Comment by SamDc73 3 days ago
The solution is simple: loosen regulation around building, and let people build more!
When houses become an investment, that's when you start screwing young people! And it stops being an asset if you just simply build more
Land prices rise with income but housing constraints mean each family needs more land. Just look at the rental market in austin collapsing 20% while incomes continue to rise to empirically falsify your working paper.
upvoted then realized you are promoting LVT. this is why i think LVT is a terrible idea: https://news.ycombinator.com/item?id=44532444
land value is only a small part of housing costs.
I don't think you understand LVT based on this "not to mention the political debates/decisions over what constitutes "fully utilized"."
LVT doesn't require any such determination.
Anyway, I'm not opposed to the solution you mention as well. We should subsidize supply of housing, and supply at any price will serve the same purpose of driving prices down, so yes I agree we should build public housing for higher price points.
i no longer buy the YIMBY argument as the sole reason we have a housing crisis. it's a very convenient narrative if you work in/around real estate and a lot of smart people have been duped by it. we had no problem in the past building housing with current regulations: https://fred.stlouisfed.org/series/HOUST
to be clear, regulations is part of the problem in some markets but not everywhere. how are local regulations causing a housing crisis everywhere? this problem is happening everywhere, and local municipalities across the country didn't coordinate to cause this.
they stopped building after GFC bc it was too risky. market dynamics, the profit incentive, and now the cost for labor + material + borrowing costs is the problem.
this is a better solution: https://www.npr.org/2024/10/07/nx-s1-5119633/housing-crisis-...
> this is a better solution
this is very valid point! i agree. but some ideas are bad, like LVT, which will not make housing cheaper: https://news.ycombinator.com/item?id=44532444
Why would a larger supply stop private equity from buying it all?
If loads of housing is built and the price of housing starts dropping, firms won't want to invest in housing because they'll lose money. Unfortunately, a lot of politically active home owners also want to keep the price of housing from dropping so this is a harder thing for local governments to put into practice.
Same reason anything else keeps getting built when the price drops. Builders are not investors. As the price drops the cost of acquiring new land to build on also drops. As long as a builder has a margin between land + construction cost, they will build.
A huge part of the cost of building a house right now is the excessive regulation. By deregulating we will be able to build houses for less money and so builders will be able to sell them for less money. In addition apartments and especially larger apartment buildings are straight up illegal in many areas even though demand is high. Legalizing these units which are much cheaper than SFHs would allow all housing prices to decrease as some of the people competing for SFHs instead buy a condo.
Because if you get zoning out of the way, we can keep building, and keep building, and keep building.
Let them keep buying. But if we build enough, they won't be able to rent it all out. Are they going to keep buying to control the rent-able supply forever? No, they'll run out of money before we run out of buildable land. (Maybe not before we run out of wood, shingles, and labor though...)
And then you're left with huge ghost towns, like that one place in Seattle. This seems like a terrible solution, although it might work. And let's not even talk about the environmental impact, it seems to be a taboo nowadays.
Why not just prevent private companies from buying homes they don't use, and force them to sell the ones they are currently holding?
Right, ghost towns owned by private equity. So I'm not crying. I agree about the environmental impact, though.
"Prevent private companies from buying homes they don't use" is going to be a really hard sell legally. (Though, to be fair, changing zoning laws seems also to be a really hard sell...)
They already don't buy with cash, which is actually one of the only advantages of scale in real estate: big firms can borrow cash more cheaply.
Supply constraints don't explain housing prices: https://www.nber.org/papers/w33576
Land prices rise with income. Through all places in all points of history.
The solution is a land value tax.