The housing mar(ule)ket
The housing mar(ule)ket
Most of you probably know the memes about homes not being affordable to younger generations. It is true, that they are, at least, less affordable as illustrated by Figure 4-1. The reasons for that however aren't evil Landlords, who want to leech as much as possible. It is more a combination of several factors:
Years of Bad Politics™️ has led to too few houses being built and now there is a shortage. As any highschooler, after paying attention in economics for 30min, can tell you: low supply + high demand = bad for consumers
Following that, most young people want to live in big cities, preferably the few biggest ones. That puts additional strain on these local markets.
Another big contributor to this problem is that Homeowners want to keep the value of their homes up. Anyone wants their assets to rise in value. But since they are the ones who vote in local elections, they vote to keep houses expensive. That means weird zoning, no new Homes etc.
In defense of renting
Renting apartments or even Houses is a good concept. I pay some entity to keep my housing repaired, up to code etc. As a consequence I don't risk most of my net-worth being deleted by a storm or similar. Renting is more expensive than owning on average, but renters have none of the risk that owning implies.
I personally like fixing and modifying stuff. That includes Computers furniture and Houses. However I also know a lot of people who don't. They don't trust themselves to drill a hole in a wall. For those people shifting the responsibility of fixing smaller things to a landlord can be beneficial.
It also frees people up to move around, when their job/life requires it.
Solutions
Build more houses.
Its that simple. Cities need to rezone and remove houses in favor of multi-family buildings or even skyscrapers. Houses in a city make no sense. You want to be in a city to have a lot of people in a small area. Why would you spread out everyone in suburban wastelands.
If you want a house yourself, go to rural areas. I know you nerds are spending your entire social life on the Internet. It's probably way cheaper to get a fiber connection into the middle of nowhere than paying for city houses. "Mimimi, but there are no queer communities" Then start one. Imagine how powerful all you queer furries will be if you take your tech jobs remote and save like 70% of your housing expenses. Just don't spend the extra cash on more porn.
I know that when I'm done with my degrees I'll be building my lair where no ethics boards will find me. My machines will be efficient and my fungi growing fast.
If I have convinced you to embrace the hermit life, come join me. I am always in need of more minions.
landlords are part of the issue. they dont simply provide a public service and get payed for their work and risk. they sit on a vital resource that ppl need to survive and exploit that. landlords, especially big ones, extort as much as they can, consitently raising rents without good reason, while doing even less than the minimum amount of work.
no one is saying that everyone should own their own house but the landlord/renting model is exploitative shit.
really most of capitalism is like that but ig we notice it more when its so close to us.
OP: debunks magical thinking about landlords by pointing out that the law of supply and demand is a thing
You: "but but but whatabout my magical thinking about landlords???!"
Frankly, I'm starting to get real sick and tired of people refusing to get on board with solving the real problem -- zoning density restrictions -- because they insist on looking for some outside villain to scapegoat instead of admitting that the villain is us and the consequences of our own shortsighted NIMBY demands!
you do realise that supply and demand are just the enabling factors that cause landlords to be able to extort as much they want, right?
magical thinking about landlords?
what magical thinking? that they are greedy and unethical and try to make the most profit out of their control over a vital resource? what is magical about that? how exactly did op debunk that?
do you know why we have scarcity of housing? because capitalists profit from it. by keeping the supply lower than the demand, they can ask for more while doing less. its not in their interrest to construct more housing. the more they build the less profitable it becomes.
thats why i am advocating from moving away entirely from a profit oriented financing model and private ownership model for housing.
yes, my landlord is not individually responsible for the issues with housing. its a systemic issue. my landlord is still a leech that extorts me.
I mean, they can only do that, because people are willing to pay that. Just increase the supply and prices should go down. If they artificially keep them high, government should step in.
I mean, they can only do that, because people are willing to pay that. Just increase the supply and prices should go down
You could make the same argument about medical care in the US. Shelter is a survival need. You can't just go without it if it's too expensive. So (like medical care) it makes no sense for there to be no public option to exert downward pressure on the market. Really it makes no sense for so much of the stock to be in a market at all, but at the very least there should be a viable public option. (Public housing stock in the US is incredibly insufficient and there are decade-longs waitlists for housing vouchers.)
However, a large number of policymakers in this country (and probably most countries) are landlords and very few are renters. Expecting a class to act against their own interests because it's the right thing to do is naive.
Landlords are absolutely part of the problem in addition to these things. Housing should not be a commodity to be traded. Thats the problem.
I think there also needs to be a real national conversation on HOAs. 84% of new homes are built in HOAs because they rake in cash. They're also so annoying because we have so few consumer protections against them.
I recently watched a news story of how an HOA suddenly became extremely litigious with fines. Saying working on your truck in your garage is proof of habitation. Wood working tools in the garage are proof of habitation, the guy in the news story was fined for over 10,000$ in a short period of time, many of his neighbors simply had to move out.
They can do think because by owning the property, you automatically agree to their terms, even if they change. They can even place a lien on your home for not following their rules.
I think before we can discuss building more homes, we need to discuss real protections for the home owners and restrictions on the currently unbridled power of HOAs.
84% of new homes are built in HOAs because they rake in cash.
I think an even bigger reason is that local governments love them because they let them shirk their responsibility to maintain infrastructure. Private subdivision pools and playgrounds replace public parks, roads inside gated communities are private and therefore HOA-maintained, etc.
It’s probably way cheaper to get a fiber connection into the middle of nowhere than paying for city houses.
Oh, my sweet summer child. You vastly underestimate the obstacles to rural internet.
Fiber isn’t even close to an option. You might be able to get DSL, if you pay thousands of dollars for them to lay the line yourself. Being restricted to ~128kbps or dial-up is a very real possibility, even in 2024.
The bright side is, if you have one cell provider with good reception (and it will be only one of them that actually works out there), you can tether to a dedicated LTE hotspot for a pretty decent modern-speed connection. But say goodbye to watching Twitch streams live or playing any kind of high-performance low-ping game.
$10,000 connection fee plus $3/ft for the line last time I tried getting fibre into a rural area. They also wanted a 5 year commitment. 🤮
Still cheaper than the million you saved by not buying in a city tho XD
More than one thing can be true: the government should build public housing and landlords stand in the way of that because government action would undermine their "investment value".
It's not that much landlords but homeowners. They want to keep their property-value, so they vote to block any rezoning. And since they're mostly boomers they vote a lot and show up to local hearings etc. Landlords just don't have that much political power.
so, sorry about wall of text, but nothing is a black and white in reality like that perspective on the marked. Love the hermit life tho! would join - currently living in a collective in a city myself.
So the economic problem of landlords is that they accumulate whealth - that they use to purchase up new housing before it's buildt - this also ensures that the housing prices goes up; and as a requirement for return on investment - the rent goes up, even if you're just renting the shitty apartment they've had for years.
building housing is a solution yes, but it's obstructed by a lot (depending on your state/country) Like safety regulations; that usually are there to protect the inhabitants and the workers building it.
there is also the construction sectors economic motivations. There are no financial motivations to finish a project (usually), and instead the motive to actually finish the job would be on ensuring that you get new contracts. As long as the marked is that way for construction firms it will ensure that they take longer to build it, thereby increasing their profits, and actually have a job (as they are in essense work for hire)
and the stock marked: (forgive me, details lacking here as my knowledge is unuanced and especially lacking in the stock marked field.) the stock marked is tied to housing, construction firms, and land. And as the stock marked wants a line to go up as they also take out dividends off that, they invest money into it with the assumption that it will be profitable - this not only ensures that housing will get more expensive; but with the amounts of money invested the government also has a incentive to keep that housing marked expensive; as a crash would ruin the finances of not only quite a few individuals i would also ruing investment firms - and the companies that they invested in. Ie a housing marked collapse, like has happened in several countries the past few decades.
this is not an exhaustive list, but at least adds a few more reasons to housing expensive beyond they don't build enough.
and yes, renting is in concept not a bad thing, but in reality the renter ends up with the risk of the owner not actually holding the house up to code. At least in my country - the only time the house is checked is when it's sold; then there isn't the incentive to actually keep the house in good shape; instead the incentive is to get cheap black marked labour to make it rentable to as many people as possible with using the least amount of money. which usually introduces risk most people would never accept in their own homes. like electrical fires (at least in my own experiences.)
(for note, I live in norway, so it's not going to perfectly apply to all countries - though it should be somewhat similar)
Building more isn't going to solve the problem.
Simply put, the homeless population is exponentially lower than the current number of vacant housing units (which, basically means landlords are almost exclusively the problem).
From gigafact.org "vacancies have decreased, from about 19 million in the first quarter of 2011 to about 14.5 million in the last quarter of 2022.
Homelessness has also decreased modestly from 623,788 in 2011."
So, if each homeless person got their own house, even the kids who are part of a homeless family, there would still be nearly 14 million vacant housing units held by greedy landlords.
Edit: Even looking at the overall numbers, there are about 142 million houses currently, and there are about 332 million people.
See? Nearly double the people? We need more houses.
Families. Families are anywhere from 2-5 people on average. So again, looking at the homeless population, which is listed as individuals, it would take less than 1/14th of the currently vacant housing units for no one to be homeless.
I think in the US that's true, but most homeless people are in cities and all the vacancies in rural areas. The city vacancies are way too low.