Among my friends seeking to buy houses, the greater problem is the ability of large companies to buy up whatever is on the market, which they then immediately turn into a rental. It’s nearly impossible to compete with a company who will pay $50k over asking price, in cash, for the house you’re trying to get. Comparatively, immigrants don’t have the purchasing power to compete, so saying they’re the problem is a weird conclusion to draw.
Zoning law in some places makes building new homes very difficult, so I would like to see less/different local regulation there. But other than zoning it seems it would help more if the government would step in to disallow large leasing companies buying up giant swathes of the housing stock just to flip into rentals. Maybe incentivize those companies to increase their ratio of new construction, to help solve this supply issue.
You only perceive corporate landlords as the greater problem because we're not living in the counterfactual reality where there are millions of new apartments that are inexpensive, tiny, safe, quiet, modern, clean, dignified, and well-located.
In pretty much every major city in North America, it is illegal or there is too much red tape to build the affordable housing people actually want.
Why is it that living in a tent on the street costs $0/month but the entry-level apartments cost ~$2k/month? Why are there no price points between $0 and $2k? The answer is bad government policy.
What government policy would allow for a 2k apartment building and not a $500 apartment building?
I just don't buy this argument. The reason there's not a $500 apartments being built is because by expanding the residence out just a tiny bit you can charge $2000 for the same space that 2 $500 apartments would occupy.
I'm seeing this play out where I live that has practically no zoning laws or regulations (LOTS of building in unincorporated land). There's almost no $500 housing going in but a lot of new luxery apartments.
We know it’s from zoning laws because a few places don’t have this problem
> “We have kept our rent increases to about 1% whereas the rest of the country was looking at 31%,” Mayor Jacob Frey said on Monday, citing data from The Pew Charitable Trusts.
> “That’s a drastic difference. And in part, it’s due to the policies that we’ve passed.”
> It’s mostly simple supply and demand, according to Mayor Frey. An explosion of housing, made possible by eliminating single-family zoning requirements, has kept prices down.
This kind of zoning also builds desireable neighborhoods.
The neighborhood I live in has six-ten unit apartments on the same streets as six-to-ten bedroom mansions. In some places, you can see where the owner of the mansion had an apartment building constructed in their front yard.
I could never imagine this happening today. Yet everyone in the region knows of this neighborhood as being prestigious, with the best schools in the state, huge sidewalks that are packed with people, and a nice little downtown with a coffee shop, dairy whip, a public library branch, and some restaurants.
People have no problem recognizing what a great neighborhood looks like. But for some reason, local politicians can't seem to enact zoning laws that allow them to be built in modern times.
Most Japanese cities have little to no zoning. They ended up with some very desirable and,livable cities; of them, Tokyo is 31M and basically zero slums.
> In his budget address last week, the Mayor recommended $18 million in the city’s budget for 2024 go into new affordable housing and another $5 million in ongoing funding for building and maintaining going forward.
> Statewide, the legislature invested more than a billion dollars to the cause. Exactly how far that’ll all go remains to be seen.
This is not due to a change to zoning laws — the construction is dependent on substantial public funding. As you’ve demonstrated it is “bigger government” that is the solution to this problem.
> Still, on average, people are spending about 40% of their paychecks on renting a place to live.
I think it's fair to say they've made progress in slowing the growth of the housing problem, but it is a big stretch to say they don't have a housing affordability problem.
Housing is mostly local but a little bit national. If you have better housing prices than other cities, well, some people can work from home, guess who's moving in. People compare cost of living when choosing a new job.
Get most cities to do what they did and you get less of this net migration and housing becomes more affordable everywhere.
Some of this also takes time. You let people build, they start to build, that doesn't mean they've stopped yet.
If zoning regulations mean you're only going to be able to service 1/4 of the annual new construction demand, then the smart money is on serving the high end of the market. If things get zoned in a way that you can serve the whole market and not just the top end, you can bet that people will figure out how to build those units too. The market has been artificially constrained so that developers are making the choice between the segment of the market they want to serve, not serving the whole market. If they had the access to serve the whole market, we'd see someone who can get creative and do it cheaper, or more efficiently to compete on price instead of luxury.
This is generally caused by strict land use and single family zoning. In a situation where you can build a duplex/triplex/4plex on every single family lot, you can run an excess of housing in the areas that people actually want or need to live in which allows people to compete on other market factors like price.
Most of the markets in goods and services seem to evolve towards hollowing out the middle: companies offer either bottom-tier garbage or luxury price (but not necessarily luxury quality) options for those not price-sensitive. What makes people think housing is different? That with unencumbered ability to build, we'll end up with decent-quality, livable, mid-tier apartments? Other markers show we should expect a mix of luxury apartment with barely-livable tin can sized slums complexes. And all of them for rent, not to buy.
Not true. Automobiles have become vastly better at all price points over the last 50 years. Safer, more fuel efficient and longer-lasting. The same applies to smartphones, PCs, televisions, etc. And laser eye surgery. And passenger air travel since the Carter administration de-centralized (de-regulated) it in the late 1970s.
I won't comment much on automobiles - I don't buy new, and don't know anyone who buys new. It's all used market, and we're dreading the day the newest, touchscreen-controlled cars will be all that's available. But it appears to me that this market is highly regulated - safety, fuel efficiency and longevity still hit the bare minimum, just the legal minima have been tightened over the years.
Laser eye surgery - I wasn't even aware this is a category and there is much to differentiate between service providers on the surgery specifically. Plus, it's another tightly-regulated space, countering natural market tendencies.
Passenger air travel - you must be traveling first-class only to not notice that everything below is bottom-tier and getting noticeably worse every year. Sure, it's more affordable - I don't dispute that - but it's a question of how bad can quality go before it trumps price.
Smartphones, televisions - all examples of what I'm talking about. A huge amount of bottom-tier products, a few high-end flagship products. There's a degree of market segmentation so there's still some middle-tier options, but my impression is, they're rapidly dragged to the bottom.
As specific examples of what I have in mind, most of which I observed personally: everything not regulated about private healthcare; bikes and bike parts; food across the board; manual tools and power tools; clothes; toys; just about every commodity electronics. It's all low-quality noname brands, low-quality fake pseudo-brands, brands tricking people with old reputation, then nothing at mid-tier, then pricey brands that didn't start "capitalizing on their reputation" just yet.
Overall, what I'm saying is that the natural tendency of the market is to optimize offerings to be the cheapest and shittiest the market can bear - and I think this is a problem; there's a mid-point we can't seem to be able to keep in established markets. And in arguments for deregulating housing, I don't see anything addressing this tendency.
Seems like its just a 1-to-1 mapping of peoples wealth. The middle class is disappearing and the remainder organize into the upper class or fall into the lower class.
>Overall, the last 30 years have seen a revolution in automobile design. Better materials, longer reliability, and yes ease in repair.
>My grandfather restores classic cars, and I've been driving for 20 years. My first car was a '73 Volkswagen Beetle and he has Fords from the 50s-70s. I don't think he's even ever been in a car that wasn't a Ford. His daily driver is a F150, and my grandmother's is a Crown Vic-- both of which are a decade old.
>Nowadays, cars are built to survive, and they survive for years longer than cars from the 50s, 60s, or 70s. And once they're done for, they're designed to be easily recycled for reuse in other cars or products.
>Looking under the hood of my Outback, I see that the entire wiring harness has thick plastic coating, ABS plastic weatherproof connectors, and every inch of free-floating wire is wrapped in a wire loom.
>Compare that to a 50s-60s Ford or Chevy, with cloth-wrapped wires and bare metal compression fittings that corroded after six months.
>In my Subaru, the metal is galvanized, and heat/weight sensitive bits on the undercarriage are made out of aluminum.
>In a 50s-60s Chevy or Ford, the metal would have been bare steel, maybe with a coat of paint that would chip and flake off the first time you drove down a gravel road, and the bottom would rust out after the first wet winter.
>The engine in my Outback is 2.5L and outputs about 175 HP. It has gone over 120,000 miles without a single problem. The only maintenance I've done is an oil and air filter changes. It's about 25% over mileage for its timing belt replacement, but I'll get around to that eventually.
>A 50's-60's Ford or Chevy V8 might be around 5L and might put out about 210-250 HP (FACTORY STOCK NON-MUSCLE VERSIONS). It would also require religious maintenance every 2500 miles or so (monthly). Not only that, but after just a couple of years the seals would start going and it would start burning oil like a thirsty camel refilling its hump after a long desert trek.
>People are also replacing their vehicles less often now. Back in my grandfather's day and age, he would get a new car every other year. Now people are keeping their cars for 8-10 years.
>Average Age of Vehicles Reaches Record High, According to Polk [1]
>Back in the 70's, the Honda sedan was REVOLUTIONARY because it would go 30,000 miles without a major problem. Overnight people were introduced to a small, reliable car that wouldn't cost an arm and a leg to maintain. Now it is considered completely pedestrian, unremarkable, average even, for a car to hit 100k with no problems whatsoever. Back in "the day" this was something Mercedes-Benz sent you a metal medallion to affix to your front grille to celebrate.
>That plastic bumper won't rust, won't deform after a brush up against a light post, is easy to recycle, and doesn't need to be welded or riveted into place, just pop out some retaining clips and replace the bumper. Plus, it won't kill someone if you hit them at 15mph, and it will absorb much more impact than the ungalvanized steel plate that used to be used in bumpers and fenders. The old "good" metal bumpers and fenders would transfer near 100% of collision energy to the passenger compartment, and they would start rusting the minute the paint got chipped in the wheel well.
>If you took a "good 'ole" metal car like a Galaxie 500 or Chevelle from back in the day and crashed it at 40mph head-long into a 2012 Toyota Camry, the Camry driver would walk away with scratches and bruises, and the EMTs would be prying the steering column out of the metal car driver's sternum.
Air travel at any quality grade is more affordable. It's true new budget tier offerings with fewer amenities have been created, but that has made air travel vastly more accessible than it once was, so I don't see it as a negative.
Laser eye surgery along with cosmetic procedures are vastly less regulated than the rest of healthcare, and coincidentally, the only areas of medicine where costs have declined for procedures after adjusting for inflation. [2]
Bottom tier smartphones are far more capable than the first generation of smartphones, which was the $800 (inflation adjusted) iPhone.
> But it appears to me that this market is highly regulated - safety, fuel efficiency and longevity still hit the bare minimum, just the legal minima have been tightened over the years.
That's just because customers want something different. If the law requires 25 MPG and the carmakers can either give you a smaller, slower car that gets 60 MPG or a bigger, faster car that gets 25 MPG, lots of people pick the second one. Then you say they're barely meeting the minimum fuel efficiency but really the customer is the one making the trade off.
> Passenger air travel - you must be traveling first-class only to not notice that everything below is bottom-tier and getting noticeably worse every year. Sure, it's more affordable - I don't dispute that - but it's a question of how bad can quality go before it trumps price.
Air travel is a really weird market because the capital investment is huge but the market is fairly competitive, which is a recipe for bankruptcies. Make a bad prediction about customer demand or future fuel costs and you're not making enough to pay back the bank. Then they have to get creative or go out of business.
They tried price fixing for a while and got in trouble. The current trend seems to be cost cutting so they can lower the price and keep the seats full. It's the same thing as the cars: Customers keep picking the one with the lowest price, so they keep finding ways to lower the price.
> Smartphones, televisions - all examples of what I'm talking about. A huge amount of bottom-tier products, a few high-end flagship products. There's a degree of market segmentation so there's still some middle-tier options, but my impression is, they're rapidly dragged to the bottom.
This, and really most of the rest of your examples, is a result of China's long-term strategy to dominate manufacturing. Which is, use profits from one industry to subsidize another one until it dominates that too.
When they enter an industry their products are crap because they don't know how to do it yet. So no one would buy them. So they subsidize the price until they're cheap enough that people do. In a normal market they'd go out of business, but the government is financing their losses, so they don't.
Which destroys the middle tier products or forces them to slash quality and compete on price, because customers would pay more for them, but not infinitely more. And the low-end junk gets subsidized until it's cheap enough that people choose it.
That doesn't really apply to real estate. Real estate is already heavily tiered by price. If the 20th percentile house in a city is $200k and the 80th percentile house is $800k there will also be plenty of everything in between. It's not like the 20th percentile house is $200k and the 75th percentile house is $210k and the 80th percentile house is $800k.
Meanwhile most of the housing is still going to be the existing housing. If they build luxury housing, affluent people will buy it. If they build tiny studios, price-sensitive people will buy it. In either case you now have those people not bidding against you for the housing that already exists.
You are also under no obligation to wait for them to build something and then take whatever they offer. You can go to a construction company, tell them what you want and have them build it for you. You can get whatever you want -- if the zoning doesn't prohibit it.
I have an external garage building that I'd love to turn into a small ADU, but it's not allowed in my area.
Additionally, if you look at historical cheap rentals of the past, you see things like tenement buildings, which were arguably horrible, but provided a cheap alternate to homelessness.
You can also see examples of what low rent places look like today in Asian countries, such as Hong Kong tiny apartments. Many of those types of residences are not allowed by local government policies.
An actual $500 a month rental is going to be really tiny, might have a shared bathroom and kitchen with other units. And these are all things that are often disallowed by government policies.
In 2010, I had a $600/month rental with a kitchen, living room, bedroom, bathroom, in apartment washing machine/dryer and a fairly large walk-in closet.
With 13 years of inflation, that'd be $850/month. That apartment now goes for over $1200/month (Almost certainly hasn't been renovated). [1]
The issue is oligopolies. Few large businesses that own the majority of available rentals and thus can set prices to whatever they like to rake in the profits.
And the way you can tell it's not government policy driving up prices is this trend has been seen across states. There's no federal zoning laws, so why would everywhere from California to Idaho see the same drastic spikes in home prices? Why are existing units that have existed since at least 2010 (and I believe back to 2005) commanding $400 premiums over what inflation would dictate? Do you think back in 2010 they were losing money renting to me?
> The issue is oligopolies. Few large businesses that own the majority of available rentals and thus can set prices to whatever they like to rake in the profits.
Even if it's true that a few large businesses own most rentals, that kind of oligopolistic behavior should be undercut by new people entering the market by building more apartments - unless there's a big barrier to entry, like the difficulty in building things when there's restrictive zoning!
> There's no federal zoning laws, so why would everywhere from California to Idaho see the same drastic spikes in home prices?
The incentives that produce NIMBYs - wanting to keep supply low so that housing prices stay high, and not wanting to deal with any of the annoyances of increased density - are the same everywhere.
> Why are existing units that have existed since at least 2010 (and I believe back to 2005) commanding $400 premiums over what inflation would dictate? Do you think back in 2010 they were losing money renting to me?
No, but now there are more people who want to live there and they haven't built enough housing to keep up, so the bidding is more intense.
> Even if it's true that a few large businesses own most rentals, that kind of oligopolistic behavior should be undercut by new people entering the market by building more apartments - unless there's a big barrier to entry, like the difficulty in building things when there's restrictive zoning!
You're missing the forest for the trees here. The 'new people' entering the market sell the apartments and buildings they create to the big businesses in question. I've lived in apartments for my entire life, eventually they all get acquired by Greystar. Even the smaller ones.
Either these companies have an unlimited amount of money and the construction companies should thereby hire everyone in the city to build ever more housing so they can make an unlimited amount of money, or they have a finite amount of money and the construction companies will eventually have taken all of it and yet still be able to build more housing after that.
It is government policy. Specifically, it is restrictive zoning. Landlords do not get to set prices to whatever they want, they set prices to what the market will pay.
If rent has gone up faster than inflation it just means that demand has increased or supply has decreased in that time.
You can build apartments for ~$250 per sqft. The issue is that local governments make it really hard to build more apartments. If you disagree I implore you to go get a construction loan, build some housing, and rent it out.
>If rent has gone up faster than inflation it just means that demand has increased or supply has decreased in that time.
Not quite. Landlords have the ability to fake demand in order to raise prices. One of the ways they do so is by leaving units intentionally empty (as they've done in NYC), which artificially restrains supply and allows them to raise prices on the units they own much higher than they'd normally be if they were releasing all units to the public. They can do this because these large apartment units are all owned by a small number of companies.
How is that going to make them money? They would have to withdraw enough units to raise the market price across an entire city -- and forego the rent on all of those.
That kind of thing only makes sense if the city is imposing some kind of rent control or similar so they can't rent them out for the market rate and start getting weird incentives for rich people accounting chicanery.
It makes them money because if you pay attention, apartment prices almost never fall nowadays. They always gradually go up. In a market where supply is constantly being added to meet demand, you would expect costs to go down in cities where people are leaving. For example, NYC's population has remained relatively static or even gone down, but the rent prices sharply go up, far more than inflation.
Keep in mind the majority of the value is in the property too, not the amount made from rent. They can effectively sit on the property and still grow value, then withhold apartments in order to either force legislative changes or force rent to go up. The loss of value from leaving those apartments empty is less than the gain in value from being able to raise rent, which results in perverse incentives.
COVID was an outlier for the obvious reason, during which it dropped by <0.1%/year, and is already back up to the high water mark.
Meanwhile the city has added less than that amount of net housing with the obvious result.
The housing market is also in a very weird state right now, because the fed raised interest rates, which long-term lowers housing prices by making it harder to borrow for a mortgage. But because the lesson people took from 2008 was to get a fixed-rate mortgage, now most existing owners have below-market mortgage rates and can't move without taking out a new mortgage at the higher rate, so they stay put, which means there is no inventory on the market and anyone trying to buy has to be desperate enough to outbid anyone else for the scarce inventory. But that can't last forever because eventually people will either be forced to move for any of the usual reasons or will have paid off enough of their existing mortgage for this to be less relevant -- or interest rates will go back down. Which, counter-intuitively, could actually lower housing prices by increasing inventory, especially because by then there would be pent-up demand for sellers to be able to move.
There is also some uncertainty in the stock market -- it had pretty much been on a bull run since right after the crash in 2008 until COVID but post-COVID has been a rollercoaster -- so you have a lot of investors looking to diversify and buying up real estate. Which they might be stupid to do because housing prices are crazy -- look at this graph and realize that 2007 was a massive housing bubble:
> Keep in mind the majority of the value is in the property too, not the amount made from rent.
They still get that whether they rent it out or not. It's like saying well, I could get a 9% return from this investment, but if I refuse to rent it out then I'd still get a 5% return, so let me do that and set the rest of this money on fire for no personal benefit.
> then withhold apartments in order to either force legislative changes or force rent to go up.
But this is the part that makes no sense. To be profitable, you not renting out a subset of your units would have to make the rents on the other units (i.e. rents city-wide) go up by more than the entire amount of the rent on the units you withheld. How are they going to do that? The largest real estate investor in NYC owns far less than 1% of the real estate.
For that to make sense would require some enormous disadvantage to actually renting out those units, like rent control or laws that make it hard to evict destructive or non-paying tenants. Because that would make renting the units a significant risk to your investment, since a buyer wouldn't pay full price for a building full of tenants paying below-market rent or trashing the building who can't be removed.
But then the cause of the rent-increasing behavior is the inept laws that increase the cost of providing rental units by so much that it's not even profitable to do it when they're already built, and the solution is to remove the laws creating the perverse incentives.
Self-serving politicians like to take offense when investors respond in predictable ways to toxic laws, but umbrage doesn't lower the rent.
It has nothing to do with inept laws. It has everything to do with the corrupt behavior of often large companies that own all of these rental units.
Like I get the feeling you don't rent. When I was living in Austin, my apartment rent shot up over 30%, in an area on the outskirts of Austin near nothing. It's nice to think that this problem could be solved by simply dumping supply on the market, but even in areas where that's being done or where there isn't significant demand rent is skyrocketing. And even when supply is dropped, it's bought up by said large corporations and investment groups that price fix it anyways.
It's occurring throughout the entire US regardless of local laws, though some areas are gouged even further. We know large landlords collude on this sort of thing to the point there's an actual term for it called warehousing [1]
> When I was living in Austin, my apartment rent shot up over 30%, in an area on the outskirts of Austin near nothing.
Austin's population has been increasing by ~4% annually for decades, which is high. Construction responds to that but it has a lead time. And Austin has zoning restrictions, but notice that it also has lower rents than cities that have more.
> It's nice to think that this problem could be solved by simply dumping supply on the market, but even in areas where that's being done or where there isn't significant demand rent is skyrocketing.
Can you name any US city where the amount of net housing growth exceeded the amount of population growth over the last 30 years?
> And even when supply is dropped, it's bought up by said large corporations and investment groups that price fix it anyways.
Most of them are buying it to rent it out, which adds supply to the market. The problem, regardless of who the buyer is, is that they're not building enough pretty much anywhere.
> "They're sort of not advertising their full inventory," Walkup said, "simply because they don't want to overwhelm the idea of what the supply currently is."
That's something else entirely -- they have a bunch of empty apartments and they wait to put some on the market until they fill the others, because why pay to advertise multiple units when they're all about the same? They're effectively all still on the market because as soon as anyone actually rents one they start advertising another one.
What you should be asking is, why don't they lower the prices some so they can rent them all out quickly and get some rent instead of none?
But that is the bad laws. If there is a short-term reduction in demand for urban apartments because of COVID, normally the incentive would be to lower the rents to whatever it takes to fill the units and then raise it again if the demand recovers. But if you have rent control or similar, once they rent it out they'd be stuck getting the short-term lower prices for decades to come, so they'd rather stick it out until they can find a tenant at a higher price.
Get rid of the bad laws and that incentive goes away.
But you still need to allow more housing to be built, because otherwise the rents would go back up as soon as COVID is over and people start moving back into cities.
Urban landlords don't have any kind of market power outside of control over zoning boards -- there are too many of them and none of them own a high enough proportion of the units to make a dent. Which is why they capture zoning boards to prevent supply from increasing to satisfy demand.
Isn't that what lobbying is all about? You effectively have companies paying politicians to keep these zoning laws that keep the rents as high as possible. Profit above all else.
Arguments that boil down to "government policy" can basically be translated to "big companies policies". Whether it's through illegal or legal bribing (lobbying), it's what we see after decades of influence.
It’s big companies but it’s also (mostly?) the nice retired insurance agents and school teachers who like their quiet neighborhood and the fact that the house they bought 30 years ago can be sold for 4x its inflation-adjusted purchase price when they’re ready.
100% agreed. Our individualism and own greed are also a great contributing factor. After-all we ultimately elect those politicians and also have to profit similar to a company (hopefully not at all costs though).
> It’s big companies but it’s also (mostly?) the nice retired insurance agents and school teachers
Those retired agents and teachers have exactly zero influence on local and state politicians.
Those big companies who host fund raising dinners at the CEOs mansions and contribute millions? Yes, a lot of influence. To the point where we've seen plenty legislative bills which turn out to be just cut & paste from what some corporate sponsor wrote.
You're talking about national politics or state-level politics in big states like California. The mayor of a random town with 50,000 people is not getting a million dollars donated to their campaign by anybody.
It is actually the local voters who decide who governs the town. But when residency in the town requires you to own a house, the existing residents vote for people who make housing prices go up.
> But when residency in the town requires you to own a house
There is no such place in the USA. Residency means you live there, which you can do also by renting a place. Then you get to vote on all local elections.
Seems to be happening all over. These are South Western Ontario (yes, Canadian bucks) numbers.
The 2 bedroom apartment I rented in college (ended around 2013/2014) was $719/mo. It is now $1699/mo.
It wasn't exactly in a nice area, either. Recently the news caught a story about somebody's drug dealer setting off fireworks in his apartment, which I suppose is pretty exciting if not in the worst ways.
If it costs twice as much to build a residential structure as it did 10 years ago, then rent will cost twice as much. There's no conspiracy, it's not Blackrock buying up all the houses, it's not the greedy politicians. It's caused by government spending beyond its means, expansion of the monetary supply, and the increased regulations that create more risk for investors and causes prices to go up.
The price of inputs went up because of COVID supply chain issues and higher demand for inputs. There are all indications of the high prices being temporary and they're already starting to go back down.
Setbacks, parking requirements, and permits are some of the imposed fixed costs that a developer would have to pay to make a 0 square foot apartment. Then you have natural fixed costs of design, engineering, acquisition.
Still, it mostly comes down to a developer's understanding of the market. We're so housing starved that there's demand at all size levels. Why would they choose the less profitable path?
In many places, a combination of requirements become a de facto floor on apartment size. Examples include requirements for natural light, parking minimums, and shared common spaces.
Some cities, like Seattle, go so far as to set an explicit minimum apartment size. It's obviously going to be challenging to build a brand new $500/mo apartment if it cannot be less than 500 sqft.
All that said, looking few brand new cheap apartments is generally the wrong approach. There's a whole filtering process of older apartments that's supposed to assure that. Similarly, nobody expects brand new cars to be price-competitive with fifteen year old Honda Civics.
Requirements for parking spots. Parking spaces are not free to construct or to maintain.
Requirements for windows.
And no, of course I don’t wish to live in a windowless single-room apartment without a kitchen, private bathroom or space for my car. But were I broke, I would rather live in that than pay money I don’t have for a nicer place.
> The reason there's not a $500 apartments being built is because by expanding the residence out just a tiny bit you can charge $2000 for the same space that 2 $500 apartments would occupy.
I understand that the typical pattern is that new construction is luxury, and over time those units wear down and become more and more affordable. Adding new $2,000 units to the market reduces the value of existing units.
> What government policy would allow for a 2k apartment building and not a $500 apartment building?
Basically all of them? All you need is minimum parking + a height limit. Since the ROI of the lot is a function of units *average price, and a height limit + parkinng requirements caps the # of units per lot, the average price has to be higher for it to make sense to an investor.
Also it’s worth noting that supply is just incredibly constrained vs demand in nearly every major American city. Anything to help the supply side decreases housing costs across the board, even if it’s luxury housing.
I read today that there are 7 billion square feet of unsold homes in China. Apparently no government can get housing right. The west has too little due to bad regulation & NIMBYs.
China built too much (due to certain regulations being too lax it seems, and corruption probably).
I think both are failures of planning over markets. China propped up giant companies that built whole cities speculatively, but in the US it’s a that they have comparatively strong municipalities that prevent new building in their neighborhoods. I think the solution there is to weaken the strength of these zoning laws. We have been kinda running an experiment across states and cities and can see the housing crisis is worse in places with stricter zoning laws. https://crsreports.congress.gov/product/pdf/IN/IN12195
Because I didn't see it in any of the other comments: '
The realistic path is that apartments become $500 apartments late in life cycle. It's extremely rare to build low-end housing, but not so unreasonable for units to filter down-market over time when new construction provides adequate supply at the upper end of the market. The logic of updating vs. repairing changes when new housing is a regular occurrence.
Interestingly - if you allow growth to keep up with demand, there are units today that are being held off market (as investments) that suddenly aren't good investments anymore, so they go back on market.
Didn't Boise, ID have an influx of better-off people from the coasts during the Pandemic? If plenty of luxury housing is being built it was likely in response to that. Ultimately those houses will get rented or otherwise occupied, which should free up housing at the lower end.
Compare this to places in the Bay Area, where it's not practical to spread out any farther (no good public transport because of a dozen or more transit agencies that are always fighting and Caltrain, which is a hugely dysfunctional organization that can't even run trains at a piddling frequency). We have houses being blocked using CEQA and other nonsense, all because people who work in unproductive industries or not at all (non-tech, retirees) have decided to get more than their share by denying permits for new construction.
What's better? Some housing being built or none at all?
> Didn't Boise, ID have an influx of better-off people from the coasts during the Pandemic?
Yup
> What's better? Some housing being built or none at all?
Loads of housing is getting built but what we've not seen is subsequent drops in housing prices (the opposite in fact). This speaks to problems beyond a housing shortage.
Who knows, maybe in 10 years that will reverse and the market will correct back to pre-pandemic levels. Doesn't look like it, however.
Googling around it looks like the population of Idaho has gone from around 1 million in 1990 to around 2.2 million today.
Total housing starts from 1988 to today are around 400k (https://fred.stlouisfed.org/series/IDBPPRIVSA). So assuming that Idaho had "enough" housing in 1988, they've only built 1 unit of housing for every 3 new residents since 1990.
USA is extremely behind on housing raw numbers by about 20 million homes based on population growth. We stopped building in 2008. Almost no homes were built that year. It took 10 years to ramp back up.
Just in the past 2-3 years started to build as many homes as we need but the rate will take 15-20 years to catch up assuming it stays at the current rate.
Basically if you're 40 now you will be 60 by the time it's okay again and that's if we even keep the current build rate for that long.
> Loads of housing is getting built but what we've not seen is subsequent drops in housing prices (the opposite in fact). This speaks to problems beyond a housing shortage.
No it doesn't. The only thing that would indicate a problem beyond a shortage would be if total supply was greater than and increasing greater than total demand. Building "loads" doesn't bear any of that data.
Not the US, but here real estate developers are complaining that modern stringent building code requirements (i.e. gas free, highly insulated) combined with high labor costs make it so that it is infeasible to build lower income housing.
I think the bigger problem is that land value is insanely high in The Netherlands right now, but there's probably a truth in the middle as well. Land costs might be lower in the US, but maybe not closer to metropolitan centers?
> What government policy would allow for a 2k apartment building and not a $500 apartment building?
At least in the UK, it's because there's pushback against perceived "luxury" flats being built rather than affordable places. That luxury flats are still 2-bedroom 600sqft starter homes doesn't really come into it, it's the class of people each is perceived to be for.
So local governments block mid-and-high end housing in favour of fewer, worse, cheaper homes instead.
something I wonder about is that I'm pretty sure new builds target the more premium market. And I'm pretty sure that has mostly been true throughout history.
But I wonder/think that in the past infill targeting $500 apartments would be an older house that gets subdivided. Like all those brownstones in NYC that were turned into SRO, or the mansions in Pittsburgh that were chopped into four-plexes, etc.
Because there is no such thing as a "new construction low end market". The finishings of a house or apartment aren't the expensive part of construction.
Look at the inputs to construction, there's no difference between low end and high end. Everything has to meet building code up to an extremely high standard due to modern building regulations. New laws mandate things like low-e glass, tougher insulation codes, solar panels (California requires them on new builds now), seismic, radon mitigation, AFCI, firewall requirements, etc. The average 50 to 100-year-old apartment has none of those things, and it would be illegal to build such a thing today.
Whats their secret? Sane zoning laws created at the federal level that separate industrial use from residential, but don't segregate humans based on race or class.
SROs used to exist to fill that gap, but were largely banned over the last hundred years. The stupid thing is that now they basically exist again in the form of regular hotels, except city governments are the ones paying full price to house otherwise homeless people.
this would be interesting history to review in video format of someone walked through the before and after and the transition. This makes me think of these very old hotels which used to line a major street in my town that slowly faded away and crumbled. I wonder if they were SRO properties essentially.
What specific government policy is causing developers to only build $2k+/mo rentals? You can't just vaguely say "government" is at fault without connecting the dots.
This seems more like the market's fault. If homes in a particular area are going for $2k/mo, then that's what they are going for. If this is the government's fault, are you proposing price controls?
You can’t built a “$2k rental”. You can only build a rental that someone will pay for. Landlords are building luxury housing because it’s the only thing that’s profitable right now due to the immensely ridiculous laws that don’t help people. But if an apartment building popped up in downtown SF charging $800/mo, it’s not like only the low income people would live there. Many people living in $3000/mo apartments also want cheaper apartments, which pushes up the price! So you can’t build “cheap apartments” or “luxury apartments”. Only “apartments”. And lots of them.
But if we suddenly built a million “luxury” apartments in each major city, then they couldn’t all charge high prices because there would be a bit of competition for tenants. Prices on the “slightly less luxury but still nice” apartments would have to drop faster.
A non-trivial amount of "property" is speculation at best and concrete money laundering at worst, especially in the largest cities
It's not supposed to saleable or rentable. But it does take up land that could be used for real housing. And it also drives up the perceived value - and price - of both rentals and outright buys.
Rent control may or may not be a solution. But many of these schemes are run through shady shell companies, and aggressive enforcement of financial reporting and taxation would go some way to fixing the problem.
That's the case in any predictably supply restricted market. That behavior completely disappears if you don't restrict supply, because if people can build more housing, housing depreciates - and investors put their money somewhere else because they don't want to lose it.
This is the key. You can’t have a vacant building charging ridiculous rent because of “speculation” while there are 10 similar buildings nearby that charge half the price and have tenants. No sane investor would fund that
> You can’t built a “$2k rental”. You can only build a rental that someone will pay for. Landlords are building luxury housing because it’s the only thing that’s profitable right now due to the immensely ridiculous laws that don’t help people.
That's what I'm asking: Exactly which laws? Nobody seems to be specific.
Lots of people are specific, but it's a HUGE set of laws, and they're slightly different in different places. Like if someone says to you "supply restrictions due to single family zoning", someone else will say "Well Houston doesn't have that", but Houston allows you to sue your neighbor if they cast a shadow on your property, so it's a different method that gets to the same result.
For example some zoning laws have a height restrictions, which limits my development to 3-story buildings, when I would actually want to build a 5-story building
For building codes, some would require me to put in $100 breakers, when I could do with simpler $20 breakers, etc. etc. for a LOT of items, which also feeds into the material costs.
If you want more specifics than that - open up your county/city website and start reading. It's not up to HN to do the legwork for you.
> if we suddenly built a million “luxury” apartments in each major city
How would you realistically "suddenly" build a million apartments? Is there enough labor in the country to do that? Enough land in each major city? A million is a lot. Some ddging suggests San Francisco has about ~400K housing units, is adding a million realistic? Let alone suddenly?
> there would be a bit of competition for tenants
But no builder will build apartments that might have to be rented at a loss if the bidding war takes prices too low.
Assuming you are actually interested, there are three different things that happen here in housing. Keep in mind you're describing how any commodity continues to have a growing market; you'd just never ask this about consumer goods since you're not used to thinking about how LG or Kohler or Fisher-Price stay in business.
1) Developers want to continue in their business, so they cut costs. This means factory built components, vertical integration, the same things that cut costs in every other industry. Today they have no incentive to actually compete.
2) Without zoning, any privately held land becomes available for housing, so you see completely new business models. A developer builds an entire neighborhood from scratch, for instance - this is how many of our late 1800s / early 1900s neighborhoods happened, before zoning, and they're often some of the best walkable urban centers now.
3) New entrants bring innovative solutions at scale. Modular buildings explode. People come up with shit you cannot possibly think of today.
> you'd just never ask this about consumer goods since you're not used to thinking about how LG or Kohler or Fisher-Price stay in business.
This is actually entirely backwards -- it's much more common for me to hear examples in informal conversation that show some understanding of how producers of household goods might want to avoid oversupply because it drives prices down and volume on smaller margins is a tough game, sometimes well worth the rewards, sometimes with its own undesirable consequences.
I literally never hear this from anyone who talks about housing supply, to the point where I'd be willing to bet the majority of people talking about it online are only tangentially familiar with the concept of diminishing marginal returns at all and the other 90% it just never occurred to them it relates.
> Today they have no incentive to actually compete.
As long as you've got competition you have incentive to compete. Along with the incentive that cutting production costs in the world we have produces greater margins as surely as in some imagined counterfactual world where there's no zoning or something.
> Without zoning
Without zoning you might get out of having to account to a municipality, but nothing changes about the demand for different kinds of use in a given area or the economics of providing it.
> Modular buildings explode. People come up with shit you cannot possibly think of today.
because markets, right?
Modular design and prefab have been a thing for decades. Where they have advantages, they should (and in some cases are) already thriving.
There are a ton of requirements placed on what can even qualify as housing.
To stick close to the example, rooming houses (SROs) are effectively illegal in most cities these days. You simply can't have a commercial venture that rents out cheap barebones bedrooms with shared bathrooms. That's due to regulations that were designed to get rid of rooming houses. Bedrooms are also required by law to have a window and closet with doors in many places.
I'll admit that living in a place that looks like a college dorm isn't the best thing, but we are at the point where there is no middle ground between an apartment and a tent on the street.
Indeed you are correct. But there are good reasons (and many deaths, maimings) underlying many of the codes that make building so much more expensive than in the past.
I mostly know about Seattle, but a lot of these are nationwide too:
Parking minimums, minimum unit sizes, long and costly “environmental review” (a classic in Seattle, where it’s sadly almost never used for environmental purpose), lengthy “community design review” (another classic for Seattle, which typically has the effect of allowing only extremely conservative design), zoning restricting how much can be built (Seattle is famous for having the highest percentage of land zoned SFH of any major city).
Seattle rental prices increase over the past 10 years is extremely correlated to the housing deficit (population growth minus housing built). It’s not just a matter of “homes going for $2k/mo”, it’s why they’re going for $2k/mo.
Zoning and building codes drive up the cost of new construction. The inventory of buildable properties in cities is artificially scarce due to zoning restrictions, and that scarcity drives up the base cost per square foot. Even with land in hand, you can’t build just anything without meeting an insane number of code requirements, all of which add real costs that drive up the minimum rent amount necessary to provide a positive ROI.
Multistory buildings with running water, electricity, heat, and other “basic” requirements are expensive to engineer and build. No one wants to build something and then lose money, but that’s where we are at with new construction.
Make no mistake, it is entirely the government’s fault. It is illegal everywhere to build something that costs less.
It's not entirely that it's illegal to build cheaper stuff, it's also that there is no incentive when zoning artificially limits the amount of the market you can serve.
Zoning laws like single family zoning, requiring parking spots for every unit or even every bedroom, disallowing zero lot lines on lots that allow multiple units. All of these things add cost that may not pass along any value to people in the market.
Aside from the engineering complexities of modern buildings, we've also limited ourselves to building either single family or 200 unit apartments when most cities have a ton of space for 3/4 unit homes which are considerably cheaper to construct. We built our zoning laws on the idea that we could just always expand outward into suburbs forever. But that approach is broken as people start to move back into cities.
I think the bigger problem is that low income projects don’t “pencil out” a lot of the time. A city can step in and say some percentage of new buildings needs to be for low income but if they get too aggressive then developers will just choose to build elsewhere.
> not living in the counterfactual reality where there are millions of new apartments that are inexpensive, tiny, safe, quiet, modern, clean, dignified, and well-located.
China serves as this counter factual and it's facing an even larger housing crisis. Massive building of houses lead to many people buying up property for investment reasons and now there is a pretty clear oversupply while plenty of people still struggle to find housing.
I don't really understand why HN is obsessed with building unlimited housing as though this will fix the problem. For years people clamored that this was the solution to all of SFs problems, but as SF starts to shrink it already looks deserted, I can't image what happen if the HN fantasy of building unlimited massive apartment housing had materialized.
China is especially interesting since it appears that much of the housing stock was built purely to be a financial instrument, and was never occupied.
There are entire towers that were never used as residences, but just used as investment vehicles based on faith rather than any sort of realized value.
This is really a story about the dangers of using housing stock as an investment vehicle.
North America has a related problem of financialization, but is complicated by rules constraining stock in the places where people would like to live.
I would argue that you need rules around financialization (punitive capital gains taxes on market based gains for non primary residence), as well as rules around allowing people to do reasonable things with their property (infill, single family zoning, etc) to increase the amount of allowable stock.
Monetization of real estate in china is exacerbated by the fact that A) there aren't a lot of great investment opportunities available to most chinese people B) the chinese government has a history of propping up property values, so there's a perception that housing is a safe investment.
The situation for non-housing assets is not quite as bad in the US.
I don’t understand how the consolidation of the housing market doesn’t create a feedback loop that prevents that counterfactual reality?
A few asset management companies have been purchasing the entire supply chain. From land to homes, from builders to agents.
These companies have a large amount of capital to deploy to make sure their assets go up and to the right.
It also seems like that capital being deployed to create a positive feedback loop pricing buyers out of the market is being funded by … buyers in the market. It’s partly their retirement assets. It seems that, in a very real way, buyers are bidding against their own retirement accounts trying to maximize returns in a decelerating market.
I very much agree that it’s government policy that gave rise to this, and that the counterfactual reality would normalize prices, but I’m not sure you can separate off corporate buyers from the feedback loop.
There is no evidence that the housing market has reached a level of consolidation needed for cartel-like activity (i.e. withholding supply to increase total rent revenue) to be feasible. No one is withholding supply.
Asset management companies don't buy houses and leave them vacant. They rent them out. There is no net-loss in supply. There is no effect on rents, only purchase price.
> These companies have a large amount of capital to deploy to make sure their assets go up and to the right.
These companies are required by law to share their investment strategies. They explicitly state that they are only interested in buying housing in areas with strong job markets and _restrictive supply policies_. It makes no sense to buy housing in an area where the bottom can fall out on rents because other people with money can just build more housing.
Blackstone et al. are a convenient boogeyman, but they are merely taking advantage of our housing crisis, not creating it.
From two different articles. It is less than you think.
>Large institutions owned roughly 5% of the 14 million single-family rentals nationally in early 2022
>Institutional investors, referring to entities that purchase 100 or more properties, accounted for under 3 percent of home sales in 2021 and 2022, according to Freddie Mac. So-called “mom-and-pop” investors, who own fewer properties, are growing at faster rates, and according to the National Rental Home Council, only 1.16 percent of single-family rental homes were owned by rental companies. Americans for Financial Reform estimated that as of June 2022, private equity firms owned about 3.6 percent of apartments and 1.6 percent of rental homes.
> build the affordable housing people actually want.
And the unspeakable little problem that people don't want to live around the people who will be living in the affordable housing people actually want. Hence, NIMBY.
This is an interesting point. So the housing problem is (at least partially) a crime problem? Because I don't think there's anything that makes low income housing _inherently_ unpleasant to live next to; it's more a question of how the people who live there tend to conduct themselves, and to what extent that behavior is tolerated by the local authorities. I don't often see people complaining about living next to affordable senior living centers, so it's not really the income level of the residents that's the problem.
It's not even a "crime problem". It's much more often people expecting their class prejudices to be embodied in the built environment, so that working class/poor/immigrant folks - which has nothing to do with crime, I hasten to add - are not defiling their beautiful suburb.
I’ve never been to the US, so I don’t have a good idea of what it is like there, but over here I lived for a couple years in a poorer district of Warsaw, where I would never be able to get good sleep, because there would either be a neighbour screaming out of nowhere in the middle of the night, or a party going on with music on full blast a floor up the whole night. Every night. Police wouldn’t do anything about the noise. It was also commonly accepted to smoke in the stairwell, leaving the cigarette dust on the floor in little dunes. A couple times I found a big pile of crap (once it was literally cow crap size) left in the middle of the first pavement tile at the exit of the building. I moved to a more expensive district. One of the best decisions I made in my life for my mental health. So it’s not a crime problem, but it is a real problem of public order, tidiness, peacefulness etc.
> a real problem of public order, tidiness, peacefulness
Side note: that's part of what I meant by "crime". Usually in the states there are laws or ordinances enforcing such things even if they're not necessarily criminal statutes.
It's possible some of it is simple prejudice. But personally I'd bet the bigger factor is that people don't want drug deals and gunfights happening right outside their house. (How much of that fear is rational vs prejudice, I'm not sure, but I'd bet it's a lot more than "none at all".)
I don't have anything concrete to substantiate this assertion though (no more than you gave anyway), so I guess we'll just agree to disagree on this point...
This here. You can't fix housing problem in a bubble. You need to solve healthcare, public transit and more. It needs to be handled as a complex unit with solutions advanced in parallel.
I think this may be changing as older Americans realize it is their own middle class children who need affordable housing in order to live close by with grandchildren.
Retireees wanting to see their main investment vehicle lose value so their lazy kids who can't bootstrap themselves into a home as hard as they did can live near them?
You say this like every developer would be rushing out to build low-income housing if only they could.
Developers build expensive luxury units because they can rent them for $2k a month by scalping tenants from nearby buildings who are currently paying $2.1k per month, because the buildings really don't cost that much more to build, the higher forecasted income from said renting makes it easier to sell to banks and get financed, and because every local politician is happy to have a new set of expensive units to tell the public about, especially if it's near a new commercial development they can hype up for bonus points. Because at the end of the day: people aren't housed because people need housing, people are housed because it is profitable to do so. And housing the middle class is always going to be more profitable than housing the poor. Which paradoxically means, as long as the motive is profit, it is incentivized more to cater to a smaller group of buyers with more money than a larger one with less. And, the ability for investment groups to write off losses means they are incentivized, in turn, to keep housing that the poor can't afford empty instead of lowering the rents, because too many renters at a lower rent would make them less money than simply holding onto the appreciating asset and writing off the lost rental income.
This is not to say that government policy couldn't do a ton to fix this, but it's basically all policies that go against financial motivations in a system where money and power are incredibly well correlated with one another, so it's practically a non-starter. Low income housing benefits people who are low-income and will attract them as a result, and no city in the entire fuckin world has a financial incentive to cater to poor people, because they're, you know, poor. If they did we would have a ton more options for things like reliable and well priced public transit, not more bloody freeways.
> housing the middle class is always going to be more profitable than housing the poor
You could make this argument for any product. Of course it’s more profitable to cook steaks for the rich. That doesn’t mean nobody poor has ever eaten.
About one percent of Americans are poor on a global scale [1]. Unaffordability of housing is a political choice. It is driven by an alliance between cynical and ignorant interests.
Yeah you can, because the vast majority of products are built and priced for the middle class, including
> Of course it’s more profitable to cook steaks for the rich
Food, which is why we have vast areas in the USA where it is impossible to buy groceries without driving 40 minutes or more, which means fresh food is basically out of the question, which is fine anyway because those people probably can't afford anything but over-processed calorie dense foods that store well. Because again: producing food is not done because people need food, it is done because it is profitable. Or in the case of food deserts, it is not done because it is substantially less profitable. Much like building low income housing.
And Americans being rich on a global scale doesn't mean shit when median expenses for said "rich" Americans are getting more expensive all the time. Cars are basically entirely a poor tax on Americans, so yes, we all drive enormous and ridiculous vehicles, but those same vehicles are also slowly driving us all into fucking poverty because a century ago, the car companies killed any decent public transit in the vast majority of cities, and people like Robert Moses used building highways as a way to fuck over black people on a scale not seen since the abolishing of slavery.
Our houses are certainly nicer than most people's too, which is why we're spending upwards of 1/3-1/2 of the money we make on them, oftentimes not even earning equity in the process: half the money you make, just dumped in a damn hole, never to be seen again. And each time the housing market crashes more of the supply ends up in the hands of banks and hedge funds, ensuring it'll be just as expensive in the future for us to pay to live in. The rich get richer, the poor get poorer, almost like everything is doing exactly what it's supposed to be doing.
You could live a comfortable lifestyle on an American full-time minimum wage in the Republic of Vanuatu, that's fucking irrelevant to everyone because no one who makes that wage lives there.
> Food, which is why we have vast areas in the USA where it is impossible to buy groceries without driving 40 minutes or more
Can you name where these reasonably densely inhabited areas are? That's difficult to believe.
Sure, there are vast areas in the USA where grocery stores are far away, because vast areas of the USA are nearly empty from inhabitants. But can you name a few towns with reasonable population where they have to drive >40 minutes to the grocery store?
> Of course it’s more profitable to cook steaks for the rich.
It's equally as profitable to cook steaks for the poor. The margin on the steak is the same, regardless of the wealth of the buyer.
This is not true for apartments. The renter holds the apartment hostage for the length of the lease, so the behavior of the renter determines the margin. Someone who leaves the apartment as it was is high margin, someone who trashes the apartment can leave you with negative margin. Even for the entire apartment building.
Reality is that people who are rich are often required to be functional, you don't get to keep the $400k/year job if your suit smells like cat urine from the 19 cats in the apartment whose litter box you never change. If you slam back 5 or 6 cases of beer every weekend starting Thursday at 3pm, and toss the empty cans and boxes in the living room until they pile to the ceiling such that you can't get to the bathroom and so you just start shitting in the corner or the kitchen sink... likewise, you tend not to remain wealthy.
Renting to a poor person allows for alot more dysfunction, and it can cost you. You can't discriminate blatantly though, but raising the price filters them out pretty well.
Poor people who don't trash apartments must not only be the majority, but a gigantic majority, of course. But there's no way to tell one of those from the assholes who do trash apartments. And landlords aren't in the fairness business anyway, so they don't care.
I grew up in Tucson, a city full of garden apt complexes that in the 2000s charged $300-$600 for a one-bedroom apartment. All of them were built by private developers, owned by private mgmt companies, there were no rent control laws, and rents stayed pretty low there all the way up until the COVID demand shock.
You aren't going to ever have cheap housing in a desirable urban core, but the vast land area of inner ring suburbs can house many more people if upzoned.
I dont think the Government can do much (that it will do well), but I think it needs to:
1) Curtail companies and LLCs from acquiring Single Family Residences (SFR).
2) Dramatically step up incentives for builders to increase quality control and build quality while increasing punishment severely for fraudsters.
In my opinion flipping, rentals, and "fixer uppers" have gotten out of control. I see the only way of curtailing this as penalizing those types of lenders in interest rates or taxes to push them out of the market. For those unaware, flippers seek out private money lenders aka hard money lenders and pursue crazy high interest rates that balloon after 3, 6, 9, or 12 months. The idea is by taking on loans while they flip properties they can take on risk/liability, but spread their assets out and purchase/flip more properties. It happens for almost all property types, but typically is done for SFR/MFR because commercial has a lot more risk since property prices are much higher. The quality of repairs and renovations these flippers typically perform is well known to be absolute god awful. Flippers make short term investment choices on home improvements needing long term solutions.
To my second point, I've heard of so much fraud from home builders it baffles me they aren't in prison. Full neighborhood developments where builder's sold 30 year roofing, but built roofs with materials known to fail in 10-15, and the building company dissolves into the wind leaving homeowners with little to no recourse other than some couple hundred dollar settlement check whenever some class action suit eventually settles. There are plenty more examples of things like this, but my point is I think the only win to have is promote tax incentives for builders to build using quality processes and pass inspections, but I will admit I'm chasing a solution and am ill equipped to be presenting a solution. I am more focused on calling out the problem.
Maybe? Or how about they are in no-way comparable.Unless you are talking mass subsidization there is an absolute floor for providing housing, not to mention finite capacity for both tent cities and affordable apartments.
The absolute floor is pretty low, and the market will provide these solutions if they're not regulated out of existence.
My first "apartment" was a 100 square foot bedroom rented in a 4 bed / 2 bath unit with 3 other residents. At the time I moved in, it was only $350/month plus utilities, in a market where the median rent for a studio was $1750/month. That room would have been affordable for a single person working full-time at minimum wage. Was it code compliant? Hell no! Was it better than living on the street or in a car? Unquestionably.
If you raise the floor to require every adult to have their own kitchen and bathroom, then you've consigned this segment of the market to homelessness. Someone who can pay $350/month certainly would need a massive subsidy to afford a $1750 studio, or you can just get out of the way and allow them to rent a room for $350.
Each room was rented individually from the landlord, so we were legally separate tenants, not just roommates all on the same lease.
The building itself was over a hundred years old, and had countless violations of modern building codes, health codes, and fire safety codes. It was pretty much a disaster waiting to happen, but it was affordable!
What would you say determines the level of that floor?
It's an interesting question, because I can imagine lots of possible housing solutions that would be way cheaper than $2k/month and more pleasant than living in a tent on the street. So the question is why haven't those solutions been built?
The absolute floor is nothing, far less than the cost of tent cities which use a lot of horizontal space compared to high rises of prefab micro apartments.
The trouble is that local government is coerced to eliminate people who don't directly or indirectly pay a lot of property tax, especially if they are minors and require school.
The federal government should be required to pay general costs per head to local government from it's excessive collection of income tax to put an end to this nonsense of states and towns trying to evict the poor and steal the rich from each other.
I can’t speak for all of the US, but locally the most common way that affordable housing is built is because we have local government mandates which require it of large companies who build in my area. It seems to work very well; ours is the fastest-growing region in my state, and homelessness has been low.
> we're not living in the counterfactual reality where there are millions of new apartments that are inexpensive, tiny, safe, quiet, modern, clean, dignified, and well-located
It is true that there's way too much (and way too costly) red tape to build housing. At the same time, it's also true that even if you skip all that, building is expensive due to materials & labor in any urban or suburban area. Look at building costs in your area by sqft, just for labor & materials. Building cheap units (for a local wage-adjusted level of cheap) is very difficult without some form of external assistance (e.g. like low-income units subsidized by other units).
Saw a YouTube video about row houses being built in Texas. They start at $135k to $160k ranging from 350sq ft to 600sq ft. You have to buy. Parking for one. No street parking. The feng shui is horrible/dystopian. They are all going to sell.
It is counterfactual in the literal sense. It is entirely possible that there are no real prices below $2k in urban centers because of demand and constrained supply. It is entirely possible that getting below this would result in a return to conditions where people were regularly dying in fires and building collapse.
We have plenty of examples of what happens in your fantasy land, you just choose to reason from ideology instead of researching them.
Lot set backs are frequently a part of the fire codes. They help prevent a fire in one building taking out the entire block.
Parking minimums are a chicken and egg problem. My suburb has started allowing new apartments to build about half the parking that would have been required a decade ago. Trouble is, those tenants still own cars since the transit system isn't robust enough to go without. Now those cars flood the streets of the single family residences nearby. Eliminating parking minimums has been mostly successful in the city core but expanding it out to the entire metro doesn't work with how we've built America over the last 70 years.
Many cities have reduced or done away with the parking minimums. It ends up being another way of extracting value out of the existing market, but does little to reduce the median price of new homes.
If parking spaces are $400/mo, you're going to be hard pressed to have power, water, and heating for $500. The reason a tent in the city is $0 is because that is an externality that is allowed... you can't even stay for free in a campground, because water, trash, and toilets cost money.
or, and hear me out here, parking spaces are $400/mo because that's what people are willing to pay in a sparsely populated autocentric living environment.
We don't have to take things like "the cost of a parking space in the system we've created" as a fact, we can change the value of the parking space.
Well, usually those are for parking either in quite dense (>3 story) business/commercial or residential. It's "only $13/day". Even Tokyo, NY, Paris parking spaces don't get cheaper. So the exception is for rural/suburban environments where parking spaces are cheap/free because space is cheap. Guess what, if you want to live cheaply, it's not going to be where everyone else wants to live and work. Cheap Tokyo apartments are far from transit and on the outskirts or even outside Yamanote. People commute daily over an hour by train each way.
Shanghai and Beijing built huge amounts of dense housing (also Shezhen, Chongqing, Hefei, Ordos) and what happened to property prices? They spiraled out of control since they were considered investments (that only go up) with many of them vacant. What happened to prices in Tokyo (notably after the '89 bust and not before)? Housing became relatively affordable since it's not considered an investment (even with near 0% interest rates).
How? You need to either build a LOT more parking or you need to make it possible to live without a car. There are only a handful (with leftover fingers) of US cities where going car-free is reasonable.
The answer is non-market housing. Housing made to pay for itself, but not profit from. Vienna has 60% non-market housing, which puts a huge damper on what the market can charge. Which is why we will likely never see it until the boomers and the boomer minded are long gone.
You're right that raw $ cost of a unit doesn't tell nearly enough information. The ideal measure is probably % of median income / sqf, or something like that. Even then, it's a very different story for singles looking for a hole to sleep in while partying up all the time vs. a family of 5 looking to have a stable home vs 4 friends looking for a cheap rental while going to school.
> But other than zoning it seems it would help more if the government would step in to disallow large leasing companies buying up giant swathes of the housing stock just to flip into rentals.
Summary is that Rotterdam did just this, and the effect was that the price to purchase a house did not measurably decrease, and that rents rose. The neighborhoods regulated in this way had fewer immigrants and skewed wealthier than those that were not.
I think a tax on vacant properties is potentially a better way to go, though checking and enforcement could be the issue (exempting one's primary and maybe secondary homes); multi-unit housing would also be exempt.
This would place more downward pressure on rents and decrease the investment upside on buying.
I'm sure this is a bad idea in a number of ways I haven't considered.
Don't have sources offhand but my recollection is that vacancy taxes have also been tried before and, while they do have some effect, the vacancy rates in most locales with high costs of living are already low enough that it doesn't help that much.
Vacancy rate statistics include things that are pretty natural and you wouldn't really want to penalize, like an apartment being briefly vacant after the previous tenant moves out and before the next tenant moves in. So you can't just look at the rental vacancy rate in a city being (say) 3% and conclude that those 3% of units in the city are being held vacant and off-market. There may be some of those, but it's a far lower percentage.
Which is to say, institute a vacancy tax if you like (it won't really hurt if done sanely), but realize that it won't be a silver bullet here.
This is so difficult to enforce. You're going to have people go door-to-door checking if houses are vacant? What if someone goes on vacation? States require legibility. The simplest way to enforce high land and property utilization is to tax all property.
In California, for example, you have reports of people who move and use their old home in the Bay Area for storage because they're paying the same nominal property tax rate from 40 years ago. If they were paying a yearly 1% tax on the value of their property (instead of <0.05%), they'd rent or sell it immediately.
Same deal in China, except more extreme. Property _is not taxed_, so there are/were a lot of people building apartments and leaving them vacant, waiting for prices to rise over time.
Neither of these situations serve the material needs of people today who need cheap, high-quality, and abundant shelter.
Plus, your vacant property tax proposal excludes the (500k+?) many empty bedrooms in occupied homes. If someone's kids have grown and moved out, their old rooms are now vacant. How many people simply leave these rooms vacant for years and decades? A blanket property tax increase would strongly incentivize the renting of these rooms.
> because they're paying the same nominal property tax rate from 40 years ago
This is a myth. Nobody is paying the same property tax from 40 years ago. Property taxes in California go up 2% every year under Prop 13.
It can be argued whether costs should increase faster or not, but in any case it is factually incorrect to say someone is paying the same as 40 years ago.
Maybe I'm just a grumpy old man but you'd have to raise my property taxes (already above the national median) by 3-4x before I'd even consider renting out our empty bedroom to a stranger. For starters, there's no legal or practical way to modify my home to allow either of us any sense of privacy or freedom to come and go without being a significant disruption to the other.
Vacancy rates across the country are extremely low. Generally around 4-5% when it's next to impossible to get below 3% due to structural frictions around moving and repairs.
1. Homeowners being a powerful political bloc and using that power to stop development is part of the problem in the first place
2. Buying a house makes sense if you're a starting a family and/or setting down roots, but that's not everyone's situation. Students or young professionals get utterly shafted by lack of rental housing, because they don't have the income or the credit to buy a house, and they don't intend on staying long they'll get eaten by the transaction fees.
By the time you’re a young professional your credit is honestly pretty decently established, hell I tried to buy a house on an internship and they qualified me for a 250k mortgage with a 48k salary.
Hell I know guys that went straight into the workforce after high school, nothing stopped them from financing 6 figure pickup trucks, and those depreciate badly in comparison and are harder to repo and re-sell.
Problem is, most places with work that won’t get you a place to live. Houses used to be 3x the median income, nowadays it’s more than 10x.
The idea of housing only being for very established people is new, and only due to its staggering costs nowadays. When my father moved to a town to wash dishes at a pub, he bought himself a house. Cost him 3x his salary.
You're not entirely wrong. Housing should be seen as more than just a place to live but less than a moneymaking investment - it should be seen as basic housing security for those who want roots as you said. NIMBYs do screw things over sometimes, I agree. And liquidity in mid-term housing supply is important. But I suggest that it would be better for society in the long term if more people had a stake in where they live.
The point is that the problem of mega corps is greatly overstated, and isn't really the root of the problem anyway. They are just an easy scapegoat.
Take them away and private "mom & pop" land lords quickly fill the void, and usually are much more stringent about who they will rent to and what they think a fair rent is.
While I agree the mom and pop landlords also pose a problem, they don’t have the capital to outbid new buyers by tens of thousands, or to leverage dozens of existing properties. Bidding against them is not a perpetual David vs. Goliath battle.
>Among my friends seeking to buy houses, the greater problem is the ability of large companies to buy up whatever is on the market, which they then immediately turn into a rental. It’s nearly impossible to compete with a company who will pay $50k over asking price, in cash, for the house you’re trying to get. Comparatively, immigrants don’t have the purchasing power to compete, so saying they’re the problem is a weird conclusion to draw.
While I bear zero animus towards immigrants, this seems obtuse. Why are those companies willing to pay so much? Because they predict they can charge enough rent to make it profitable anyway. Why would they think that? Because immigrants can compete down at the level of rents.
This seems like the same mistake people make about "luxury housing," but on the other end of the market. Building housing at the top of the market does indeed make things cheaper at the bottom of the market, and bringing in people at the bottom of the market does indeed make things more expensive at the top.
These companies hardly exist, "evil corporations" is just super memeable and denizens of the internet will accept it as the answer to anything bad.
In reality, the economy has been booming for the "haves" and those people are the ones bidding up homes and pay $50k over asking with a 6.5% mortgage. Corporations don't care much for home rentals when treasuries are paying 5% with zero overhead and zero risk.
Sucks to be poor and sad to be poor and still eating the "evil corporations" delusion.
The worrying part is that my friends aren’t “sad and poor” by any means. But they’re still regularly outbid (by huge margins) by these companies, which they then watch turn the properties into rentals. I don’t know what the larger trends are, but as my circle attempts to break into homeownership for the past 3 or 4 years, I am the only person who managed to dodge this trend (truly through luck alone) and remain the only homeowner.
So BlackRock and Vanguard didn't buy up swathes of housing out competing individuals by offering above asking price and then rent or landbank that housing?
> Because immigrants can compete down at the level of rents.
On a per house level, undocumented immigrants can often pay more than others because they are willing to live many more people to a house with rents being charged on a per-person basis. If the house is all male workers, homeowners can charge $100 per week per person (now, it used to be $50 and before than it was $25) and can have up to 4 people per bedroom (I've seen up to 8) and often multiple in the living-room. If families, there can often be 3-4 families in a single house, all paying less than they normally would to rent an individual house but much more total than the house would ever rent for otherwise.
Because they are buying assets with debt just like everyone else, and they don't actually care about ROI via rents, either due to "appreciation" (really, further inflation), or they're expecting the financial system to collapse.
> Comparatively, immigrants don’t have the purchasing power to compete
What makes you say that? As someone who's currently dating a Chinese immigrant I have been made aware of an entire world I didn't know existed. They often have much better family support so their parents will send money from home to help them buy a house.
From her masters program at university, which was all immigrants because universities here seem to be taking advantage of the fact that this is an easy path for immigration, everyone in her class (80 people) already have a house. From my group of friends at university, only 1 of them has a house, and 1 a condo (out of the ~50 people I loosely keep in touch with, all with good careers). We would too if my parents had been willing to meet her parents partway and give us a 50k loan, but they preferred to buy a 100k luxury car for themselves instead (they also refuse to acknowledge the current housing situation).
She also found out from WeChat that there are a number of Chinese landlords in Toronto who own blocks of houses by investing money on behalf of friends and family back home to get around foreign investment regulations, and nothing is being done to stop it.
edit: I'm not sure why this was downvoted, it may be anecdotal evidence, but nothing I said here is untrue, nor did I make any claims other than there being immigrants who are able to compete in the current housing market.
I agree it is worth accounting for this, though I'm not sure the nation-wide rate disproves the claim.
"Large companies" could be having a significant impact on some number of urban markets without shifting a country-wide statistic in a way that's unambiguous against trends driven by larger forces like population age and economic trends.
We, IMO, need a progressive tax system for every home controlled by an entity that isn't their primary residence. You don't want to hurt small individuals trying to build up wealth, but we need to stop allowing large corporations to turn basic necessities into investment vehicles.
> Houses can be cheap, or they can be a good investment. Not both.
> I think I read that here on hacker news a few years ago, and it has stuck with me.
It's repeated in every HN discussion about housing.
Also, it's too simplistic. It's basically impossible (barring a complete market meltdown like Detroit back then) to not increase your net worth owning a house.
You have to live somewhere. If you buy a house you (very slowly) end up owning it. A house has nonzero value. Now you have some equity, aka wealth. Even if the price depreciates it's not zero, so you built some wealth (vs renting where you could've rented for 60 years and still own nothing).
There's no contradiction. If it's easy to generate rent income from a house then houses will appreciate in price. For example, if I can buy a house and pay off the loan just from rent payments then it's a great investment.
I understand your perspective; there's a reason the term "rent-seeking" has a negative connotation. But I don't really see an alternative that wouldn't be worse. Different tax rates for primary residences sounds like a potentially okay compromise (though it would make renting more expensive, by design).
The state/county/city/whatever entity could provide those and make it a +/-0 thing for their books. They don't need to make money by doing that. "Social housing" is a concept that has been pretty much lost, I think.
Nope, you're just old enough to remember the propaganda. Social housing (in the US) has always been underfunded to make it look bad. It was a worst-of-both-worlds compromise which served to undermine confidence in government and promote racism.
There is literally no reason a municipal government can't run high quality social housing. That's why it happens, outside of the US.
> has always been underfunded to make it look bad. I
Yes, the "secret capitalists hiding in the woodpile" theory of why communism sucks.
You, of course, are immune to the other side's propaganda, and your own brain is a perfect simulator of the real world so you've run mental experiments that prove to you irrefutably how awesome it would be. If only other people paid for it for you.
> That's why it happens, outside of the US.
This is shit throughout all of western civilization. Go check out Ireland, or any place in Europe right now. It's shit everywhere.
> Yes, the "secret capitalists hiding in the woodpile" theory of why communism sucks.
Are you saying the United States is secretly ran by communists, and that there is a conspiracy theory that those secret communists are secretly ran by secret capitalists?
He's saying that. His contention was the projects looks bad because "has always been underfunded to make it look bad."
Ignoring, of course, that there are so many other factors that make those look bad, that would continue to make them look bad even if they were properly funded (whatever that absurd number might be).
Not that they shouldn't exist but for profit, rental only apartments shouldn't be the predominant form of apartment. Apartments for purchase are perfectly valid and housing cooperatives are also a solution that should be far more common.
As a blanket statement, I don't think that makes much sense. You'd be opposed to someone working hard on their own house over the years to improve it so that they can sell it when they're older?
Singapore does this very well. Almost no property tax or land value tax for primary residence for Singapore citizens. Up to 30% property/LVT for corporations and foreigners.
Given how much Singapore relies on foreign labor, this makes housing those foreigners tricky. The non-migrant worker foreigners who aren’t put in dorms face a very expensive housing market, Singapore companies have to pay larger salaries to compensate (and if you are American, you have to lean heavily on your housing exemption to avoid double taxation because Singapore taxes are also low).
Not only building new homes is unnecessarily complicated and expensive, single family homes are an incredible waste of space and money, had the US and it's big cities invested in apartment buildings with better amenities or forced developers to build shared neighborhood amenities Americans in general wouldn't be so incredibly against it.
It's insane to me that my hometown of 1M people in Brazil has more tall apartment buildings than Philadelphia, with incredibly better amenities.
This is a really good point. I don't understand the obsession with single family homes.
We own a single family home and it kind of make me feel bad. We rarely use our yard, it is just maintenance for no good reason. Inside the house, we have also so much useless space, just costing money to heat or cool it.
> It's insane to me that my hometown of 1M people in Brazil has more tall apartment buildings than Philadelphia, with incredibly better amenities.
Would you mind sharing what the amenities are that you are referring to--both the in-building and neighborhood amenities? In the US I've seen gyms, swimming pools, shared hosting spaces, and some child-friendly spaces, to name a few.
Pools, BBQs, gyms, playgrounds, multi sports courts, party rooms, stores and restaurants.
In PHL unless you’re paying big money in a new or refurbished building in center city (and there aren’t that many) you’re out of luck.
Doesn’t help that schools also suck and are heavily segregated, which ended up forcing us to move to the suburbs into a single family home to raise our kids as we knew we wouldn’t have enough money to send them to private schools and didn’t want them on the public system there.
Just to add on to this, a number of older buildings in my city in Canada (say late 1960s to mid 1970s construction) even had woodworking shops as common amenities! Today there are pet washing stations, EV chargers, outdoor rooftop patios, movie theatres, etc. It’s incredible.
Not owning the apartment seems to be a very US thing, I owned two apartments in Brazil and had a small construction business that built small apartment buildings and it was almost all sold to owners.
eh, they are called condos or co-ops when they are owned by the occupant in the states. I think they're the same thing, though interested if there is some distinction I'm missing
TIL. I don't think we have different names for them in portuguese, it's just apartments, for some reason full apartment buildings for rental aren't really a thing in Brazil, don't think I've seen many of them there.
A place to live is a base of the hierarchy of needs, but giving away $2000 to someone else for a place to live vs. putting $2000 a month into your own assets is not a red herring.
Developers want equity because it is financial security and passive income for them. Regular Joes want it so they don't pay rent in perpetuity; that they may have a place to live in old age without working, among other reasons.
All my friend's parents that didn't own their homes are completely fucked now that they're old, retired and their pensions didn't keep up with inflation. If you don't own the place you live you're just a rent hike away from the streets.
a) Housing is only a viable investment because of a shortage. If housing supply met housing demand, housing would be a depreciating asset.
b) Investors turn around and rent/sell those houses, so they aren't actually eating into housing supply. What they are reducing the supply of is the bottom level of the rent seeking pyramid. Property ownership is simply so profitable that the average person now can't afford to buy in.
> it seems it would help more if the government would step in to disallow large leasing companies buying up giant swathes of the housing stock
My instinct is to disagree. That could create other problems and it's not a given that it would help prices. Encouraging growth by changing zoning seems preferable. We know that it works, since Japan has been doing it forever.
If the policy goal is to have more homeowners, which I think it should be, you have to do something about private equity buying up all the home stock. Blackrock and its ilk of private equity firms buying up single family homes to turn them into rentals stands in direct opposition to the goal of more people owning homes.
Where was Blackrock when I was desperately trying to sell my home last year? Reduced price three times, and I can assure you that Mister Blackrock didn't contact my agent even once. For an evil wizard intent on gobbling up homes, he didn't seem interested in mine.
> the greater problem is the ability of large companies to buy up whatever is on the market
Out of curiosity, where? How do they know this?
I bought my house “cash.” It doesn’t mean I filed my car with paper. Just that I didn’t require a financing contingency. (Brokers typically don’t know who they lost a house to until property records are updated.)
You can look up the listings for the rentals after the house has been flipped. And damn, good for you being able to purchase a home without financing! Most of us can’t pull that off
I’m arguing they don’t. If a client looks likely to be soothed by losing to a corporate landlord, versus anyone else, there is a real estate broker who will sell them that line.
What would happen to the person renting from the landlord, if the corporation hadn’t purchased the house to rent to them? Well, maybe that person would buy the house themselves to live in.
But there still wouldn’t be any more houses for YOU to buy.
Corporations and landlords aren’t the problem, lack of building is.
No, they are too. If you build, blackrock, or evergrand will buy it for a lot more than most can afford. The goal being to limit stock and push the prices of their asset up.
As long as they don’t leave it empty, they are not limiting the stock. Changing the name on a piece of paper doesn’t magically creates new houses out of thin air.
Well they are leaving them vacant. Both rentals and houses across the country are sitting unfilled. NYC has anywhere from 13-26k rent controlled apartments vacant. As of last year ~16 million homes were estimated to be vacant overall and increasing interest rates have likely increased that. Why? Because these large orgs have purchased them via debt and it's just a line-item on a spreadsheet to them. Just build might work in a world where market actors were wholly rational and the government regulations actually targeted these perverse incentives, but that's not the reality we currently find ourselves in.
I don't understand the math of this? If the company is paying way over asking price, they will be losing money for some number of years while renting the property. I guess the idea is that eventually they will turn cash flow positive? So these companies have a bunch of cash in reserve?
My personal experience in recent years, in the city of Atlanta, Atlanta suburbs, and Philadelphia suburbs, is that I do not see companies buying up all the houses to rent. In the Philly burbs in particular, I see traditional home buyers bidding up the prices. Even with the high interest rates, the low supply is still causing a good bit of competition for each new listing that is in good shape. The supply of rentals in this area is pretty low as well. So if there were these large swathes of homes going from family owned to rentals, I would think it would be pretty obvious when I'm looking for a rental.
The idea is simple, you burn through money to establish a monopoly, then squeeze the profits out on the back end.
Hold on long enough to get your money back plus a hefty profit, and then when it seems like the laws will change to outlaw what you're doing, then sell ahead of the wave for more than you paid to begin with and leave the next sucker holding the check when the bottom falls out.
It's worked so many times in the past and barring some sort of major legislation it will happen again.
> Comparatively, immigrants don’t have the purchasing power to compete,
Does that even matter? They don't have to compete on house purchases, they just have to increase demand on rentals, even at the low end. This pushes everyone in an income bracket above them to compete for the higher priced rentals, until those say "screw this, I'll just buy" find out that even that's no longer possible.
"Comparatively, immigrants don’t have the purchasing power to compete, so saying they’re the problem is a weird conclusion to draw."
Does more demand drive up price or does it not? Large swaths of farmland are being bulldozed in my state to build townhouses that are largely populated by 1st generation immigrants. I'm sure this is not the only place.
i have never heard any investor who is willing to put $50K over asking, they are dictated by their pro-forma, they run the numbers and it has to beat S&P 500, much more stricter in sending offers. Families however..they purchase with emotions or schools for their kids, they are the ones who drive the price up.
https://www.freddiemac.com/perspectives/sam-khater/first-tim...
> the ability of large companies to buy up whatever is on the market,
And that has a simple cause: they created too much money to prop up both the housing and stock markets.
We're in an inflationary debt spiral that has a very high chance of going the same route as every other one in history; completely devaluing the currency, defaulting on debt, and issuing new currency. The rational play in such a scenario is to take on more debt to buy assets, because the debt will be wiped by inflation. Which is exactly the energy powering the debt spiral. It's nearly impossible to fix.
Raise the government-set lending rates and keep them there, let overextended private parties (like highly leveraged asset owners) actually default en masse, and slowly pay down the government's external debt by moving it to the federal reserve. I'm not saying that the metastasized finance industry will let this happen, but there is a way out of the spiral.
I agree with those things, but we both see how unworkable it is. It hurts the monied class and edifice that holds up the house of cards made of people who produce no real value other than pulling levers in the casino.
The Blackrock issue is overhyped. Saw a post recently showing that the percentages aren’t actually that high, don’t have time to find it now but hope to do so later
I have a hunch that companies paying $50k over to turn a house into a rental and governments paying the rent of immigrants are not things happening in a vacuum.
Yea we desperately need land reform. What Japan did after WW2 should set an example [0]. Also, investment properties should be heavily taxed to disincentivize this behavior.
The ability for them to do this is only granted to them by the restrictiveness of the regulatory state.
You've prescribed a byzantine series of rules in order to free up supply when the quickest step is to just free up supply, which will make "buying up whatever is on the market" a gigantic waste of money because it will not be possible to corner said market.
Is the problem really just boomers who have rented long term and never bought?
Even if you own you could be forced to sell your house if you can't afford the property taxes and maintenance costs associated with your home, especially in states where they aren't strict limits on how much your property taxes can increase each year.
A $500k house in Texas is more than $10k in property taxes a year. Not cheap especially if you do not work or have limited income.
Zoning law in some places makes building new homes very difficult, so I would like to see less/different local regulation there. But other than zoning it seems it would help more if the government would step in to disallow large leasing companies buying up giant swathes of the housing stock just to flip into rentals. Maybe incentivize those companies to increase their ratio of new construction, to help solve this supply issue.