No shortage of land in the US, but everyone wants to live in the same few places (for good reason), and those places have a lot of restrictions on what can be built where.
It's satisfying to blame a big bad "them" for this, but the problem is "us". We all want our properties to increase in value so we collectively conspire to suppress supply that would make our properties less valuable.
I don't want more students at my kid's schools, which are already at a 35/1 kid to teacher ratio.
That's it for me. I think that's it for a lot of people, whether they live in cities or suburbs or far out in the country. Very few people want more crowding. The people who like living in dense cities already live there.
Blaming greed and property values is just a distraction.
Build rail and deploy bussing like you fucking want it. Make it so good Japanese and European civil engineers ask you for help.
Noise?
That’s an engineering problem.
Teacher ratios?
Your property taxes too low for the services your community needs. Notice how I said need - it’s necessary. 20-1 is high, 30+ plus and your local governance is criminally incompetent.
You’re distracted by change and upset that you need to adapt to a world that’s moved past you. Tale older than the dirt we walk on.
Its easy to say "just build trains." It is much harder to actually do it. New rail costs on the order of a billion dollars a mile in American cities. It is not financially practical to expand rail service because of this. What usually ends up happening when suburban areas densify is just that traffic gets worse. It makes sense that people are worried about that when theyve seen it happen many times.
I don't really care about how much it costs to make America look like a modern, 21st century place like the rest of the developed world. Americans deserve to live in a place that gives them services like the rest of the world has.
Deploy the army Corp of engineers, tie to a massive jobs program with expedited eminent domain. Fund it by closing loopholes on wealthy tax cheats, tax unrealized gains for billionaires, tax loans against stocks, tax private jet travel 100%. And on and on.
These are all solvable problems but no one has the will because the people empowered are too fucking comfortable watching the planet get destroyed while people die deaths of exposure and despair by the millions.
When you say "just bring in the army corps of engineers" everyone hears "we're not going to solve the problem" because the odds of that happening are extremely low compared to the odds of everyone just putting up with things being a little bit worse. We need to rebuild faith in our government in order to undertake projects that cause change.
> The people who like living in dense cities already live there.
One would then think that dense cities would build more housing, but that doesn’t seem to happen. NYC, SF, and Boston are the densest cities in the country and build barely any housing compared to areas like Houston and Austin.
I also just think it isn’t true that everyone who wants to live in a dense city does. My experience is that a lot of people would absolutely love to live in NYC but can’t afford it, and I think this is primarily because there is not enough housing.
That's because few really like unbound density, people who move to cities want more density than a SFH-on-an-acre and/or perhaps can tolerate more of it but they do not enjoy density per se and don't "upgrade" by moving to even more crowded conditions just for the sake of having more nuisance.
Sure, many people would love to move to NYC, but how many people would chose to move to a tiny apartment over a giant penthouse in there, if given such a choice. Say the employer pays for housing with no cost to the individual and no limit, how many people would go for the smallest place in their preferred location and how many would go for the largest? If the former group is in minority this would explain how the cities, ruled by a democratic process, do not strive to pump density.
So your assertion is that if all the open space near me was mowed down to make room for massive apartment complexes, then I would actually experience less noise and traffic.
It's a bold theory but not one I want to try out in practice.
Well since it sounds like you’re in a suburb or semi rural suburb, then you likely won’t need to speculate on that. Just wait a few years and you’ll find out.
Because instead of infill density in cities, the sprawl will keep up its creep. Low density building makes that certain.
With how it goes with new development in American suburbs, it’s going to be car oriented and increase loud traffic and make walking unpleasant. (Although it’s probably already not very walkable)
Someone on the new edge will repeat your gripe, rinse and repeat.
Right so we are in agreement - I will experience more noise and more traffic in higher density, and I have every right to complain about it. My complaints may fall on deaf ears, but that is neither here nor there.
I think you missed the forest for the trees. Because Low density car oriented building is what’s going to cause your neighborhood to turn into a concrete jungle.
You’ll see that it’s true once you decouple the idea that one person == one more car on the road.
Aside from lawn equipment, the noise pollution I suffer from in my streetcar suburb in a major metro is almost completely from cars and other fossil fuel motorized vehicles.
I was out in a fairly high earning suburb recently and the backyard was constantly inundated by the roar of a not so nearby highway.
Like, what exactly do you think people do to make noise?
Counter example: Europe, Japan. It's perfectly possible for a city to grow denser of people without growing denser of cars.
My inner city neighborhood is quite calm and quiet, because the city has decent public transit with three different modes within 3 minutes walk (besides decent biking infra).
Tokyo. There's 38M people in the metro area, and the amount of cars is nothing even remotely like what you see in an American city like Houston.
When you build the city densely and don't give away free parking anywhere, it makes people not bother with driving very much. There's no place to park here, except for a few very expensive private lots that probably aren't close to where you want to go. There's no street parking. Renting a parking space at your apartment is very, very expensive (because they could be using that for something else that makes more profit instead, like more apartments or a convenience or grocery store). And you're not even allowed to own a car here unless you can prove to the police that you have a place to park it: they'll even come with a measuring tape to be sure that particular model of car will fit.
Closer to your home, maybe you should visit Amsterdam, because you've obviously never been there. There's lots of people living there without a car, and the amount of car traffic in the city center is quite low.
This is true for Belgium as well, that traffic in the city center is essentially nonexistent (after 12h and the trucks delivering goods leave) in the major cities.
But living in these car-free zones is at least double as expensive as outside (and the more central, the easier it is to live car-free, the more expensive it is). It is also totally unrealistic to live there with a family, and if you want a job in center of Brussels and live in Mechelen (for example), you need a car. Train is barely doable and only if your employer is dead center brussels (e.g. Diegem, where "the internet lives", is not realistically reachable)
America isnt the Europe or Japan. Unfortunately things that work there do not work here. I would like that problem to be solved, but just saying "well they solved it" isnt the same as actually solving it.
And this is wrong. If you build proper mixed housing/commercial with local markets, bakery, park, coffee, restaurants, etc. You will end up reducing car use to what they are best for. But for this paradigm to exist, you need density. I lived in NA almost all my life (California, Pennsylvania, Montreal and Vancouver) and I am currently in Spain and let me tell you, density != cars.
No. In most American suburbs you can get more density by taking 2 single family homes and replacing them with one 6-plex. You’ll also have more open space, because a 6-plex takes up around one single family lot. Especially if the 6-plex can be 4-6 stories tall. Everyone can have more (private) interior and more (shared) exterior space if the neighborhood allows a little bit of density.
As a bonus having more neighbors means things like grocery stores within walking distance become good businesses, so you need a car dramatically less and less space needs to be taken up by parking lots.
You are right, and I will amend my statement. I will get more noise and traffic if the open space near me is mowed down. I will also get more noise and traffic if all the single family homes near me are replaced with 6 plexes.
I assure you that neither of those are a good outcome as far as I'm concerned.
Not necessarily: it depends on the traffic speed. If all the cars are traveling at 20mph (using American units here), then sure, streets will be quieter. Over about 35mph, they don't: tire noise becomes the main noise factor at higher speeds.
We really need more public transit, though there also exist pavements that reduce road noise (most of it comes from tires) considerably… it’s just that it’s more expensive (and more effective) than noise walls… but government mandates say noise walls are “adequate”.
It's economically viable here in Japan, and most public transit here is run by private businesses.
There's no way you're going to make public transit work in the American suburbs: you're better off hiring taxis and letting people use those for free, because at least the taxis won't create so much pollution and use so much fuel. Running buses every 10 minutes in the subways with 0-2 riders will never be practical.
How is it not viable in Japan? It's clearly working fine here. No, they're not subsidizing the trains with real estate; their financials clearly show that (though they get more profit from the real estate, granted), but there is a network effect: operating the train line brings foot traffic to the station and the area around it, making the land around the station very valuable.
Maybe western countries should learn a lesson from this, instead of somehow expecting public transit to always operate at a loss. The transit itself makes land valuable, so why not use that as an opportunity for profit? Here, even inside the stations, they rent out space to convenience stores, vending machines, cafes, etc., so they make direct profit just from that, but over in the US they seem to be allergic to doing that (nor do they even have bathrooms in the stations!).
I could never understand why some people don't understand that people buy into a community because they like the community in the state when they bought into it. And that making large changes to the community would alter the community and what people liked about it will be diminished. Not to mention the practical aspects like utilities, road capacity, schools, etc. as you've pointed out.
For some reason, some people outside a community believe they should have a voice on what the actual community wants. As if a community should be expected to want to ruin what makes their space attractive so interlopers can infest it?
Some development where it makes sense - sure. But no, we aren't converting our homes and properties into multi-family dwellings.
I used to agree with this when I was a kid. Then I realized that it’s literally just a part of live in a modernized country.
Both my wife’s and I home were “out in the country” when we were kids. Now they’re surrounded by houses. The same pattern is basically everywhere. If you want the community of 20 years ago, move to a new one that looks like it.
It’s simply part of the constant change of life. Being bitter over it isn’t helpful or anyone.
I don’t understand your point. Every town in existence was “out in the country” at one point. The land owners/community made the choice to subdivide and develop the land. But it was their decision as a community to do this.
My town was a bucolic paradise at one time and then in the late 19th century a few of the regional villages merged and the community of land owners began to subdivide and develop the land and establish a new town. And now it’s highly desired. This was their choice to transform their holiday community into the bedroom community it is today. And now us, as the land owning community, get to decide how further development goes. Not interlopers with no skin in the game. And we do develop new things but they’re rightfully contested and very carefully decided upon because this is our home.
I'm probably one of those people you're referring to, and quite honestly it's not that I don't realize or understand - it's that I don't care. The community you love wasn't always that way - it changed to become what you enjoy, likely to the similar anger/detriment of the previous residents who like the "old" community. I imagine racial segregationists and apartheid advocates used disconcertingly similar arguments.
Ok. So hoefully you can see why people who like their homes and their town will rationally do everything possible to oppose a person who is an outsider and comes in saying they don't care about anything the residents enjoy and just wants to change it all (destroy it)?
Building turnover is such that you can’t really destroy it all to be fair. Either way its not your town, you just live there. Who builds on land? Not people who show up and say you should build on land. No, its the landowners who build on land. You don’t have claim for what other people ought to do with their land. If they think its a good business decision to build and apartment on their land, so be it. This is america, not a feudal society.
Your last point is very important. Zoning at a federal level would be required to clear some basic anti segregation. Would it be perfect? No. But the zoning in my town is 100% in the same spirit as redlining. No one would describe themselves as racist or classist. Maybe that's just human nature?
So, if I convinced a bunch of people in nearby rural areas, none of which live in your city, to demand to your mayor to do things in a way you personally dislike, you would welcome the change with open arms? Or is your belief that all external change is good only extend as long as you personally do not receive repercussions?
This mentality is the same one that’s leading California and New York to ruin, by the way. :D
Can you understand why a community would want to exclude you? That antisocial attitudes like this are shunned accordingly and projects that would attract them are avoided. We actively select to avoid these kinds of antagonistic attitudes getting a foothold because we know what makes our community attractive. Certainly it isn't people that "don't care" about what the community values. You'll need to find somewhere lower rent for that.
> The community you love wasn't always that way - it changed to become what you enjoy, likely to the similar anger/detriment of the previous residents who like the "old" community.
How do you know this? Likely even? Communities do change, of course. But there's a reason why the most highly sought after places continue to be the most highly sought after places and it isn't because they gleefully rip down the very things that make them sough after. Especially so "don't cares" can move in and not care about the place.
> I imagine racial segregationists and apartheid advocates used disconcertingly similar arguments.
What does that have to do with a community wanting to limit and select what they consider appropriate development in the modern age?
> That antisocial attitudes like this are shunned accordingly and projects that would attract them are avoided.
I don't find them antisocial whatsoever. Especially since, to my reading, the wider society is _ better_ because of the change. New communities take root and a better place arises.
Regardless, the community will change wether you want it or not. I find it rare that people wanting to stop something from happening get what they want. It's rather the people that want to build something that actually get stuff done.
Never said anything about not wanting to build something but rather the community determines the terms. This is how it goes and will in any non-tyrannical society. The stakeholders are the key constituents when it comes to decision making. Not outside interlopers.
But there is so much inefficiently-used land and so many cities that you don't have to deliberately go into an existing town and change its nature head to toe.
There are plenty of already-urban areas that have poorly-used lots that could benefit from building more urban housing. Why not start there? Keep like housing styles together: If you're the one single family house in the middle of a city surrounded by dozens of apartments, then yea, that lot should probably be re-developed into an apartment. The single family home is out of place and the neighborhood is already set up for dense living.
But if you're in a small town that's all single family houses, it doesn't make sense to re-develop a random sampling of them into apartment buildings. 1. They'd look out of place and 2. These small towns don't have the infrastructure to suddenly 3X-10X their populations. They'd need more schools, transportation, electric capacity, water/sewer capacity, trash collection, retail, industry, everything.
> For some reason, some people outside a community believe they should have a voice on what the actual community wants. As if a community should be expected to want to ruin what makes their space attractive so interlopers can infest it?
I don't understand the notion that that community exists in a vacuum where they're entitled to be insulated from the world changing around them.
I don't think that it's entitled to be insulated from the world changing around it, but I do think that the residents of, say, Palo Alto, should have more say about the planning and permitting in Palo Alto than I do (living 3000 miles away from there), no matter how much "some people outside a community believe they should have a voice on what the actual community wants."
I don't live there; I shouldn't have any say on their policies (except via federal law-making, limited by the 10th Amendment delegation of powers).
Why letting each city have the entire say on its planning is very obviously going to end badly for society. it’s not hard to see it’s a prisoners dilemma or tragedy of the commons type fiasco.
I have a hard time believe that people aren’t aware of that. Especially since we tried it for decades and the obvious happened - it has gone horribly.
Of course the average current home owners in Palo Alto doesn’t want it to change. But Palo Alto doesn’t exist on an island or something. Why would the nearby towns have different views? Mountain View doesn’t want to change! San Mateo doesn’t want to change!
Wowza! How about that, now the entire bay won’t change if left to each town.
And you know what, for decades that’s what we did and we can see what happened. All we got for it was a massive housing shortage.
We tried letting towns set their policy. It went horribly, as it obviously would.
It’s like Kant, would the outcome be acceptable if all the similar actors took this action? No? Well why shouldn’t they if this town does it.
They should have some say, but they should not be able to act as a cartel and prevent permitting altogether. And I say that as a new homeowner.
General zoning policy should be decided at a state level (or federal) - like in Japan. Otherwise, no individual community wants more development (of course), but it's a bitter pill that they have to swallow together if we want to solve the housing problem.
Anyone who lives in a area with hundreds of competing jurisdictions sees this problem everyday. One tiny village says yes the neighboring tiny village files a lawsuit. The smaller the jurisdiction the more desperate the government is for funding and tuft.
> I could never understand why some people don't understand that people buy into a community because they like the community in the state when they bought into it.
And the guy who bought 10 years before you hates you, the newcomer, changing their neighborhood and ruining its character.
Probably not since I haven’t tried to force dramatic changes to the character of the town. And I’ve poured quite a bit of money into renovating my home making the neighborhood even more desirable.
In essence I found a neighborhood I liked and I’ve made sure I fit in rather than an interloper that is trying to make a quick buck at the towns long term expense.
Asking people to sacrifice for the greater good requires that they trust their leaders and systems to do everything possible to maximize the benefits and ameliorate the harms. Absent that, it’s every man for themselves.
Asking people to sacrifice for the greater good is generally a non-starter and I'm not just taking about housing. It's certainly not something to consider when planning public policies.
> Presumably double the density you also double the size of the school and double the teachers.
It's not that easy. If you doubled the density, maybe there is nowhere left to go for the school to expand, or the land is now so expensive there is no way for the town to afford expanding the school.
My town is an example. The middle school had two quite large empty lots on two sides.
Those lots have now multi-story apartment buildings in construction. Presumably those apartments will attract younger families who might have kids going to middle school. But if that school ever needs to expand, it is now boxed in by housing on all sides. Time will tell how it goes.
Won't solve the worse than 35/1 student/reacher ratio problem of ancestor post if those extra classrooms won't have teachers in them. Seems like increasing teacher shortage is a problem in the US as well as here in the EU.
Here in the Netherlands, already a generally densely populated country, there's a teacher shortage everywhere, including cities.
People rather have higher paying jobs, or quit because the job disappoints. I belong to the latter group. I quit teaching at secondary school (ages 15-18). After three different schools in three different areas, and having spoken with many colleagues and their experiences, I sadly had to conclude that broadly the work culture in secondary education (in this country, at least) is dramatically lacking professionalism. To a point where I think if my goal is to teach the next generation well enough, my time and energy is better spent elsewhere.
Around here, a lot of new teachers give up after 1 year. After a draining day in the class, checking their homework, prepping the next day, the governement gives teachers an additional mountain of paperwork to fill in, and parents want to discuss everything.
A second problem is kids found out they can get everyone fired for claiming sexual harassment. Especially male teachers are scared. A brat utters a single sentence and you'll never work again as a teacher, and all your neighbours hate you.
> Teacher shortage mostly happens in sparse communities not dense ones since it is easy to find teachers where lots of people live.
Only in medium density cities. Once you get to very high cost of living areas, finding and keeping teachers becomes extremely difficult because there's just not enough money to pay them enough for the cost of living. Many teachers either move to cheaper areas or change careers to high paying jobs.
There are a lot of problems, none of which are going to be addressed if the only focus is property values.
A school was knocked down in my neighborhood to build a pricey apartment complex. The district and the developers made a bunch of promises about how current schools would be expanded and more resources would be available. Those were all lies, of course. Apartment complexes make money, public schools do not. Guess which one wins.
> No shortage of land in the US, but everyone wants to live in the same few places
It's not enough to have land, though. The land needs access to water and electricity, not to mention roads, or it's a nonstarter, especially if you want to build a bunch of homes on the land. And the new homeowners will need access to food and supplies, i.e., stores. You need an entire community.
Very true. There are many areas in the US (Detroit for example) that have lost population over the past 50 years that wouldn't have to start from scratch with new development.
The homes from detroits population high did not sit vacant and maintained over the decades. They rotted apart and many were razed. Much of inner city detroit really would be like starting from scratch considering the amount of vacant greenfield land available.
Assuming infrastructure serving vacant lots were maintained by a famously insolvent city budget is a big one to make. Sometimes replacement or retrofit are vastly more expensive than greenfield development.
That's a bit of a strawman though. There are plenty of cities and towns that have infrastructure and have stores at some level that have much lower costs. (They may or may not have good local jobs.) It's not a choice between NYC/SF/etc. and the wilds of Wyoming.
I'm not sure what exactly you think is a straw man?
When the OP said "everyone wants to live in the same few places", I didn't interpret that to mean specifically NYC/SF, because that's plainly false. I interpreted it to mean urban vs. rural/undeveloped areas in general.
But the problem is that home builder cartels exist all across the country, and they own a lot of the desirable land around the urban areas. For example, in my own area of Madison, Wisconsin, we have a company Veridian Homes that owns giant tracts of land all around the outskirks of the Madison area. They're the dominant home builder here.
It was in reference to: The land needs access to water and electricity, not to mention roads, or it's a nonstarter, especially if you want to build a bunch of homes on the land.
(The comment may indeed be true--sort of by definition to at least some degree--for new construction, although getting that access can be pretty straightforward, to the degree anything involving construction is straightforward. It's more that housing prices are an issue in popular places where a lot of people want to live. And, yes, vibrant college towns fall into that category although not to the same degree as elite cities.)
Fair enough, it would be possible to scale up smaller towns, much smaller than Madison. However, I'm not sure that's practical, at least to the extent required to meet the housing shortage, for several reasons. First, the reason you already mentioned: "They may or may not have good local jobs." Second, there may not be enough home builders available in smaller towns. The builders themselves have to come from somewhere, and they're likely to be somewhat scarce the smaller and more remote the town.
I just don't think the conspiracy that the OP postulated, "We all want our properties to increase in value so we collectively conspire to suppress supply" is a very plausible explanation when applied in general to the entire country. For example, again in the Madison area, most of the home building is occurring not in the city proper but rather out in the suburbs and exurbs, which are independently governed. Indeed, in a fast-growing suburb, the property values can actually increase as homes are built and the town becomes a more desirable place to live.
The neat thing about capitalism is that stores will be built to serve the community if there's a market for it. We don't need to centrally plan the whole community up front. We do need zoning laws that ALLOW those stores to be built though.
Those are about rural communities. It makes perfect sense that a very low-density community doesn't generate enough demand for a robust grocery store. The 2nd article mentions that the community used the newly built grocery store for a while, before going back mostly shopping at a Walmart 30 miles away. My guess is that those people were going to that Walmart anyway for this or that in many cases. So at that point, why drive to two locations, esp for most people in the rural area, that grocery store isn't actually that much more convenient, and can't compete on price with Walmart?
Food deserts also exist in urban areas, particularly poor and historically disadvantaged communities. No magic to capitalism - the local communities don't get a grocery because they can't pay (and, of course, other reasons), even if the population density is high.
> The neat thing about capitalism is that stores will be built to serve the community if there's a market for it.
I am pointing out that this is not a given, magic that will just happen. Capitalism is not always efficient nor reliable, based on the evidence.
> before going back mostly shopping at a Walmart 30 miles away. My guess is that those people were going to that Walmart anyway for this or that in many cases. So at that point, why drive to two locations, esp for most people in the rural area, that grocery store isn't actually that much more convenient, and can't compete on price with Walmart?
> I am pointing out that this is not a given, magic that will just happen. Capitalism is not always efficient nor reliable, based on the evidence.
I said 'if there's a market for it'.
The simple fact is that these rural communities are just not as economically viable as they used to be. Most rural communities exist around 'base input' types of industries that made money by exporting stuff extracted from the land. Farming, mining, logging, etc. The community existed because extracting those resources required a lot of labor, and that labor wanted to buy services after work. When you had 100 people who worked in the fields all day, they'd come back to town and patronize local bars, stores etc. However, farming, like mining, has continued to become less and less labor intensive because of better automation. There isn't 100 people coming back from the fields in most cases now. There's 1 dude who was driving a combine harvester all day. Or a planter, etc. And more recently, its one guy who was monitoring a dozen combine harvesters that were self-driving based on GPS.
Editing in a reply to below comments bc depth limit.
> This is why I'm very pro remote work for the broader economy.
> It's much easier for remote workers who want to live in rural areas to patronize these local bars, stores, etc, when they're not already commuting to places with a much larger collection of services.
I'm also pro-remote work, but even if every job that is do-able remote becomes remote, that won't revitalize every rural community. No one is moving to North Dakota just because they got a remote job. The US is just too big and the number of remote-able jobs is too small. Sure, some rural communities, with particularly nice outdoors, etc will be winners. But you need actual 'large' numbers of people to sustain those local bars/stores. A few software developers moving to a dying mining town is just not going to be enough patrons to sustain a bar, stores, schools, etc. Even if they all keep their 500k Google paychecks, they can still only drink so much beer at once.
> In which case, that reminds me:
> The neat thing about central planning is that it can invest in things-- like rural electrification-- which are cost prohibitive for a market-based solution, if/when that need arises.
> So would you agree they are both neat in their own way?
Yes, they are both neat in their own way. I like that the post office has to deliver mail to everyone.
Central planning can react faster than the market, if the central planners have good foresight. But they can't see into the future either. If you have some rural mining community that could sustain a population of 5,000 in 1970, it made a lot of sense to electrify it. But then 40 years later, the mine is more productive than ever before, but only needs 20% of the labor because of advances in automation. It kinda sucks that you built an electric system sized for a population of 10,000, right? Cuz now you have a town of 5,000 where unemployment is extremely high.
Though I'd argue that rural electrification at this point (or in the next few years) is probably best by a home-solar-battery combo.
The neat thing about central planning is that it can invest in things-- like rural electrification-- which are cost prohibitive for a market-based solution, if/when that need arises.
So would you agree they are both neat in their own way?
This is why I'm very pro remote work for the broader economy.
It's much easier for remote workers who want to live in rural areas to patronize these local bars, stores, etc, when they're not already commuting to places with a much larger collection of services.
The problem with remote workers is that they will only move to a town after there’s a healthy crop of local businesses competing for patronage on quality.
So they can’t become the motive for such businesses to start in a town. It’s a crop of local workers flocking to location-specific, non-remote job opportunities that creates that attractive opportunity for service businesses to follow.
To be fair, rich people could theoretically jump start the process by paying people to open businesses in a town. It just takes startup costs. And if the flywheel gets going, you could see a new "popular" town spring up.
"if there's a market for it" is a big weasel phrase. It lets you ascribe fault not to the system, but to the people who 'chose' to live in such a non-marketable way.
Even if we accept that: what would you have those farmers do, then? Capitalism has hollowed out the towns that supported them, and now you say that the free market will handle the rest: to me that sounds like a recipe for headlines ten years out saying stuff like "The farmer shortage is quickly becoming an issue of national security."
And it's not just a rural issue either. AFAIK the term originated, or at least first became popular with reference to urban areas: e.g. map of these in New York https://www.arcgis.com/home/item.html?id=a20cc15bc7cf49939c8...
These people did the "right" thing and moved to a city, even if they had to take up residence in cheaper homes to do so. Yet the market still doesn't want to serve them.
> The neat thing about capitalism is that stores will be built to serve the community if there's a market for it. We don't need to centrally plan the whole community up front.
There's a chicken-and-egg problem here, though. Would you buy a new home and move in with no groceries or other stores in the area yet? If there's an existing community, then yes, stores will be built eventually, but that can't just happen overnight, so how do homeowners survive in the meantime?
That's why most new housing is built in the suburbs around existing cities. All of the amenities needed by homeowners are already nearby, or at least within reasonable driving distance. Starting a new community in the middle of nowhere would be extremely difficult, and would certainly cost a lot more money to the home builders, reducing profit.
If "we" all got together and reduced permitting costs, "our" homes would be much more valuable because a developer can build a highrise where the house is.
The fix is to enshrine remote work for jobs that can be remote (labor regulation and whatnot), enabling labor mobility to where housing is affordable, but the ideological challenges prevent that. So, instead, we gnash teeth and say there is no solution while we slowly build more housing stock and hope that'll catch us up eventually. It will, eventually, as immigration slows, and the death rate exceeds the birth rate and household formation (see: Japan), but that will take time.
To destroy housing values to increased affordability, you must destroy locality as a value factor.
> The fix is to enshrine remote work for jobs that can be remote (labor regulation and whatnot), enabling labor mobility to where housing is affordable,
Not really a fix. When people's location becomes free from their jobs, they don't move to remote locations where land is cheap. They move to cities they want to live in, or cities where they have friends and family.
The subset of people who prefer to move to the middle of nowhere and prioritize the cheapest housing above all else is very small (and probably overrepresented online)
But they're a lot more willing to choose outer exurbs or nearby towns that have a lot more space, or if they really prefer city life, are more willing to consider cities with good lifestyle/affordability but second-rate job opportunities. This rebalancing is still overall good for everyone.
And some move to established mountain towns and the like. But, yeah, in general there are a lot of good reasons to move to the periphery of decent-sized cities if you don't care much about city amenities day to day. That doesn't help you much with housing prices in the Bay Area necessarily but it does in a lot of places.
Why wouldn’t a remote worker be good for a city? They pay taxes but use a fraction of infrastructure and services as a commuter. They don’t need a second job site reserved elsewhere in the city. Its like a free bingo square for the city.
I feel like I need to make this point again and again: It's not about increasing the value of properties for most (after all, allowing apartments to be built in your neighborhood would increase the value of the remaining SFHs). It's about keeping the character of the neighborhood the same as it is now (SFH vibes), and all that comes with that ("family friendliness", etc).
I think people in the US overestimate how much upzoning "has to" affect most neighborhoods, especially infill development or removing default single-family home zoning. I used to live in Minneapolis, which has lots of century-old duplexes and fourplexes mixed in with single-family homes on similar lot sizes. Traffic, activity/noise, appearance, and overall "niceness" were almost the same as on single-family-only blocks -- but the bump in density supported lots of corner stores and restaurants in walking distance that made people want to live there or visit the neighborhood for the day.
Part of the apprehension might be caused by the difficulty of rezoning itself. The only people with the determination and money to get a zoning variance are big developers who need a big building to make it worthwhile. That's how you get 50- or 100-unit apartments going up in single-family neighborhoods, and a "missing middle" of density and affordability.
Is it not contradictory to say that traffic/activity/noise are almost the same, but it'd support lots of corner stores and restaurants and people would want to visit the neighborhood? The entire point of living in a suburb is that people who don't live here have no reason to be here. I actively do not want a restaurant or a bar or a coffee shop a block away from my home.
As counterintuitive as it seems, that was my experience living in one of those neighborhoods and visiting others over several years. A handful of small stores on one block or corner every half-mile really doesn't induce that much traffic. It's an entirely different scale from a commercial district or even a car-oriented strip mall.
Even in small cities in Spain, central areas are high density with three or four storey mix residential buildings.
I chose a random small city in northern Catalonia called Vielha and viewed it on Goggle Maps, there they are. They look different to Eixanple apartment buildings, but they are there in the centre. Population less than 6k.
Chose another, Gironella, a bit further south; population around 4k. One less floor on the multi family apartment buildings in the old centre, and a much higher ratio of SFDs to MFDs in the settlement as a whole, but still there.
If the yardstick moves to "three or four story residential buildings are present" from "every block is 4-story apartments", three story apartments/multi-families can be found in many cities around the US as well.
They’re multi family apartment buildings. Rather like those in the Eichample, but with a different exterior style, and of course without the famous block chamfer.
I agree, and I think even the folks who are against that would actually end up enjoying it more. But people hate change, especially when it means changing something that has been that way for generations at this point. My main point though is that people who think this is about money are simply wrong. Trying to argue numbers with these folks will not move them an inch. It has everything to do with emotion.
> I agree, and I think even the folks who are against that would actually end up enjoying it more
That's a pretty remarkable belief. Many of us happy suburbanites have lived in large dense cities in our younger days. We are not ignorant of the joys of city living, we've just changed priorities.
The neighborhoods I have in mind here aren't "true suburbs" but rather "pre-war suburbs" that are already fairly dense. Think west SF, Fremont/Ballard in Seattle, etc.
Zoning that mandates low densities is used to economically segregate areas. They're invisibly gated communities enforced by the government. "Can't live here unless you can afford to buy/rent this much land."
One of the things I noticed while living in Munich was that the differences in apparent neighborhood prosperity in different parts of the city were vastly less extreme than in major US cities. Almost every neighborhood looked kind of vaguely middling, it was rare for a place to look obviously well-to-do or obviously run down.
And it makes that it's harder to get extreme differences there if at least medium density dwellings are allowed just about everywhere. Working class people may not be able to afford a whole house, but they may be able to afford an apartment in a given neighborhood.
One thing DC had some well half a century ago was housing coops.
Take a bunch of folks across a block of area & convince them to band together & build big. Create a housing coop that collectively owns the building, is the people who will live there.
Right now every property owner is sort of in it for themselves. Figuring out ways to enable development while retaining ownership, without forcing owners to sell of their stake, while enfranchising future owners, worked really well. But it feels like we aren't trying to replicate this clear success.
Opportunity comes at scale Figuring out how to make that scaling possibly accessible by residents (versus someone else getting to capture the value of redevelopment) requires some legal can do willingness we haven't been seeing.
This on the same day that the SF Bay Area pulled its $20 billion housing bond from the November ballot [0], after objectors claimed the published costings were inaccurate. (SJMercuryNews: "The total cost, including principal and interest on the bond, is estimated at $48.3 billion and would take more than 50 years to pay off.")
Another relevant project is the Solano County ("California Forever") proposal [1], which is being dropped from the 2024 ballot but is still active (presumably for March 2026 ballot, when there will be gubernatorial primary and high turnout).
Also, after 2024 CA Proposition 5 ("Lower Supermajority from 66.67% to 55% for local bond measures to fund housing projects and public infrastructure")[2] has been voted on. (It's also being challenged by the Howard Jarvis Taxpayers Association.)
We will be able to compare timelines/costs/delays between the two development proposals and get answers on whether costs/delays in CA homebuilding are primarily due to the homebuilder, the city/county, CA state, the development process in general, or nearby residents' objections. The Solano County proposal is more greenfield and seems to have more supporters and fewer existing homeowners to object, so this outcome should be interesting and informative. (Of course, it's a distinct possibility that both proposals get killed politically, which would also give us the answer that it's not really about costs or timelines, and that a vocal minority of existing homeowners/landowners can game the process to pretty much kill any proposal, regardless how antisocial that might be.)
It's a similar situation in Canada, but with the added problem of horribly flawed immigration policies that have flooded the country with a huge number of foreigners each year. While this has been going on for decades now, it has really intensified over the last nine years.
The equivalent of a large (by Canadian standards) city's worth of people is being added each year, but there is nowhere near that much residential construction taking place in total.
Why does everyone want to live in the same few places? Because all ways to make money and a living are there! Give people the option to work remotely and they can live wherever they want, and that is not in crowded expensive cities most of the time.
We have made an enormous shift in that direction post-COVID and it turns out that: [drumroll] people still largely prefer to live in cities when financially viable. The price tag of cities is itself evidence of this. San Francisco isn’t expensive in a vacuum. If there wasn’t demand for housing at these prices, they would fall. And yet people continue to willingly pay an enormous premium for the privilege of living here.
I can walk across the street to get my groceries. I have at least fifty restaurants within walking distance. My doctor is four blocks away and a large hospital is six. I have access to a large park three blocks away.
There is a streetcar that goes straight downtown one block away and three buses that go throughout the city are right at the end of my block. I can bike to virtually anywhere I want to go if walking is too far or transit is annoying.
And all of this keeps us healthy. It’s no secret that obesity is approaching near universality in areas of the country where driving is the only option to reach basic amenities. It also correlates with reduced energy use and therefore to reduced greenhouse gas emissions.
Making cities cheaper goes a lot further than trying to make cheap but fundamentally broken suburbs and exurbs less hostile. And part of that is precisely what this article highlights: the rentier class siphoning away the profits of workers while providing little to no value themselves. And I say this as a homeowner (and therefore landowner) myself.
Even with remote work, it may still be beneficial to live in or near a large metro area. From an American point of view, large metro areas generally offer many amenities such as a variety of cultural events (concerts, exhibits, festivals), a variety of shops and restaurants, international airports, a populace that is diverse and is more accepting of people from diverse backgrounds, expanded opportunities for education, and much more. Even if one chooses not to live in the Bay Area or New York City due to housing costs, there are still other desirable metro areas in the United States that offer these amenities and have lower (though definitely not low) housing costs. To add, if one could afford the housing costs of the Bay Area and New York City, there are many reasons to live in those places.
There’s a lot more to life than a job. Most jobs can’t be done remotely. How do you convince a barista to move to New Billings? Is there anything to do there after work?
There is a lot to do there, but it might not to be to your liking. If you don't like guns the fact that you can safely shoot off your deck is f no value. Meanwhile you get one musical in town per year and they expect you to be in it (that is not very high quality).
> Give people the option to work remotely and they can live wherever they want, and that is not in crowded expensive cities most of the time.
COVID dramatically increased the opportunities for remote work. Yet housing prices in major cities went up, not down.
Anecdotally, my friends who moved during COVID remote work all moved to cities they wanted to live in. I knew more people leaving mid-sized towns to move to Seattle, NYC, and the Bay Area than the opposite.
i work remote and i live in an expensive city. why? because I was raised here and have many friends and there is much cultural events going on. work aint everything
You missed a costly part of grabbing a chunk of land: utilities. Getting them onto your land, so you can live with modern creature comforts, some of them dictated by law, is often prohibitively expensive. You can DIY with the alternative being a well (hit or miss), a septic system, and setting up a solar/battery farm, which isn't cheap either.
> You missed a costly part of grabbing a chunk of land: utilities.
There is a 15 acre lot down the street. A good spot for another small housing development.
But one issue with it is that it has legacy utility and power poles on the periphery. Anyone wanting to develop that space is obliged to route all of that underground, which easily add several M$ to the project.
Eventually, someone will bite, buy the lot, and develop it.
But it's going to be low on the list because all of that cost will notably bounce up the new home costs. Cheaper places to build elsewhere.
Above ground is ugly, and less reliable, in terms of frequency (about half) and total duration (about 20% more, since underground takes around 1.6x longer per outage) [1]. But, underground is so expensive that they end up being a net social loss, at least in NY [2].
>And I realized that to call these businesses “homebuilders” is misleading. It’s striking how little of their business has to do with, well, building. For instance, here’s D.R. Horton in 2023: “Substantially all of our land development and home construction work is performed by subcontractors.” Here’s Lennar in 2023: “We use independent subcontractors for most aspects of land development and home construction.” I suspect most of the other big guys would say something similar. These aren’t builders, they are financiers that borrow cheaper than real developers and use that cheap credit to speculate in land, hiring contractors to do the work. They are, in other words, middlemen.
This is pretty far out there. They are the general contractor and have substantial value add to the project.
Most of the rest of the article is misunderstandings like that.
This was a poor article. Stoller reveals his ignorance of the industry. The GC is far from some middleman. They are the one that coordinate all aspects of the construction, from the digging of the foundation, the rough-in carpentry for the frame of the home, the electrical work, painting, roofing, and everything in between. No single craftsperson could be versed in so many trades, so of course they use subcontractors.
The structure of neighborhoods I’ve seen pop up in the last couple decades (maybe also earlier, I dunno) is that of a neighborhood developer who farms out the work of building the houses to (usually) a few select other firms, which do the actual GC work and sell the houses, having bought the lots they’re building on from the owner of the neighborhood. The neighborhood developer is mostly in land speculation, they don’t GC the building of houses. IDK if such outfits bill themselves as “home builders” in some contexts, but it wouldn’t surprise me.
If you're talking about developing an entirely new neighborhood, that involves a lot of work beyond just buying the land, carving it up into lots with a pencil and then selling them for a profit. They have to survey and plan and layout the neighborhood, including the lots, roads, drainage systems and any common areas. Then they have to get all the necessary approvals from the local government, which typically includes drainage studies, traffic studies, school impact studies, architectural reviews, discussions with residents who live on adjacent properties, etc. This often involves multiple rounds that requires revisiting the original design. Then they have to actually get all the infrastructure built out to the point where homes can actually be built on the lots (roads, sewers, drainage ponds, sidewalks, land grading, etc.).
And they build them for maximum profit, with nothing besides cookie cutter houses, each with a new tree out front, and nothing else unless you get in the car to drive to the nearest gas station or plaza with a chain restaurant or big box store.
> tax the land of lot developers so they don’t hold land off the market.
This is something I dealt with a few years ago. There were a few acreage lots (5-15 acres) my partner and I were considering buying and building a house on, and all of them had been in the $200k range a year or two before but had been bought by land speculators (in some cases by the same person). Prices went from ~$200k to ~$750k, which we weren't interested in.
Most of them sold. One of the larger lots was around $350k and is still for sale, now for almost $2 million.
I don't think developers should be forced to sell land just because I want to buy it, but the taxes they pay on their empty lots is extremely low. I checked on a couple of the ~$750k lots, and the taxes were something like $115 per year. At that rate, it costs the developer/speculator basically nothing to hold onto it while prices rise.
If lots like this were taxed at, say, 20x the current rate for lots that are near areas that are being built up and are ready to be bought, then there would be a stronger incentive for the owners to sell to people who are ready to build and start paying property taxes. It seems like such an increase would benefit everyone except the speculators.
> It seems like such an increase would benefit everyone except the speculators.
Correct, a simple power law tax formula on unimproved/vacant land that forever increases the cost to hold onto land near and in the middle of population centers would do wonders.
That's the idea, though. If you're sitting on an undeveloped or underdeveloped parcel of land, you should bear the cost of the value of the land. If it's in a rural area, you can probably weather the tax burden because it's worth a lot less than a surface parking lot in an urban area.
The idea behind such taxation is to destroy the deadweight losses created by land speculators. You either buy the land, develop it, and bear the weight of the tax on the fair assessment of the land's value, or you don't buy the land at all.
Property tax is predicated on the value of the structure now. Land-value taxes are predicated on the value of the land, developed or not. That will fluctuate based on the desirability of the surrounding area.
The irony is that property taxes are predicated on the value of the structure, but the practicalities of market forces are that the land is what's actually valuable. So rather than keep playing this mis-labeled game, we should embrace land-value taxes and have municipalities asses taxes without regard to the structure, just the potential economic value of the land.
One could say Property taxes are like wealth taxes. You are taxing unrealized gains. But IMO it's once of the best ways cities meet their expenses and everyone pays their fair share. It keeps property prices somewhat in check because it costs money speculate.
Land that can be developed into residential lots should be appraised at a higher value. There should be a 2-4 year period where a land owner has their opportunity to develop land, but then it should be taxed at rate of nearby developed lots.
Land ownership is almost a zero-sum game and should be well regulated for efficient demand and supply. Rent-seekers don't add any value, just suck it up into their fat pockets.
And that's a good thing, because unlike other valuables, you can't just create or mine more land. Land is inherently valuable based on its location, you can't just get more of it somewhere and import it in.
There needs to be pressure to actually make productive use of land so that people don't just uselessly sit on it.
Yes, it’s called property tax, calculated by multiplying a property tax rate times assessed value of the property. Does anywhere not already have that?
A property tax is typically assessed on the value of land + property, and honestly, we don't do a good job of accurately pricing the land value aspect of it. So if you don't build anything and just own the land, your property tax will be very low.
theoreticalmal's comment seems to imply that taxes on unrealized gains are not a thing, to which I was replying that property taxes are an example of a tax on unrealized gains. Everyone whose home has gone up in market value knows this because their property tax has surely increased over the years even though they haven't sold their home.
Land Value Tax (the Georgeism discussed in the article) just taxes the land on what it is worth, not the buildings on it. So holding land vacant costs more because the speculator is not making any money from it, while they could be making money from a building.
A side benefit for homeowners is that improvements increase equity and resale value without raising taxes
In CA there was/is a ban on SFH zoning. So at least in that case every homeowner should get taxed like at least a fourplex. Considering your wage didn’t increase that means less money for mortgage, etc., so buyers have less to spend on a house and your property goes down in value.
Housing can’t be both a good investment AND affordable. As a kid, I was told that my house was a good investment and the houses rise in value overtime. Now, I own two houses which of both appreciated by about 9% per year for a decade.
We agree there is a problem.
But I doubt the premise that land hoarding is the key issue. It seems to me that everyone wants to live in a 3,500 square foot detached house near the city. But only so much of that exists.
At least one major reason is that neighborhoods actively fight the installation of semi-dense housing because it would “ruin the character of the neighborhood.” This gets encoded in zoning.
The people who have most power over local zoning regulations are neighborhood boards, not home builders.
Poorer kids tend to be harder to teach. School “quality”
largely measures how easy-to-teach the kids are. School quality plays a huge role in home value.
That and related factors (likelihood to commit crimes of the sort that affect home values, say) are a lot of why communities try to keep affordable housing away. High prices are your buy-in to good schools if you can’t afford good private schools. Once you’ve bought in at a price inflated by school quality, you definitely don’t want to see that slip or there goes all the money you spent (maybe literally all of it—I’ve seen premiums for “good” versus “just ok” districts near one another that are well into the levels of mortgage down payments—20%, 30%)
I don't find this article very compelling. The core argument comes from a single 2018 paper from a single author who used IV regressions to claim that increased consolidation of homebuilders is consistent with a reduced amount of new construction.
The argument in this article is that small homebuilders got caught in the credit crunch and had to flip their lots to the mega builders, who maintained access to capital and credit that the small players didn't have. So now the big players are hoarding land and not building on it to control the market.
I can believe that a credit crunch has cooled the construction market. Nothing about that would be surprising. I have a harder time believing that the major home builders have bought up so much land that nobody else can build anything, leaving them to control the market price of houses by artificially limiting supply.
Anecdotally, the most expensive housing markets are in cities where most of the buildable land has already been used by something. This is where these supposed land-hoarding mega builders would have the least influence. In my experience there are a lot of affordable houses being built in smaller cities and in the outskirts of major cities, but the demand just isn't there. More people want to live in dense and desirable locations and they're willing to pay a premium for it.
This paragraph looks wrong.
"In 2005, when D.R. Horton sold a record number of homes, it made $1.47 billion. In 2023, when it built roughly half as many, its profit was a little over three times as high, or $4.7 billion. "
It did not build half as many homes, it was 82917 homes in 2023 vs. 51172 in 2005. Also, the profit number should be corrected for inflation when comparing across almost 2 decades.
Thanks for doing this calculation! It would be interesting to know if the average square footage of houses built by the company has changed. If they have increased by 25%, the profit per square foot would be roughly unchanged.
D.R.Horton home sizes have remained mostly consistent for the past 20+ years that I am aware of*
* My family worked with home builder marketing departments, and I use to enjoy seeing home & price progression in the area over the years (D.R. Horton has been and is, mostly 1200-2200sqft with a few going past that on either end). One of my many issues with this article is making the mass production builder into a bad guy. D.R. Horton IS the "Starter Home" builder, few other builders can compete for that market because the cost and time it takes to build. It's why local small builders tend to build higher quality homes, they only have the resources (money for permits, legal etc and manpower) for a few houses a year. If the profit on a home is $55k with all the marketing and construction bulk prices DRHorton gets, whats that profit for the 2-4 homes a year local builder this guy wants to replace them with? Probably not much to want to keep doing the job; always on the verge of financial collapse if 2008 happens again (many small home builders disappeared and did not come back. I dont think many people want that kind of risk to start up again). If we wait for small local builders to build homes we would be in a far worse situation than we are now.
I had the opportunity to talk, in length, to the owner/CEO of a mid-sized builder who had to sell the remaining lots from one of three communities because he couldn't keep the prices within: both a price that they would sell and price to make a profit (or break-even); the shortage of construction workers and regulatory delays and cost were a large drain on resources. It had nothing to do with having land or needing to buy land, he already had, it was simply taking too long to get through the building process. Not sure if home builders are still doing it, but many in the area were working together to try and get high-school students into construction apprenticeship/vocation programs to make up for the shortage.
Maybe. I’m not a domain expert so I’m not sure that’s a meaningful metric, especially at this scale. But in general I think anyone would be happy if their business improved units sold and per unit profit. Naively I’d expect an inverse relationship.
Overconsolidating is bad, but the article's chain of logic falls apart for me because it doesn't actually make any connection to indicate that these companies wouldn't make even more money by building more homes, while ignoring that local permitting and approval process have gotten ever more pricey and complicated over even just the past two decades.
For the extreme example, take a look at San Francisco, which has approved a grand total of 16 housing units so far this year (https://www.newsweek.com/san-francisco-only-agreed-build-16-...). Only a tiny margin of ultra-high-price housing can even be sustainable, let alone profitable, in that environment.
> because it doesn't actually make any connection to indicate that these companies wouldn't make even more money by building more homes,
I think it comes down to risk, effort, and available labor/resources. If it costs them nothing to hold the land and build only when they're very sure that the building will be profitable, then that's what they'll do. But once they have the whole construction side working on projects... if there's capital left over... why not buy up more land in the mean time? It makes it harder for your competition to build while you work through your backlog and it costs you basically nothing.
One of the worst aspect of these big home builders is that they impose homeowners associations on all of their new homes. It's difficult to find new homes free of HOAs.
I think this is at least partly driven by the locality (city or county) wanting more property taxes from the new homes. In a city near me, there have been five new subdivisions approved in the past few years, all of which have not only HOAs but CDDs, which are basically extra property taxes (ostensibly to fund the building of more amenities in these communities like pools and community centers) that get split between the developer and the city/county until the community is fully built out, and then the city continues to collect them for an additional period that, I believe, is something like 30 years. The city/county required the HOA/CDD setup as a condition for the subdivisions to be developed.
Fun fact: About 89% of Canada's land area (8,886,356 km² or 3,431,041 sq mi) is Crown land: 41% is federal Crown land and 48% is provincial Crown land. The remaining 11% is privately owned. For example, 92% of Quebec, 87% of Ontario, 95% of Newfoundland and Labrador, and 94% of the land in British Columbia are Crown land. So when you “buy” land, you actually become a tenant to the Crown. If you don’t pay the property taxes, “your” property can be registered for sale. The laws around properties in Canada are extremely complicated and stupid. A friend of mine, after building their house and wanting to connect the sewer to the municipal one, was required to pay more than $50k! After 2 years, they ended up having a septic tank instead.
Unfortunately, there’s no hope to fix the housing issue in a democratic way because the majority of the voters are landlords. The only possible solution is like Japan (where houses are depreciated assets) by having centralized control over housing, zoning, permits, and everything to maintain a flat price. Other than that, the future is grim for young people or anyone who doesn’t already own a house. I remember a year ago I saw a mortgage here in Canada of 70 years, so if you bought a house at 30, you will become a Crown tenant by 100!
If you don't pay property taxes for long enough (usually 5 years) in the US, typically your property will be auctioned off at a county tax sale (assuming your lender hasn't paid the taxes and foreclosed first).
Wildly inaccurate. No one owns crown land, if you buy land, that's "privately owned" If you don't pay property tax, eg you are in arrears, your land is seized and sold to pay your debt. Again, that has nothing to do with crown land.
I’m just not sure about this article. To me, it seems like these large homebuilders can only efficiently operate in tract housing so if you want to live in the middle of nowhere and have total uncertainty regarding the quality of the neighborhood that you live in and quality of the schools, etc because they just built it and pay through the nose for a brand new home, you can buy into tract housing, but I think many people want to live in established neighborhoods, where newly built homes are custom built and they mostly aren’t built by these new companies or they have to build large condos or apartments, because that’s the only way to efficiently add large numbers of units. High housing prices are the result of the fact that most people purchase used homes, because the risk of purchasing a used home in an established neighborhood is simply lower and there just aren’t that many used homes, because people want to live in established neighborhoods.
If the companies that are holding land are able to maintain steady profits with minimal competition, then the logical approach is to say we should incentivize them to build on the land, make improvements etc now to ideally decrease the value of the existing land to make it more affordable to people. So could you essentially say "if you own more than 20 properties that are not owner occupied, you have to pay a tax.. but if you sell the house, you get some large chunk of the tax money back".. something that should encourage the big builders to build something and to sell it -- not to build and potentially rent it out -- which is in many cases the most expensive type of house to rent.
Changing financing doesn't actually change underlying affordability. If your distinction is "rent vs own" and you ban doing it primarily you're either going to have pretty miserable housing outcomes or essentially shadow mortgages.
As well as push things to subletting or force people to stay in one place for most of their life.
We need to make it so that most neighborhoods are developed by homebuyers rather than large conglomerates. My 1920s streetcar suburb was platted by the original farmer/owner and then sold off in lots. Today, this would be illegal / cost-prohibitive. It also leads to nicer / more varied neighborhoods where people actually own their land. Instead of yet another branded neighborhood where everything looks the same and the HOA board thinks too highly of themselves
Nearly 40% of the United States is public land, supported by taxpayers and managed by federal, state, or local governments. -- https://headwaterseconomics.org/public-lands/protected-lands/public-land-ownership-in-the-us/
Allocating a few more percentage points of that for housing could have a large effect on prices.
Probably any land the federal government would be okay selling to developers is also land that no developers would have the capital or physical ability to improve to the point of being valuable. Most of Nevada is federal land. Almost no one wants to live on it.
The federal land is not necessarily where the jobs are. Its stuff like remote gun ranges or national parks. Unless you are considering VA hospital and federal cemetery land.
Look at a digital U.S. map with a private / public land overlay and zoom in on the satellite images. It quickly becomes clear that people will live wherever they are allowed to. Sometimes the population stays low and sometimes bare desert turns into the Las Vegas metropolitan area.
> It quickly becomes clear that people will live wherever they are allowed to.
Doesn't seem to be true. You can buy land in e.g. Nevada for less than $1000 per acre, but it sits empty because approximately nobody wants to live in the middle of the desert.
So basically, if you're an individual, or a contractor who reinvests their earnings into the housing market, you face two challenges: getting competitive financing, and finding a plot of land to build on.
Question: is finance screwing up capitalism? Real estate is supposed to be one of the most competitive and dynamic markets. If you can turn even this very simple and basic market into a quasi-monopoly, then there is something fundamentally wrong with the whole economy. And it seems all fingers point to Wall Street.
Real estate is not competitive nor dynamic because of the disproportionately low property (specifically land value) tax that property owners pay relative to the utility they get from society (police/military and courts to protect their land as well as myriad other policies that ensure a stable society).
Simply hoarding land should not be profitable, and yet it is one of the most profitable businesses because of subsidies (too low property taxes, 1031 exchange, various “farming” and other exemptions).
You don’t have to be the sole investor. Say you can afford to invest $10k. You could try and find a 2k plot to put a 8k garden shed on. Or you can put that 10k in a REIT and get a gain.
Cornering the market, or a sufficiently large portion of it, doesn't necessarily drive prices higher. Demand plus cheap credit (and Wall Street shenanigans) are at least as much to blame.
This is maybe a stupid question, but if credit is cheap, shouldn’t it be easier to finance a housebuilding operation? In the very low interest rates from say 2008-2020, I think we saw less housebuilding in the United States than before.
Interest rates tripled in the past few years, and home prices continued their upward march throughout most of the U.S. Do you mean something else by "cheap credit"?
Tripled from a hundred year low. Kinda normal to mildly low still.
Prices are up since people did 30yr mortgages at obscenely low rates, and don’t sell/move in order to keep them. That group will eventually rotate out. Ironically, somewhat lower rates will cause a housing price decline.
Unless you are willing to hold the asset at 40% occupancy without changing prices because preserving the on paper value is more important than profiting from rent.
Population growth has slowed substantially in high demand cities. Honestly when looking at historical charts, prices were better when cities grew hand over fist. There was enough development to meet growth and also prevent much price growth beyond what wages could afford. Today there is little growth, and prices have surged as a result of that limited supply being bid up.
If we froze the population level and all the people try to move to the same place, it'll bid up the prices. But growing the total supply of humans only causes additional pressure.
So you see a problem like this and your reaction generally falls into one of three buckets:
1. There is no problem. This is working as intended. Everything is fine;
2. There are a few bad apples on an otherwise good and functioning system; or
3. The entire system is fundamentally broken.
To blame the "homebuilder cartel" sounds very much like (2) to me. My view is that the entire system is broken and it goes back to enclosures and private property borne from capitalism and liberalism, respectively.
Liberalism is the deification of individualism, implicitly rejecting any sort of collectivism. A key pillar is the idea of private property, that is the ability to acquire and maintain a state-backed exclusive use of land well beyond your personal needs.
Capitalism is really the evolution of feudalism and the origins were in England with the Enclosure Acts [1]. These transformed land use for grazing by all to people having exclusive use thereof. You might hear as a counterargument things like "the tragedy of the commons". Interestingly, this term originated in 1968, some 350+ years later.
I bring this up because when I see people hoarding land and people voting out of narrow short-term self-interest to restrict supply and reduce housing in order to increase housing costs, I don't necessarily see that as a failure of government or the fault of a few bad actors. I see it as inevitable given our economic system.
So much of history can be viewed as simply a land grab.
I don't expect our economic system to change anytime soon but the governmentr can do a lot to alleviate this. At a minimum:
1. Ban single-family house zoning in urban areas. Multi-family units should be legal anywhere within city limits;
2. Stop subsidizing suburban expansion to the degree we do by building roads to a ridiculous degree;
3. Build public transit infrastructure. For the successfully-propagandized Americans who will fight this because "it'll raise our taxes", people on trains will make it faster and more convenient for you to drive. Literally everyone benefits.
4. Punitive taxes on non-prrimary residences (ie investment properties, second/vacation homes); and
This Matt Stoller guy paints a misleading picture of the dynamics of what is to be in the industry.
I grew up in the housing industry as the son of a homebuilder. Not to date myself, but I wrote what was probably one of the first cost accounting spreadsheets on the nascent PC of the day using VisiCalc. The spreadsheet took into account all costs associated with building a starter single family home, including land acquisition, financing, municipal fees, material, and labor costs, I.e. everything one one need to run a successful business as a home builder. I know this industry intimately.
Yes, Stoller is correct it’s harder to be a small (i.e. 10-20 homes per year) home builder than it was 40 years ago. But it’s not due to some conspiracy. It’s because the local zoning has become much more arcane and the red tape so Byzantine that the little guys have been effectively pushed out. For instance, you need a full time staff person to negotiate with your local ZBA (Zoning Board Association) to get permission to get something built. Beyond the direct costs, the delays and uncertainties are killer as they eat into your profits. (The gross margin is slim, somewhere between 10-20% on a home for a small time builder. I know - I wrote the damn spreadsheet that calculated it.) As a consequence of all these regulations, only the big builders can afford to absorb and amortize these costs over tens to hundreds of homes. Of course, this also means the big guys still need a fatter profit to to deal with zoning hurdles, long time frames, uncertainties, and what have you, thus margins need to be higher on average even for them. This is what is going on. Not some monopolistic conspiracy.
His gig is railing against monopolies. The housing industry is just another nail for his one-size fits all monopolistic hammer explanations.
The real culprit here actually is a cartel ironically. But this cartel is made up of homeowners who flex their power through local zoning codes that make it near impossible to build new homes, especially apartments.
TLDR: In other words, the YIMBYs are right: the problem is zoning restrictions on new supply. Reform zoning and small time home builders will be back with a gusto.
Right after the war my grandfather and his brothers built probably 8 homes as a little business before finding other work. They did it all themselves. The plans, the building, wiring, plumbing, everything.
Part of the issue is that the big guys have pushed out players like this. But another part of the issue is the onerous code process in place today. Could you even get a few guys together to build a home without having a certified electrician or engineer? And even if you could, does the present generation of able bodied workers even have the knowhow as my grandparents generation? The guy would spend all the time I waste on TV or the internet working out projects and plans until the day he passed practically. Seems present generations are a bit distracted by the digital world to pick up so many useful analog skills.
The mistake made by Georgism is to assume that rent extraction is a bug. It's not. The economy is literally owned by rich people -- that's what capitalism is -- so rich peoples' opinion is the one that counts, and rich people want to get paid for being rich. Rent extraction is a feature not a bug. Georgism will never see political success due to this misunderstanding of political economy.
Can't afford 'high' prices? Work harder spend less time on play or leisure pursuits. Realize maybe you should have studied harder in high school or picked a career based on earnings rather than 'what you enjoyed'. While this doesn't cover all situations for sure it does cover many 'whiners' who wish things were just easier for them 'because they should be and that's why'.
Not everyone can 'win' and the people who try harder often win more. And of course don't forget 'luck'. It plays a large part as well.
And guess what? Many of those people who win actually worked harder and weren't born or inherited and are from disadvantaged groups. Nobody wants to think that. Everyone thinks the other person has an edge 'and if I just had that edge things would be fine for me'.
(My father came to this country with nothing. My mother grew up and her father died back when there was no social safety net. All the children went to work. And yes because of that and in addition to my personal hard work and attention to school things are better for me for sure.)
We have a DR Horton home. It's really nice and well built. They deserve to make money.
It's satisfying to blame a big bad "them" for this, but the problem is "us". We all want our properties to increase in value so we collectively conspire to suppress supply that would make our properties less valuable.