but it's importantly different in two big ways: 1) If people see their costs going up while they also see new construction, the correlation machine's gonna jump to the wrong conclusions 2) If costs are still going up people are still going to be unhappy and worse off Supply can increase AND price can still go up, and so for people to be won over and convinced you need to crack the second part, not just the first part. In a libertarian "just reduce regulation" approach that's often pitched, the natural equilibrium will be closer to "supply increase and price go up slowly", and people skeptical of "just reduce regulation" as a solution are more accurate than they're given credit for. Gotta actively intervene to make supply increase enough for any sustained period of time - we only see it in cases of macro shocks. Like the 2008 recession, or the post-Covid-bullwhip.

kypro 1y ago

Immigration is a similar debate where supply and demand goes out the window for political reasons. Here in the UK it's really hard to convince people that it's really hard to address our housing shortage through building alone when we bring in about a million people every year. Even a lot of economists seem to think supply/demand doesn't apply when it comes to wages and house prices if you introduce immigration as a variable. Unless it's undeniable I find people will just believe whatever suites them personally. Which is fair enough. I guess I'm just surprised at how unconscious this bias is for most people. Or at the very least they seem to truly believe that the housing market is an exception to supply/demand dynamics.

amanaplanacanal 1y ago
The problem is an aging population. If you don't have immigration who is going to support all the retirees?

w10-1 1y ago

Adding supply would only reduce prices if it was added at the average or below. Even if the number of units increase, the price can actually go up. The relative market power matters most. A developer with cheap bridge financing and a large portfolio of unsold units has every incentive to hold prices to set expectations, while buyers who are occupiers generally are compelled to buy in a certain time frame and location.

lokar 1y ago

In the cost to build vs what would be affordable I think people on both sides over generalize. Liberal land use and other rules would eventually bring down prices to affordable levels for most families. But not all of them. Every country has to have some strategy to provide housing for the bottom of the income range, since they typically won't be able to afford "dignified" housing based purely on the Capex/depreciation/opex value of the housing (they will always be renters). So you need something like liberal land use to provide for 80%, and then some kind of government intervention for the bottom 20% (numbers will vary based on the location/nation/etc)

intalentive 1y ago

>Why is housing supply so severely restricted in US cities and suburbs? Urban economists offer two primary hypotheses: homeowner self-interest and political fragmentation. Homeowners, who outnumber and have organizational advantages over renters, are said to lobby against development to protect their property values. The fragmentation hypothesis emphasizes that development's negative externalities are borne locally while most of the benefits accrue regionally or nationally, leading localities to block housing. These two hypotheses sound like the same thing to me. Homeowners organize to protect themselves from negative externalities that affect their property values (and quality of life).

watwut 1y ago

The discussion under this article proves the title to be correct. Nice meta.

lossolo 1y ago

Housing costs mostly boil down to this stack: price of land + price of materials + cost of labor + margin + other (marketing, admin, fees, financing, etc.) When you try to boost the number of homes, you also boost demand for construction labor, materials, and buildable land. Those inputs tend to rise or at least not fall much, so there isn’t a big, easy savings there. That leaves soft "other" costs or developer margin. Other is a relatively small slice, and typical margins aren’t huge push them too low and projects stop penciling, so fewer homes get built. Even if margins were squeezed, the price drop would usually be too small to bridge the affordability gap for most households. The bigger issue is that household incomes haven’t kept pace with housing prices over the last few decades.

nis0s 1y ago

One problem that’s unaddressed is that there isn’t a house building, pricing and mortgage model for people making 50K or less. One piece of data I’ve found is that 65% of Americans are homeowners (meaning American families, not rentals or investments), which is also about the percentage of Americans who make $50K or more per year (~68%). For people with a middle class networth (not income, I mean networth, which is about ~1M-9M when compared with the top of US society), homeownership currently works as a wealth-building mechanism because of scarcity. There’s also the desire to live close to certain areas, but why not make more neighborhoods or areas worth living in? Regardless, if the goal is to maintain scarcity for wealth building, then I think the scarcity mechanism will remain intact if homeownership is increased to a high rate while balancing the cost of materials and labor, and building houses specially for certain income levels, as mentioned already in other posts. But no one seems to be doing materials innovation, or construction innovation. I don’t think 3D printing is there quite yet, and might be more expensive. Where’s the push on automating construction? Why not build with a genetically engineered bamboo that’s cheaper and more sustainable than wood? Seems materials innovation will help with both housing and sustainability goals.

yupitsme123 1y ago
In the past, people were able to buy a small piece of land and develop it themselves. Literally build the house themselves. Over a long period time if necessary to spread out the cost. They also built 2-4 family homes so they could bring in some rent or house a family member. None of this is really allowed anymore and it's very hard to find a piece of land to do it with. Enabling this sort of construction and forcing or incentiving small plots of land might open up options for people on the lower end.

cloverich 1y ago

People believe what they can see. New development happens in desireable areas and price goes up all around them. Meanwhile (mom and pop) investors buy and own significant chunks of the market. Together they tell a story. Disincentivize investor ownership, and it will be harder to tell the story of investors buying up all the property, and the rest may fall into place at best, and at worst you get marginally lower prices and less validation of the investor price inflation stories.

nathan_compton 1y ago

Wow, I'm totally owned. A few weeks ago here I argued that no one blames landlords and developers for this. I was specifically arguing that "the left" doesn't, but I'm actually really surprised to see anyone does.

crooked-v 1y ago
A huge amount of people on the left blame "greedy developers" for making housing too expensive.

dc1144 1y ago

No matter, it’s still a demand and supply issue. It just depends on where on the equilibrium point we are. This takes time. And yes, based on pure economics, supply will fill in the most profitable sections first.

lif 1y ago

hmm. What would happen if real estate investors/developers by law also had to dwell in the most dense type of housing they built? Hypothesis: Humans by and large are all looking for a bit more breathing room, privacy, and quality of life in their choice of home. (In other words, qualities diametrically opposed to the black hole compression cubicle end game of 'efficient housing for the masses').

barchar 1y ago

I'm sorta convinced we need to strongly discourage homeownership (of homes you live in) if we want to fix our housing issues. It just seems like once ~50% of the electorate are owner occupiers homes are treated like collectibles instead of normal productive assets.

BrenBarn 1y ago

I think another reason people think this is that people often do not notice there is a problem until rents have risen enough that they're noticeable less affordable. And when that happens, a small reduction due to supply increase is not really enough. It's not enough for rents to "go down", they actually need to become affordable. In places where a third of renters are spending half their income on rent (as some stats have shown for CA), it is implausible to believe that nibbling around the edges of the problem is going to result in enough of a reduction to make a difference. I haven't seen any estimates of how many market-rate units would need to be built to, say, reduce the number of rent-burdened households to 10% or 5%, but presumably it would need to be in the millions. I haven't seen any studies of supply/price issues that contemplate anything like that scale. Just as important, such studies generally ignore the issue of inequality. It doesn't really matter what rents are; if there is someone who can afford to own multiple vacation homes that sit empty most of the year, rents should be lower.