I've posted in another thread about this but what interests me primarily is how housing has changed over time.
In 'ancient history', it's fairly well known that people lived in ridiculous conditions, ten to a house and so on.
But what strikes me is that in recent years (say, the last 50 or so), housing has rocketed out of proportion around the Western world whilst other goods have become basically irrelevant.
I could buy 1,000 decent spec laptops for the price of a modest home. Or over a hundred thousand cups of Starbucks coffee. The car I have outside? Sixty of them and I could get a bargain basement flat.
Renting? A brand new Android flagship for the price of a months' rent. An utterly imaginably spectacular device.
I'd much, much rather live in a world in which a laptop was a huge expense that I could only literally afford once every few years, but to be able to afford to put a roof over my head without hustling 8 hours a day.
At the moment, political and regulatory barriers dwarf technological ones, per Yglesias in The Rent is too Damn High: http://www.amazon.com/dp/B0078XGJXO.
In many areas, building with century-old technologies like steel frames and elevators is effectively illegal. Where it isn't illegal, the approval process is often so cumbrous that it substantially raise the price of building: http://www.theatlantic.com/magazine/archive/2007/11/a-tale-o....
We as a society have chosen to make a lot of housing very expensive.
It's a bit juvenile to blame building codes without also admitting why we have them: they save lives. Look at the death tolls of earthquakes that happen in countries with and without enforced building codes.
On the other side of the coin, thanks to deregulation houses are commodities that people buy, sell and trade for profit, which raises their prices and causes volatility in the market.
Is that Atlantic article really comparing the building codes of Dallas and L.A. without admitting one of those cities has to plan for earthquakes and the other doesn't? And that one of those cities is already too big while the other is looking to grow? Where's L.A. going to get the water for these cheap new housing developments?
TL;DR building codes and growth restrictions are a lot more complicated than some rich people wringing their hands and using regulations to make themselves money.
Safety related building codes are not the issue. It's disingenuous to bring them up.
If they were the problem, then you'd have little difficulty building up Mountain View to SF level densities, or SF up to Hoboken (a suburb of NY) level densities. All you'd need to do is copy the safety features for already existing larger buildings (which currently meet safety codes) and build them everywhere.
> If they were the problem, then you'd have little difficulty building up Mountain View to SF level densities, or SF up to Hoboken (a suburb of NY) level densities.
You just said that if building codes were removed there would be "little difficulty" in doubling the density of San Francisco or tripling the population density of Mountain View? What?
Like there's no logistical issues involved of doubling or tripling the capacities of roads and utilities, figuring out where the trash is going to go, where the water's going to come from, etc. Like there's no reason a city might reasonably decide against unlimited growth.
This is so far removed from reality I don't even know where to start. At the bare minimum, if you're going to call me disingenuous at least make a case of why.
It is more complicated than rich people gaming the system to get richer, but that's definitely part of it, and the generations-long monopoly on land ("ownership", as much as any human can claim that a piece of the earth belongs to them and them alone) enables basically unlimited rent-seeking priced at whatever the market will bear.
http://m.sfgate.com/homeandgarden/article/What-San-Francisco... goes into what happens to building codes after e.g. an earthquake. TL;DR not much, and I'm sure SF will get absolutely wrecked in the next "big one", people will die because stuff is old and not up to code, there will be public outcry for safer buildings, developers will lobby against it and basically do anything they can to continue to slap apartments up as cheaply as possible while charging $3000/mo for a 500sqft studio, and they'll build even-more-expensive yet not much safer buildings in the ruins. Then repeat.
Eh. I don't believe this is true. For example, in the Great San Francisco earthquake, something like 90% of the damage was caused by fires. Most of these fires were and are caused by unsecured water heaters, rigid gas connections, etc. There are now building codes that improve on these issues -- all water heaters are now strapped, gas connections are flexible, etc. Among other protections that I know of, shear walls are mandated in certain cases, engineering reviews are done, houses are bolted to foundations at more regular intervals, the proportion of various walls that are windows is more limited, etc.
Yes, regulations were slackened in 1906, but
1. Earthquakes between 1906 and now show that regulations DO tighten over time. If developers are trying to lobby against these, they are failing. (More likely, the property owners paying the developers are the ones who would lobby. It benefits the contractor to charge for more work.)
2. Even if we didn't have historical evidence to discount your position, the resources available to the people of that time and the people of our current time are not remotely comparable. Our capabilities for manufacturing and building are dramatically more vast.
75% of all SF housing units are over 50 years old. Source: http://www.sf-planning.org/ftp/general_plan/Housing_Element_... So the technlogical improvements in earthquake safety since the 1960s are simply irrelevant for most residents. They're living an ancient, unsafe homes.
What ought to happen is proposition 13 ought to be repealed, along with the restrictive zoning laws. Then people who are sitting on lots of undeveloped property would have to sell it to developers, because the taxes would be unaffordable otherwise. And developers would put up new properties. Prices would then come back to earth and poor people would be able to live in houses again.
But the prevailing mentality in the US is that houses are investments, not places to live, so don't expect this to happen any time soon. Instead, you can expect politicians to intervene if housing starts to become affordable again, like they did in 2007. ("Oh no! Housing prices DECLINED!") It's basically a giant transfer of wealth from the young to the old. But people are too ignorant of economics to understand how and why it's happening, so you can expect it to continue.
You're right, and Prop 13 doesn't get nearly enough hate in these discussions. It's not just that people are sitting on investments like domain campers, though - it makes it impossible for many people to move, because if they did move to an equivalently valued home, they'd be paying many times their current property tax. This restricts the liquidity of the housing market and encourages hoarding, which leads to skyrocketing prices among the few houses that do go on the market.
If that was slowly phased out, prices would come down as more houses came on the market, and the houses that those people wouldn't represent such a huge jump in ongoing property taxes.
How does repealing Prop 13 change anything? Wouldn't everyone just end up paying the same or more taxes? Looking at property tax rates in other states (which presumably don't have such a law), we're about on par with them.
The people who can't move because of increased taxes would be forced to flee the state maybe?
We may be on par with them in terms of nominal rates, but those other states' property taxes rise with the value of the houses every year, whereas CA prop tax amounts are based on the cost at the time of purchase and adjusted at a max of 2%/year, even if their house appreciates by 10%, as it does some years. People who bought their houses in 1975 are paying taxes based on what their houses were worth in 1975 times roughly 1.02^40, or 2.2x. In the same period, the median home price went from $41,600 to $478,700, a rise of almost 12x. So, if they moved to an equivalently valuable home, they'd pay about 5.5x the amount of tax going forward, which can be very significant.
Housing prices take into account the amount of taxes one expects to have to pay, so if they're no longer locked, and one expects prices to rise, then the price one will be willing to pay will be lower. Also, prices will fall as more supply opens up, since there won't be such a big advantage to sitting on houses anymore, and people are more free to move to less expensive areas. Currently there's a bit of a rent control situation where the low rates can be passed on to your descendants, and there's a big incentive to stay in it rather than selling it and moving farther out, even if the place farther out is half the price. This effect is more pronounced on the high demand areas where prices have risen more.
Over time, the prices would adjust and settle. People may end up paying more tax overall, but we can play with the rate, or we could decide that the schools could use more funding (in many places, they could), and that we should keep the rate where it is. As it is now, the people who are just moving to CA are heavily subsidizing people who have lived here for a long time, and the lack of liquid housing supply is causing prices to shoot up.
"... but those other states' property taxes rise with the value of the houses every year, ..."
In Michigan, it's a bit more complex. The assessor calculates a State Equalized Value (SEV) on which the tax is based, and that cannot rise faster than the rate of inflation, or 5%, whichever is less. I assume lots of states have odd property tax quirks.
People who already own property in places where values are rising have no incentive to do anything to counteract the rising trend. So we have the spectacle of Mountain View denying Google's request for approval to build apartments for their employees near their campus -- at a time when housing in Silicon Valley is getting absurdly expensive.
I explained it earlier. Repealing prop 13 forces people holding on to undeveloped land to sell it to someone who can make use of it.
It's funny that people accept taxes of up to 40% on wages (things the middle class earns), but can't understand how taxing vast landed estates (things the rich owns) would "help." Suggest thinking this through more clearly.
"So the technlogical improvements in earthquake safety since the 1960s are simply irrelevant for most residents. They're living an ancient, unsafe homes."
That's a nice theory, but it's wrong. The city is requiring buildings to get retrofitted with earthquake safe structural foundations. It's every building with greater than a few units, so the rather small 100+ year old Victorian I'm in will be required to go undergo retrofitting by 2017.
The latest SF seismic retrofit program is for wooden buildings. Brick buildings, which are at much higher risk in an earthquake, were fixed long ago.
There were 1,987 unreinforced masonry buildings in SF in 1990, and all but 158 were fixed by 2013. That's why, all over SF, you see diagonal steel beams inside brick buildings, sometimes across windows. There are now supposedly only 29 unreinforced brick buildings left, mostly ones that are abandoned or scheduled for demolition. A few are still occupied, including some non-patient buildings at SF General Hospital.
In a really big quake, many buildings will be damaged, but structural collapse in SF should be rare. The occupants get to survive.
Oh, I missed where you mentioned this only applies to buildings with a minimum number of units -- I thought you meant there was a program that applied to single-family homes.
Re: reddit, pshaw, I was only there two and a half years. :) Most of the hard work was done before I showed up and after I left.
> So the technlogical improvements in earthquake safety since the 1960s are simply irrelevant for most residents. They're living an ancient, unsafe homes.
Even if we assume zero retrofitting of old homes, what about the future residents of currently-new homes which persist for another 50 years?
From most anything I've read, they've for the most part (yes, with some exceptions) tracked the overall inflation rate very closely, up until around the year 2000, when ratios and charts in the US and much of the world started to massively deviate from extremely long standing trends.
I think part of it is credit (money) creation out of thin air, and it has to go somewhere. Another part is the massive productivity gains of past decades, that also has to go somewhere, and it isn't going into rising prices of consumer goods for the most part.
To me, it seems logical that the ratio between median housing prices and median wages has to be rather constant over time, and if it isn't, there should be a measurable offset somewhere else, especially when the housing is by far the largest purchase 90%+ of people will ever make - yet, I see no proportional offset (of decreased spending) elsewhere.
Oftentimes governments will place extra taxes on non-primary residences which discourage using houses as an investment vehicle. I'm not sure about the history of this, though.
We have something like that in Italy, except financial institution were made exempt to protect them from the housing mortgage crash of 2008, and now are holding on empty houses waiting for market price to raise again.
They can't sell at a loss because all mortgages given were put in books at the 100% repayment price and now they need to wait not only for the house to recover the price lost since the crisis but also to raise in value to match the expected mortgage gain written in books, to avoid negative impact on their ratings
> ("ownership", as much as any human can claim that a piece of the earth belongs to them and them alone)
They can claim it as long as they can defend it, and historically that defense has been by force. It should make you feel better that (by and large) we don't need to kill each other in order to reserve a spot to sleep.
Someone might argue that your capacity to compete peacefully was hard-won by government or elites dominating the use of force. In other words, you don't have to fight because a bigger entity already won for you. But should that entity fall weak to an external force, I think we'll see that many rights are built on a foundation of power, rather than a peaceful morality.
There's definitely some legacy family land holdings, but I don't know how much that effects the market. I would like to know, but I suspect that as you touched on they're making money off rents, maybe lending.
What I was getting at are the houses that are bought and the mortgage goes into a CMO[0] or a CDO[1] because the new owner really had no business buying a house in the first place but they're "getting into real-estate" and the bank found a way to get paid for writing really questionable loans. Why are people without money even in the real estate market? (See the 2008 financial collapse for more details.)
And that's just the worst of it, there's still the more legitimate case where people move their wealth into real estate because it's a good medium-term investment. I can't fault anybody for that, but I do believe it raises prices for everybody.
It creates additional demand because the house not only provides shelter, but also takes on the form of an investment. How many people do you know who talk themselves into buying a house because of the potential pay off when prices rise?
It gets worse when foreign real estate speculation is allowed. Where I live most new condo developments are bought out by millionaires in Asia for the sole purpose of making money thus I need $700,000 for a tiny studio.
Supply and demand? Increase demand, supply is largely fixed* , prices go up.
* a house in the boonies isn't really a substitute for a house in the city. Every house has demand from people who want to buy it as a home plus the demand of people who want to buy it to rent/flip/scrape it.
You are confusing land and housing - they are not the same. Land area is fixed but habitable space is not. In built up areas the constraint on building new housing is largely regulatory (mostly planning regulations).
I don't blame building codes, but I do blame governments for just trying to derive their own building codes in an NIH fashion. Engineering best-practices (which is what building codes are) advance in global lock-step in every other industry, because—once it's proven that approach X fails less than approach Y under conditions Z—X should be used instead of Y for all Zs, no matter what country you find the Z in.
Regional considerations for things like earthquake proofing, density planning, etc. can be built into a single overarching engineering standard, just like considerations for different company shapes with different needs are built into a single larger tax code. There's nothing having many different local algorithms can optimize, that wouldn't be even more optimal as many different local parameter values to a single parameterized algorithm.
No, the people who own houses have chosen to make them expensive. Because it is expensive, those people are quite rich. This gives them political power to make it more expensive. See: San Francisco regulations on construction.
It's a terrible feedback loop. Nobody who owns a house in SF in their right mind would vote for anything that could substantially decrease the value of their home.
The fix: (1) government re-regulates building to be easier and land to be more available, causing a housing boom. (2) government guarantees every house's value as it was before the reforms. If the value falls, government pays the difference. (3) Government raises a tax to pay this all off.
The actual cost of constructing a house is almost meaningless in most areas people want to live. What your paying for is the infrastructure around houses. So, if we really want cheap housing find out how to make cheap roads, bridges, water and sewer systems, electrical systems, schools, hospitals, ... etc.
That said, people are also living in much larger houses with more amenity's like AC, and dishwashers.
PS: There is a completely reasonable argument that building a new house or apartment complex should pay their fair share of existing infrastructure ~10k-50+k/person in most areas. That this does not happen is simply a form of corruption as zoning becomes a quick way to massively change the value of land after purchase.
A house in SF might cost around a million dollars. The same house in Columbus, Ohio, might cost 100k. Are you really going to argue that "roads, bridges, water, and sewer systems" are 10x as expensive in one place as in the other?
No, "what you are paying for" is the artificial scarcity created by restrictive zoning codes and NIMBYs. If the city council let me build on one of the many open fields around I-280 tomorrow, I could get it constructed for a pittance-- and then turn around and sell for hundreds of thousands of dollars.
PS: There is a completely reasonable argument that building a new house or apartment complex should pay their fair share of existing infrastructure ~10k-50+k/person in most areas. That this does not happen is simply a form of corruption as zoning becomes a quick way to massively change the value of land after purchase.
Do you understand how "the existing infrastructure" is funded? It's funded by taxes. And developers pay taxes like anyone else. What they do isn't cheap.
This is the correct answer, all the others are looking the wrong way.
We know it is the correct answer because it identifies how farmland sold by the acre can turn into residential land sold by the 1/4 acre. All because the zoning (and/or approved buildings) changes on that same land, the value changes substantially.
Anything that has such a dramatic change in value is subject to some kind of scarcity, like the difference between a real cezanne and a very good copy.
I believe some cities in Texas have relaxed zoning, and the housing prices are much more reasonable as a result.
Cities like San Francisco and New York are also subject to physical scarcity because of water and topographical features, but it is artificial scarcity that drives prices up.
How do you undo it? I don't think that is possible, simply because there is too much vested interest. Existing owners and banks must keep the status quo or the 2008 problems would look like a picnic. Maybe with some gradual relaxation over time the eventual market structure could be changed. It's doubtful.
I do think it is undoable just big monopolies with special interests such as the Rockefellers were broken up. It takes leadership (such as Teddy Roosevelt) that is given a mandate by the people. The issue is that this artificial scarcity, "rent seeking" is not visible to the public at large, esp. those who are renters and the young. Specifically, if rents in NYC were made aware they might vote their representative in city council out of office and the mayor as well.
> Are you really going to argue that "roads, bridges, water, and sewer systems" are 10x as expensive in one place as in the other?
I would. Working around a couple centuries of existing infrastructure, dealing with the issues regarding vastly limited space, and of course having to stay compliant with California's ever-changing and ever-more-expensive environmental regulations -- pfft, 10x easily.
Systems get more expensive as they get more complex. Car repair is a salient example.
SF doesn't have "centuries" of infrastructure. The great earthquake and fire in 1906 destroyed nearly everything. SF doesn't have "vastly limited space" either. It's not even in the top 100 cities in the world in terms of population density. Source: http://www.citymayors.com/statistics/largest-cities-density-...
Nor are SF's roads and bridges really all that complex. Pittsburgh, Pennsylvania, has 446 bridges, and is one of the cheapest cities to live in in the United States. Maintaining two big bridges just isn't that complex, certainly not enough to explain a 10x factor in the cost of living. Sure, SF has a high minimum wage for construction employees, but so does California in general. And somehow it is not that expensive to live in Fresno or Sacramento.
If anything, rural and suburban areas tend to have to maintain more infrastructure per taxpayer, since people are more spread out.
Not really. Japan's "sunlight laws" make it really hard to go above around three stories or so, meaning that nearly all of Tokyo's skyscrapers are concentrated in a few hot spots with commercial zoning (Shinjuku, Marunouchi) plus a few mega-developments like Roppongi Hills where the developer could pull enough strings to buy a large chunk of land and bulldoze their way to an exception.
Of course, compared to Silicon Valley, even the suburbs of Tokyo are indeed densely packed -- but then, Tokyo also crams in something on the order of 7x more people into the same area.
An even clearer way of looking at this is to compare
1: The price of a plot of land with a house on it
2: The price of an equivalent plot with no house but the right to build a house there.
3: The price of an equivalent plot with not right to build.
In places like SF where housing is expensive 1 and 2 cost within 10% of each other. In places where housing is cheap 2 is closer to 3.
> That this does not happen is simply a form of corruption...
That's what property taxes are, to the tune of ~$500 billion per year in the US! The market price of a dwelling is inversely proportional to the tax rate, so it IS priced into the sale.
I agree with everything except that "we as a society have chosen" this. A very very tiny portion of people (far smaller than "the 1%") have chosen this.
Mostly they are just invested in inflation, the same way anyone with high debt of any kind is. From 1970-date inflation alone is responsible for a $120k house becoming a $700k house.
In California, property taxes are assessed only when the property is sold. So people have an interest in seeing their "investment" become more valuable. Their taxes are the same either way.
In Canada, property taxes are assessed as a fraction that results in the city budget being met within constraints. Rising house prices for YOU vs. everyone else would result in higher property taxes, but a rising tide lifts all boats. The city budget and the relative worth of your home to your neighbors' determines your fraction.
It's more that the people who own houses in a city get votes as to whether the price of their investment should go up but the people who would like to move there don't get a vote.
But really in the Boston area it seems like a bigger force (talking with some co-workers) is not wanting poor people to move into their school districts for various reasons. If it were just prices there'd be a contingent who would want to be able to sell their plots to developers for even more than they could resell it for as is.
In most of the US it's pretty easy to entitle the construction of a new dwelling. The difficulty tends to be proportional to demand - i.e. regulatory requirements reflect market forces as the result of political action by the citizens of a representative democracy.
In practice building with steel and elevators is more expensive than using traditional American methods involving stick framing and low rise construction. The more expensive methods only make sense when demand is high enough to justify the additional costs.
A primary constraint on development density in the US is parking. By the time resources are committed to accommodating residents' vehicles, only higher housing prices associated with 'luxury' class housing make development of a site with dense housing feasible. Again, it's a market dealing with the parking regulations. Parking regulations reflect the body politic's interest in protecting the commons that is our roadways.
There's cheap housing in Detroit. There isn't in Mountain View. That's just the nature of markets.
Not quite. Land is the main cost of buildings in the most desirable places in the developed world. In the US Pacific Northwest as an example, outside of major metro areas people will spend about 1.5-4x the cost of land on the actual structure. If you buy a $150K lot in Boise Idaho as an example it's pretty standard to then spend between $200K-$400K on the structure and landscaping.
I think another interesting bit is how little other stuff we're buying now. I'm finding it's becoming harder and harder to find birthday and christmas presents for friends and relatives...once you have a decent computer and smartphone, so much other stuff simply becomes irrelevant.
Thinking back 20 or 30 years ago, there simply used to be many more kinds of things that people would buy. As a child I had a toy closet full of games and toys of infinite variety. My friend's kids all seem pretty happy with a tablet and maybe some legos and that's about it.
This is interesting in that I look at all the crap my kids have and was thinking the exact opposite. I had a handful of things. A few games. A few outfits. These kids have piles of stuff (alongside their laptops, smartphones, and consoles). We are always throwing out/donating stuff too.
Lego are still a thing! My friend and I discovered this. He bought me the Imperial Star Destroyer set for my birthday. We drank whiskey and built it all night -- it was one of the best nights I've had recently!
First, I'm currently in the process of remodeling my basement. And, it's quite expensive. What I'm spending on remodeling 1500 square feet is approximately the cost of 5 inexpensive cars. Although some of these costs have come from the building supplies, most of the costs have come from labor. Labor in expensive areas is more expensive.
But, then the cost of land is expensive. There are network effects. Upper-middle income people want to live around people like them. Educated people want to live around other educated people. Educated people want to live in nice climates, in places where they can go out into nature, where they can have ready access to nice shops, art galleries, clean cafes, etc. There are not enough of these types of areas to meet the demand.
Alternatively, one can buy an old house in a rust belt city for $25,000. People don't want to move there. It's cold, the people are less educated, there aren't fancy shops around, no good coffee, no hiking, no pleasant strolls around the neighborhood. There are fewer high-paying jobs.
In a rust belt city, you can build a brand new house for less than $90 a sq-ft. Sure, it won't have the nicest fixtures, but you can.
In rural areas, outside of the rust belt, you can buy an acre of land for $1000. You can build a nice place for under $100,000. But, do educated, upper-middle income people want to live there?
Some possible solutions: 1) reduce the costs of building. Services should pop up that import labor from less expensive areas. The rise of more modular housing, 3D printing of houses, etc. should lessen the costs. 2) create more areas where upper-middle income, educated people want to live. This is harder, because there needs to be jobs, first. It's a chicken/egg problem. How do you get employers to set up shop where there aren't any educated workers?
Adding to this; I could totally conceive of a situation in which I could end up homeless but still rocking a modern smartphone - because it just simply is an irrelevant expense in the grand scheme of things. It'd buy me 2 weeks worth of food and shelter, in exchange for losing my 'window on the world'.
And if that amazes you it marks you as old - because you remember a time when a mobile internet device was a frivolous luxury rather than a not-cheap-but-not-truly-expensive necessity. Ancient people can be recognized for having the same attitude about cell phones in general :)
As the trend towards urbanisation (rural flight) continues worldwide, and as population continues to grow, the rent isn't going to get any cheaper in the decades to come, anywhere.
Even imagining that 3D printing techniques can significantly cut down the cost of new construction (as is starting to happen in China), land scarcity will be the overriding factor. Save building cities on the ocean, we can't escape it.
It strikes me that by combining building high-rise blocks with expanding out into the countryside we could manage it.
The planning situation in the UK (which is a particularly dense country) seems utterly despicable to me at present. The game being played is essentially 'haves' bemoaning the loss of small amounts of countryside while 'have nots' are stuck paying dramatic portions of their income to the former group.
Add to that the long arm of the law (buy a field and stick a trailer on it? expect a visit) and it's almost dystopian.
(please read my comments if you're interested more on the UK situation - others have shown me that in the US rural land is actually affordable, if you have savings)
Huge areas of the UK are privately owned by a small coterie of landowners, which happens to include the royal family.
Excepting the odd toy village project, those areas will never be built on.
And London's so-called property boom is almost entirely a foreign phenomenon, with the world's 1% pushing up prices as part of a speculative bubble.
None of this is accidental. The UK could easily lower prices by building affordable social housing. Even in London, housing densities are lower than they are in many cities in Europe.
But it's far more profitable to ration property ownership, and to create a new landlord class.
As is often the case the underlying problem is political, and caused by concentrations of power that - history suggests - can't be sustained indefinitely.
We might be short on land the majority views as attractive enough to actually live on. Rural Wyoming is by no means short of land, but it's dry, desolate, windblown, and hundreds of miles from any regions with, say, hospitals, or airports, or actual grocery stores, or land that can grow something other than grass, or other frivolities of modern living. The fact that land is divided up into huge ranches is, therefore, not a huge loss for people looking for a little spread of their own; the only way the land could possibly be economically productive is in those huge ranches. A lot of it's owned by the Federal government, as well.
So it's trivially supply-and-demand, and the fact is the US, at least, has a huge supply of land for which there is essentially no demand. It's been allocated about as efficiently as it's going to be. Canada has a similar situation. Does that mean we're not short on land? Technically, perhaps not, but realistically, if the land is effectively unlivable, it might as well not exist for our purposes.
On the gripping hand everyone has a different definition of 'livable', even to the point of some people being willing to live in rehabbed ICBM silos in the wilds of North Dakota.
I think stegosaurus's idea is that a sufficiently motivated government or billionaire could make that land attractive to urbanites. Cheap rent in high-rises + an art and cultural scene attracted by the low cost of living + planning the city around public transportation and bike/walkability rather than personal cars + fiber to the home/office = I'd happily live somewhere that would otherwise be considered the middle of nowhere due to "boring" or unpleasant geography.
Pretty far fetched, but if Elon Musk wants to build The City of Tomorrow, sign me up.
EDIT: stegosaurus, for some silly reason HN hides the reply link for the first few minutes after a post is made, but if you click the direct link to my post, you can reply anyway.
That's easy to say if you've never experienced some of the weather Wyoming has to offer.
California isn't popular because of burgeoning art scenes, cheap rent, low cost of living, and good public transportation. In fact it has none of those things (Well, maybe some art scene). California is popular because girls can wear miniskirts and tanktops in the middle of February.
Can't reply to the below post (max nesting perhaps?)
I agree with the solution of constructing additional cities to an extent, though I can't speak too much about the US (British here).
What bugs me is seeing endless expanses of land within reasonable commuting distance of places like London that just aren't being used. There really is no need for people to have to move hundreds and hundreds of miles from their families.
I'm not even concerned that much about employment here, because a cheap home on cheap land would free people to work far less and/or simply retire after a few years in the Big City.
"but it's dry, desolate, windblown, and hundreds of miles from any regions with, say, hospitals, or airports, or actual grocery stores, or land that can grow something other than grass, or other frivolities of modern living."
So, sort of like Southern California before the boom, then. :-) Except that there are areas in SoCal that couldn't even grow grass. If I recall correctly, several of the early Spanish colonies starved to death.
If you could convince people to move there, the grocery stores and hospitals would soon follow.
Look up how cold Wyoming gets in the winter and tell me it's a viable place for a lot of people to live.
I don't like saying things like this, but unless you've experienced a zero-visibility blizzard which went on for hours on end, you don't know what rural Wyoming is like.
Summer temperature averages in LA aren't that much different from summer temperature averages across Wyoming. The big difference comes in the winter, where LA's record lows are in line with (or a little below) Wyoming's average highs.
There's plenty of land, the problem is that everybody wants to be in the same dense urban cores. Drive 3-4 hours north or south of San Francisco and you have lots of cheap, beautiful coastal land available.
Inspired by this comment I actually spent 30min looking on Redfin. Most of the coastal land I found is listed for around $1-2M (for ~1 acre), from SF area down to LA. Check it out! I was actually pretty surprised by this.
Out here in the Midwest, my quarter acre plot didn't cost a whole lot - but the house itself cost a fortune in materials and labor. Maybe I wouldn't have needed a 30 year mortgage if the place could have been 3D printed with novel materials.
I'd still need a job to pay my property taxes, but wouldn't have to bust my ass as much.
" A brand new Android flagship for the price of a months' rent. An utterly imaginably spectacular device."
But this isn't an utterly imaginably spectacular device. It's merely a run of the mill consumer-grade portable computer according to modern standards.
Your rent would be insignificant compared to, for example, the cost of a truly spectacular computer by modern standards, such as a modern search engine cluster with a price tag of perhaps a half billion dollars not counting ongoing opex.
housing has rocketed out of proportion around the Western world whilst other goods have become basically irrelevant.
Only if you want to live where everybody else wants to live. I mean if I really wanted to I could sell my small flat in town and buy a nice enough house for less than 20% of what I got for my flat. The only problem is that the house would be in the middle of nowhere and I don't want to live in the middle of nowhere.
>Only if you want to live where everybody else wants to live.
There is no such place where everyone wants to live. SF is desirable to only a very small percentage of the population. Yet it has some of the highest housing costs in the world. All it takes is an imbalance of supply for the demand. If there are only two houses available in a location that 200 people are interested in, they are going to go for very high prices regardless of what the rest of the world thinks of them.
There are places where you can't afford to live even if housing costs zero - if "noone wants to live there" then after a single generation, the place has no jobs, no nearby infrastructure (schools, social services, etc), and all the goods and services cost more (if available at all) than in the affluent regions simply due to lack of economies of scale.
This is a big problem in some areas, where urban regions have a lack of housing despite a construction boom, while rural regions have empty houses available for 20-30% of what it would cost to build a similar house.
If I moved to a place like that, the extra cost in time and fuel in driving myself and (especially) the kids between there and a reasonable city would be much greater than what I currently spend on housing.
A bit part of it is that people like to live either in the center of things, or out at the edge with a nice green property.
That makes much of the in between land non valuable.
New York City has property worth almost a trillion dollars. That would be the economic return if someone could clone the city.
But we can't clone the city. We can only build out along the edges of existing cities. Or try to build dense in the middle and complain about regulations.
Why not grow smaller cities into New Yorks? Because the core of New York was built at a time when we built differently. Cities grow differently now thanks to cars, and it's very hard to build a new old city.
So places in the middle or on the edges of old cities are expensive. There are many places you could live for very little, but who wants to live there?
What's preventing people from making dense, mixed-zoning walkable cities with good public transit like NYC elsewhere? Why it a requirement that cities have their commercial areas mostly separate from the residential areas?
I remember a few years ago I saw a 7000 acre piece of land in eastern CA for sale. The price tag was $7M. How hard do you guys think it would be to convince a good group of people with diverse skills to go out there and start a small city? All initial people get a piece of land for very cheap or free. Later movers get smaller pieces, etc. Like a startup with equity.
I'm not really sure, I'm guessing you could get at least a small group of people to come. I'd consider it if it had a high proportion of geeks, seemed well managed, had good infrastructure (things like water rights, proximity to an airport, Amazon service, fiber to the home, good schools, etc), and wasn't too expensive.
I don't think you'd have to make it free - you could probably make a tidy profit off of getting services hooked up and then subdividing the land, and still providing people a better place to go.
An amusing exercise is to visit http://zillow.com and search for properties <= $10000, $1000, $100, $10 & $1. You have to dig thru a lot of distractions, but in some large areas you can find some reasonable options (given circumstances).
I don't understand how a house can cost $1. What prevents me from buying 100 of $1 houses just for fun? Seems like a pretty decent investment if nothing else.
Other people have answered that question for you, but I'd also like to point out that a number of cities have had problems from far-off speculators buying up dirt cheap properties and then failing to maintain them or pay taxes. In one case, it may have contributed to a gas explosion in an abandoned house in Cleveland: http://www.ideastream.org/news/feature/long_distance_ownersh...
You can afford to put a roof over your head without hustling 8 hours a day. Even in the UK you can get two bedroomed terraced houses for the equivalent of around 20 decent-spec MacBooks, or less than a basic-spec Vauxhall Insignia. Or 25 years worth of drinking Starbucks on a daily basis
The compromise is that your house is in Burnley or Accrington with an oversupply of housing, rather than the South East, with an oversupply of purchasing power seeking to get on the property ladder.
Thank you for the tip on Burnley/Accrington, I genuinely appreciate it and will be looking into it more. Quite a bit cheaper than the North East, I was looking at about 60-70K GBP for ex council. Would leave a lot more leeway for a lower paid job.
It doesn't really help that much though, unless you're willing to live hundreds of miles from family, friends, potentially split with your partner, etcetera.
The decent spec MacBook chat is interesting if you're a well paid worker, but not really otherwise. I can't see myself ever buying a full price MacBook or a new car unless my situation changes dramatically.
It's not really even the pricing that bugs me as much as the complete lack of understanding demonstrated by the Government. Every single policy is aimed at inflating house prices to the sky seemingly indefinitely.
The cheap laptops and Android devices exist only because the population is manufacturing the devices by hustling 8 hours a day to keep a roof over their heads.
The parent suggested he would prefer a world where housing was cheaper but was willing to concede that electronics could be more expensive. Not a paradox.
Think of it this way: Whenever residents in a sought-after area get cheaper computers, that means they have more money. Since everyone (also outside the area) gets more money that means they have more money to pay for housing. And voila! The prices of housing in the desired area rises and all savings are gone.
Since desirable land is a limited resource, it's' price will simply rise with people's ability to pay for it.
I agree that the price of land is a tough nut to crack, but the cost of actually building stuff on that land could be reasonably expected to fall at a rate similar to the rate of other manufacturing. That it hasn't is, I think, largely because we build buildings right where they end up, so we can't take advantage of the efficiencies afforded by assembly lines and outsourced labor. This mostly seems like a good thing to me. The notable exception is trailer homes, for which the price of the land really does dominate the cost.
Well, there's also a question of what you're getting for your money.
A ten-by-ten one-roomed shack with a stove in the middle, no running water, no bathroom and no foundation can be had for about a few thousand dollars, and if you put it on an undesirable quarter acre in the middle of nowhere the land will cost you another thousand.
A well-built small home, a few hundred square feet with a well, a septic tank, electricity and the appropriate four or five rooms will cost you thirty to fifty thousand dollars.
The problem isn't just economics or regulations or technology; it's also one of standards and social status. I'm willing to wager that far more people buy a big expensive house because either they want the extra features -- air conditioning, plumbing, and enough bedrooms and bathrooms to qualify as a small mansion -- or because they want to impress their friends, family and neighbors, than do because the market doesn't make small, cheap houses available.
You can buy a house for literally $1 in several neighborhoods in Detroit right now. Perfectly livable houses are available for the cost of a few MacBook Pros in other depressed cities and towns.
I think the issue is really that the places you want to live are also the places lots of other people want to live--not that the absolute floor on housing costs has risen so far.
In ancient history the people who lived 10 to a house also rarely owned the house or land where they lived. Either they lived in a society with little organized sense of individual property rights (really ancient history), or they were sharecropper tenants on some lord's land. Not so different from young people in a popular metro area today, except that back then there was almost no possibility of ever changing their lot in life.
As with most things, the one dollar Detroit houses are far more complex than that. For example, typically you will pay taxes on the appraised value rather than the one dollar. You're also buying into a neighborhood with little in the way of city services, although the city is working on that.
The "cost" of a house is not the sticker price! Due to mortgages and resale market and inflation and such the actual cost of a house is two things; 1) taxes, 2) upkeep. Better materials will continously reduce upkeep over time so it's really just taxes and utilities.
You really don't need to hustle 8 hours a day to own a house. You need to pick one and live in it for 60 years or whatever and then give it to your kids and then they give it to theirs, etc.
It doesn't jive with modern western culture, but if the first things you did after high school wasn't to pile on x-million of consumption for college, housing, wedding/honeymoon, a whole new set of 'stuff', etc. then there would be little need to work at all.
It also helps a lot if you're cool with picking a house that isn't in the middle of the United State's most popular cities. As best I can tell, demand for property in San Francisco, Manhattan, etc has never been higher. The affordable homes of yore were not located in Times Square.
I have a friend who has a huge apartment on W 47th street, complete with a good sized backyard, but because of the location, the rent is surprisingly reasonable. That's obviously an exceptional case, but there are also pretty good restaurants on 9th ave, and great access to all the subway lines.
The retirement systems is utterly inadequate and pensions are non-existent. Thus the middle class is entirely dependent on effectively a housing ponzi scheme to avoid squalor (or even homelessness) in old age. So they will always fanatically, desperately vote to raise property values whatever the long term consequences.
Even more importantly, mortgage holders and other large institutions have a vested interested in raising property values and will guarantee that polices drive that.
Obviously housing prices can't outpace wages forever so one generation, probably the current one, is going to be screwed with houses that can't raise enough in value and yet have no real retirement security.
Even better, once house prices stop outpacing wages and the average Joe realizes, we'll be in the situation where it is much cheaper to rent than buy, and stuff the difference into an index fund, which will yield much better than housing capital gains.
At that point, you're looking at long term house price declines which only stop when buying becomes cheaper than renting.
The next 30 years are not going to look like the previous 30 in the west. However, consumer goods will keep getting cheaper.
As with the shirt example in the original article, the cost of labour (i.e. paying people for their time) represents the majority of the cost in building a house. The other items you list are using cheaper overseas labour in their construction, whereas if you're building a house by definition you need to pay local craftspeople for their time. Also due to their physical size, houses require lots of people to put together (i.e. the time is in some sense proportional to size of the item being constructed).
The high cost of housing is caused by "rent seeking" -- a microeconomics term in which politics rather than wealth creation is used to increase someone's wealth. Harvard economist Edward Glaeser and many others have written about this. Zoning is used to regulate housing density and overuse of historic landmark preservation both artificially increase the price of land. Thus, landowners with billions of dollars in property are made all the more wealthy.
> The high cost of housing is caused by "rent seeking" -- a microeconomics term in which politics rather than wealth creation is used to increase someone's wealth.
I disagree with the term "politics" here, because rent-seeking behavior is much broader and can involve other tactics.
Middle and upper class people are always desperately trying to figure out ways to keep people with anti-social tendencies out of their neighborhoods and away from their kids. As it stands in America there's no legal mechanism to banish annoying people, as was the historical way to handle this. Lower income is a very flawed but still useful proxy for criminal or otherwise annoying tendencies. So you get folks everywhere consistently trying to erect cost barriers to housing, because affordability excludes lower income residents. This is in reality one of the main reasons for the original suburban flight. The cost of car ownership necessary for suburban residency excluded social elements the new suburbanites were trying to evade.
If somehow there were a legal mechanism where people on a block could collectively say "No, these people aren't allowed to move in. Go away." Then housing would be way, way cheaper. Nobody would have nearly so strong an interest in driving up prices with artificial scarcity.
The business model for a laptop and technology in general has become one of planned obsolescence. Products need to be cheap so that a new one can be purchased in a short time.
I do not necessarily subscribe to that notion myself. My phone is a Samsung Fascinate that was purchased in 2010 and runs Froyo. I have no tendency toward latest and greatest however I do not dictate the market either.
The planned obsolescence came from the huge strides the market was making. I don't care that old Pentium 3 chips don't last for fifty years, because they are already relics twenty years later.
Making consumer goods bombproof when they will be comically obsolete in a decade or two seems like a waste of time, money, and resources.
>I'd much, much rather live in a world in which a laptop was a huge expense that I could only literally afford once every few years, but to be able to afford to put a roof over my head without hustling 8 hours a day.
I'd rather have the opposite, to be honest. Houses are affordable because there are mortgages; most people need lots of hardware in their life and only one house.
Also I want to mention that it is unlikely we will ever get "there" as property is not a good that can be mass produced. If I spend 1 million dollars designing a phone, I only need 20 dollars to instantiate a physical model.
Property cannot be instantiated. It is only bought, sold, taken or discovered and there's no more left to discover.
Land cannot be mass produced, but dwellings certainly can be. There is plenty of unused or underutilized land in the US waiting for a high-rise to be plopped on it.
Who would be slaves then if not decades of mortgage or expensive rent? Nobody (with power) wants people to be too free and happy, because that won't make them work; only pressure will (physical in less advanced countries or economical in more so).
Nobody has to sell you on the need for being connected to society, which is why millions of people living in wretched conditions spend what little they have on cell phones.
And while shelter is necessary for survival, most of the walls, rooms, windows, wires, etc. of a modern home are entirely unessential.
I've never really found looking at the 'average' (be it median or mean) experience to be very useful here, though.
In the UK something like 30% of homes are owner occupied with no mortgage. But at the bottom, millions are completely stuck struggling to even pay the rent, never mind even think about saving any money or getting the income multiplier / job security / deposit required to start along that path.
Far more relevant is how accessible the bottom rung is, and whether that top portion (and so the average) are simply propped up by legions of modern day serfs.
In the UK in particular I'd be happy to build a wooden shack on a bit of agricultural land near to some utilities, maintain it well and stay out of others' way. Capital costs would be incredibly low.
But then there are the costs of jumping through regulatory hoops. Or simply being shut down by a judgement that your society says you have to live in a city at ten times the cost, or else.
Our version of poverty is 'death by bureaucracy'. The welfare state has created a situation in which many are simply incapable of fending for themselves - and the results when the state turns its back (google for 'UK benefit sanctions' for more information) are truly despicable.
That was to get a base ground truth to establish that there was something to consider, and that I'm not babbling nonsense. If you have better numbers, I would be glad to see them. It's well known that housing sizes are going up in the US, and one of the associated terms is 'McMansion'. But name-calling like that makes for boring, go-nowhere threads.
While you attribute UK's 77sq.m/person to the "welfare state", the Dutch and Danish welfare states have 115 and 137 sq.m/person. (UK has 255 people/sq.km, the Netherlands 409, and Denmark 128, so it's not a simple matter of density which causes the difference.)
In Sweden, where I live, there's been a huge increase in the amount of space per person. In the 1940s, it was considered spacious for two parents and three children to live in a flat with a kitchen and 2 or 3 other rooms. (See http://poseidon.goteborg.se/sv/Sok-ledigt/Bostadsomraden/San... , "Trots sitt syfte är de flesta lägenheterna tvåor eller treor, vilket räknades som en rymlig bostad för en trebarnsfamilj på den tiden.")
So I don't understand your objection. You have no counter-evidence, you bring up the UK which has the worst history in this regard, and what information I can find does not back your statement that something as broad as "the welfare state" can be the issue for the UK.
Planning restraint, combined with the way that housing is subsidised directly (rather than say, giving someone money to spend on building a new home).
I have nothing against the welfare state - I'd rather see a citizen's income than the nonsense mash of policies we have at present, though.
It makes no sense to me that the state should subsidise rental payments to private landlords in perpetuity. We should be building homes and relaxing planning permissions.
How is "The welfare state has created a situation in which many are simply incapable of fending for themselves" not a statement against the welfare state?
In any case, you're derailing the conversation, and my working hypothesis is that you want to talk about your feelings rather than put any interpretable numbers behind it. What is wrong with my analysis enough that it should be considered not "very useful here", which is what you stated. What is your objection?
I don't exactly know the situation in Europe, but in Israel,many city councils aren't giving permits for building small apartments, because they prefer to attract well off population to their area.
And while it's true that some are spend without thinking on a house, there are plenty who would prefer a smaller house.
In the US, especially in the Midwest, former farm fields are quickly flipped and filled with stick-built homes in mere months. Seems pretty "mass-produced" to me.
In 'ancient history', it's fairly well known that people lived in ridiculous conditions, ten to a house and so on.
But what strikes me is that in recent years (say, the last 50 or so), housing has rocketed out of proportion around the Western world whilst other goods have become basically irrelevant.
I could buy 1,000 decent spec laptops for the price of a modest home. Or over a hundred thousand cups of Starbucks coffee. The car I have outside? Sixty of them and I could get a bargain basement flat.
Renting? A brand new Android flagship for the price of a months' rent. An utterly imaginably spectacular device.
I'd much, much rather live in a world in which a laptop was a huge expense that I could only literally afford once every few years, but to be able to afford to put a roof over my head without hustling 8 hours a day.
Will we ever get there?