Interesting that this report is produced by an academic institute in the US (in this case Harvard), in the UK the government releases statistics annually [1] around the same issues of affordability and access to housing.
Indeed, while simultaneously doing little of note to address the issue (beyond further propping up the house of cards with schemes like the lifetime ISA).
Sorry to be ignorant about this, but I just checked out the stats and the US has had like 50% population growth in the past 40 years, which is a crazy amount (proportionally more than China).
Where does this come from? Natural growth? Immigration? If so, what countries do people come from?
In contrast, most West-European countries (where immigration seems to be an oft-discussed issue), the growth in the same period is much more modest.
Foreign-born immigration caused the U.S. population to continue its rapid increase, with the foreign-born population doubling from almost 20 million in 1990 to over 45 million in 2015,[19] representing one-third of the population increase.[20] The U.S. population grew by 1.6 million from 2018 to 2019, with 38% of growth from immigration.[21]
In 2021, nearly 40% of immigrants, about 600,000 people, came to the US from Asia, followed by North America at 35%, Europe at 12%, Africa at 6%, and South America at just under 6%. The other 1.94% of immigrants were from Oceania or had an unknown nationality.
Mexico, India, and China were the most common countries of origin for immigrants. The highest number of immigrants came from Mexico: 424,791. India followed with 202,567 people. China was third with 114,121 immigrants.
TFR has been around or just below replacement rate for the last 40 years, so probably not due to that
Given China's one child policy between 1980 and 2015, comparing the growth percentage between US and China probably doesn't make sense (of course China population would grow slower).
We either need to reduce population growth, or convince politicians, voters, people looking to buy, and developers that just because we can't make a new hip metro area overnight doesn't mean we simply ignore all our available land (rather than continuously talking past each other on the issue of "we need more housing in desirable areas" vs "we need to not harm desirable areas").
It's significantly easier and cheaper to build in the "empty areas", and developers would love to build there, were the demand present.
It's not the developers or politicians you need to convince. It's the status-oriented urbanite bugman.
It's the urbanite bugmen who think people in flyover country are all filthy rednecks, who are literally afraid of living in an area without human feces and used heroin needles on the sidewalk, that you need to convince.
These people prefer living in high-cost, high-crime environments because shopping at a bodega makes you the right class of people, not like those trashy Wal-Mart customers. So instead of even considering moving to the empty areas, they bitch about "developers" and "politicians" standing the way of building more $3000/mo 300 ft^2 bugman pods, just so they can tell all their friends that they live in the "right" place. It's all about status, and nothing is sweeter than the tears of these people. Their unhappiness at their self-inflicted "problem" is a beautiful thing.
Status-oriented people are the lowest form of life. Let them wallow in it.
You're so caught up in your polarized hot take that you completely ignore why people don't want to live in empty areas. A lot of people don't want to live where it's empty. It's really that simple.
They like being near other people, having access to the services, don't want to waste precious hours commuting, and that's where the jobs are.
That population growth did not go into "most of the USA is empty", it went into the same metro areas of SF Bay, LA, NYC, Texas, DC, etc. contributing to the speculative investment cost of living crisis that many homeless peoples lives have been destroyed by.
Took me a moment to get that heatmap. An axis labelled 1-10 from pale to red seemed absurd to me at first. "On a scale from-one-to-ten, how expensive are houses?"
It is a shame how vulgarization of science and statistics seems to necessitate a simplification of the data set to the point where its usefulness becomes debatable. It always seems to me like I want access to the axes that they've simplified away down to just a mean or an average. I get that presenting data is hard, but if I'm left more puzzled than informed at the end, what have you really presented to me?
In this case, I wish I could see the distribution of salaries through time and by location, as well as that of home prices. There ought to be a more interesting metric available than simply calculating the average of either and dividing the two.
I was eager to see the data, but exporting from the first source only gives the same data shown in the article, although in a spreadsheet.
The explanations in your second link are more like definitions than justifications for why this and those boiled down quantities are worth talking about.
I'm not trying to excuse them, I just had similar questions and googled around a bit and those looked interesting to save the next person a couple minutes! I also shamelessly sorta use my own HN comments as a brain dump sometimes for myself in the future.
The retired people who brought their house in 80s/90s can stay and hold onto the house for much longer, since the property tax is very "affordable". Whereas in other states, the property tax will push people to move to cheaper places during retirement years, thus increasing the supply to the market.
This will _eventually_ get phased out with recent changes, but only as the owners die off. You can still pass on a residence to an heir but they have to actually live in it (within 1 year of you dying, IIRC).
The effects of prop 13 are overstated. The problem is California didn't build enough where people want to live. Many states have laws restricting property tax growth, my own state limits it to the lesser of inflation or 5%. It's the lack of building that pushed prices so high that selling only makes sense to leave the state.
No, the effects of prop 13 are not overstated. NIMBYism is a bigger problem, but prop 13 makes it financially reckless to ever move. Yimby policy would lead to less drastic divergence between value and tax rate as value increases slower, but there would still be a gap as people who bought SFHs in the town center would see the properties value grow due to the lack of land value tax.
It's not prop 13 that made property values 10x in the last 30 years. It's the lack of supply forcing bids ever higher. Downsizing and rebasing taxes isn't a big deal if you went from a 1980s 100k 4-bedroom house to a modern 300k 2-bedroom condo, it's a huge problem if the cheapest option is over 1 million.
There's literally just too much money. Covid involved creating many trillions of dollars right when it was about time for a recession. What those dollars are doing now that they can't just be easily taken back is... well inflation and booming stock markets and nobody getting a raise.
Total military spending in 2019 was approximately $746 billion (including the DoD, nuclear weapons spending under the DoE, and other defense-related activities).
The projected defense spending for 2024 is around $891 billion.
So roughly 19.4% in total defense spending over that five-year period. Which is not chump change, considering how high it was before.
I'd like to see an overlay showing which red areas are also college towns. Did easy student loans help fuel the increase in rents? That's what happened where I live, where dormitories are mainly for new undergrads. After a year or two, students are expected to find apartments. (And I wonder if something similar would happen if Universal Basic Income became a thing.)
It's not even about student loans. A group of students can always outbid the average family for housing. They need less space per person, because it's a temporary phase of life and most of their activities are elsewhere. And because students must afford studying and living on their own, their income per person needs to be on the same level as for the average family with kids.
Prices are not determined in a vacuum. Sellers price things as high as possible based on what they think buyers can afford. If buyers can afford more, sellers will find a way to absorb the extra liquidity in the market. We will end up where we started. The solution is not UBI, it is to make certain things basic rights, like housing, food, transportation, infrastructure, education, but not excessively cheap. So people can afford to live, but need to work harder to live better. New housing development, prices need to be reasonably anchored to what people there earn. If what people earn in that location goes down next year? So does rent/housing prices. Exceptions for higher end housing and things can be made.
This is what I think anyway, don't really have any hard science to back this up, but I have a feeling UBI will not work like we expect.
It could work with abundant housing, say 20% more housing than the number of people that want to live there. If there's always a lot of empty units, landlords are encouraged to reduce rents to not be stuck with too many vacancies. Rents can go up so much now because there are more qualified applicants than units. That number likely requires about 200% more housing in large cities, which is unlikely to ever happen.
But that's the whole idea - the only reason sellers can do this is because there is a shortage of homes. If you have more homes than people looking for them (and you should always have some vacant homes for flexibility and to handle people mid-move, etc.c) then you can tell any seller who tries to raise prices to take a hike.
No, they don’t, the optimal amount of units vacant is not zero to begin with, and in fact the profit-maximizing number of vacant units is likely considerably higher than the market-optimal price.
Sellers like a market with constricted supply, it’s like nobody remembers OPEC. And with a computer program to tell them when to leave units vacant and when to raise the price, they’ve outsourced the cartel actions.
Anyway, this is another "thinking econ-101 charts are real" oopsie. Everyone likes the nice single-line supply/demand charts. But profit-maximizing often isn't the same thing as market-clearing for a variety of reasons. The whole point of the rent-cartel program was that it's better to raise 95% of rents and leave 5% of units vacant than to have 100% of units with a lower more competitive rate. But also things like the materials used to produce goods having their own price curves with prices rising as their own demands increase etc. A "market clearing" price in an efficient market leaves zero profit for producers by definition, nobody wants that, so we inherently live in some combination of inefficient market and above-clearing prices.
Vacancy rates across the country are at all time lows. Im sympathetic to the collusion with realpage argument, but with vacancy rates this low Im not buying it.
Extra students were financed by (student) debt, ie. made up money, which could lead to inflation. Whereas UBI could be done without any money printing - just via taxation.
> If demand continues to tick up while the slowdown in construction persists, the Harvard report warns that this will "risk sparking another period of rapid rent increases similar to the recent run-up that has contributed to the worst renter affordability conditions on record."
That may be true in certain areas, but I don't think it applies where I live. Prices of existing homes just simply chase the cost to build a new home. The older the neighborhood, the less authoritarian the covenants are. The new development down the road start out at about $150k more for smaller lots, less house, and an HOA primed with rules ready to ream you a new one for simply breathing wrong. I poked around and some of the other recent developments have the same or similar covenants.
Most large metros land costs around 300-500k just for an empty lot. In chicago lots are often 400k while houses next door are 550k. Clearly the cost to build the house is not the issue here.
So many good things would happen if the coastal class occasionally remembered that the United States is a huge country with a vast interior. There are tons and tons of towns with affordable housing in Ohio, Kentucky, Michigan, Pennsylvania, and so on. The problem is that the incomes are lower, too – but that is fixable with remote work, companies being incentivized to hire locally, and so forth. There is really no reason why everyone needs to be centralized in 10 urban centers on the coasts.
I have no idea how people can afford buying a house/apartment and having kids in big cities. Feels as feasible as a space travel to Mars x)
Especially with partners that are frequently so spoiled they expect you to pay for everything.
I mean the numbers are just bad unless something changes. I have a small house with a low mortgage rate and low payment that's more than doubled in value over the last 10 years. Yet there aren't any near term realistic situations where it's worth it to sell unless interest rates go up by quite a bit more or the overall cost to rent crashes.
As it stands, rental income would be like 3.x the monthly cost. Even accounting for vacancy while assuming any kind of continued value growth is comfortably ahead of any reduction in payment on a new place that I'd get from selling.
The only things that make selling look attractive are much higher interest rates (IE something that would let common bonds approach 10% yield), or significant depreciation in home prices, or some combo of the two, neither of which look that likely for now. (I guess substantially lower rates without significant price changes would be a third option that seems even less healthy.)
At the same time I'd love to have more space, my house is waaay too cramped. But purchasing also looks like a non wonderful choice (since it's likely to increase monthly costs by > $2k for a mediocre larger house even taking rental picture into account).
At the same time you'd think at some point declining birth rates would become a factor and make houses cheaper again. Problem is also maybe partially that geographic concentration of economic activity into the top urban centers outweighs overall population behavior? And that household size it probably increasingly one person.
It's just too easy, all we had to say is that housing developers are evil capitalists and all the plebs bought it hook line and sinker.
Want to build housing? Good luck with the five environmental reviews you need to submit before breaking ground. And that make sure you have enough below-market rate units, and parking, and you only use union labor. oh does all that make the economics difficult? Such a shame, maybe it's just not a fit to build around here.
How could it not? Until we no longer have a shortage of housing won't all surplus income/cash go in to outbidding our peers for the existing stock?
If a town has 11 billionaires and 10 houses then the houses will presumably be a billion dollars. (That's obviously an oversimplification but you get the drift)
Similarly, Ireland makes it damn near impossible to build anything and started a program to give first time buyers €20,000. New home prices went up by... around €20,000.
Yeah, this sounds like a classic Irish solution. It's hard to see any light at the end of the tunnel here between the shortfall, cost and availability of labour and materials, and so on. To paraphrase what someone once said on this site — housing as an investment or a human right, choose one.
I bought a house in Cork city six years ago, paid more than I hoped because it's quite the fixer upper — we've done almost nothing and "the market" suggests that its value has increased about 50% since. Which is meaningless to me but means a lot to many people I know who can no longer afford a buy a home.
I somehow managed to lose money because I'm an idiot. I bought a thatched house in Offaly in 2019. Then I lost insurance (like many other thatched home owners in Ireland since the last insurer stopped writing policies) and the house became uninsurable and unmortgageable. Took a huge loss on it and moved to the Netherlands, where it's still possible to get insurance on thatched homes (though I sure as hell will never have one again).
I'm literally buying an overpriced apartment in the Netherlands right now because I know that the population is only going to keep growing while housing supply will stay limited, so if I keep it 20 years and sell then, I'm going to be fucking rich and I'll just retire to a small town in a poor country with fast internet. The fact that I'm massively overpaying right now doesn't matter.
No, I bought the place cash, but it meant any subsequent buyers couldn't get a mortgage. What you're describing has in fact been a huge problem for other people with thatched roofs in Ireland.
UBI can be done, just not in a cash form. You get an efficiency apartment with all the amenites, food stamp allowance per week, healthcare, cheap android phone with internet, and a chromebook.
If you take a step back and look at the earth via satellite layer via Google maps, it’s not as full as it feels on the ground. Quite the opposite.
A sibling comment about people cramming into the same area seems way more accurate.
Also, look up the population density of different countries:
* China has ~4x the people of the U.S. with similar land area
* India also ~4x US population and has 1/3 of landmass
* Russia has ~2x landmass of US, but only ~1/2 population.
There’s plenty of space for more people. Just gotta be less lazy and destructive and build, build, build. Finding how incentives align & not as game-able would also help.
Arable land is a problem. Most of China lives in one third of the country, and even in that one third there are a lot of mountains that keep population even further concentrated. Russia has never figured out how to really population Siberia and it’s FarEast, it’s sort of a hostile area, although the areas next to China could easily be as populated as the adjacent areas in China. India has a lot of arable land for its size, which is why it is populated the way it is, and see Bangladesh for an extreme take on how dense a country can get with enough arable land.
I’ve been to rural China (village where my family and ancestors are), there’s tons of space to modernize and build still, China def not out of livable space.
Arable land probably has to do more with carrying capacity in terms of agriculture and water resources. Yes, you could build a huge city on the Tibetan plateau but you would have to truck in a lot of stuff to keep people alive.
Even the rural areas, you have to decide whether to keep them growing food (low density for China) or turn them into dense cites. Do too much of the latter and your cities starve. But you can’t really build cities on land unsuited for farming, since again you have to truck a lot of stuff in from far away.
I think it's mostly empty, but everyone is cramming into the same few places. Eg I don't think rural Japan has this problem. But then you have to give up on high paying jobs, live standup comedy, lots of matches on tinder, or whatever else people do in cities (tbh I've never lived in one for a long time so idk)
Exactly, you can pick up a rural house in France 4 hours from Paris for €100k. 2 hours away it's a different story, and obviously within Paris itself the same affordability issues are evident as in the article.
The value of living in cities is constantly going up. Loads of rural areas are just collapsing because they have hollowed out to the point there are no jobs or stores left. Italy has been giving out houses for $1 in rural areas but they are basically worthless.
The winning move is to work remotely/hybrid from the countryside (close enough to a city though), and invest all the savings in housing to stock market.
I can't see the value in pure city-living when quality of housing keeps going down, and prices go up. Better salary alone doesn't mean anything.
I agree that for remote workers being near enough to a major airport (not exactly sure how near near enough is) should open up cheaper housing that's not regular commute convenient, but if you have another household member who needs to work somewhere in person you're kind of stuck.
The Earth might be getting full, but the (western) US is not... lots of cheap land just waiting for settlers. Not so different from the days of the Old West. What is different is that these days, the gold rushes always seem to happen in the already-crowded places.
Actually population world wide is dropping considerably and there are more empty houses per person then ever. Just almost no one can afford to live in them (only building expensive) or like rural they are just too expensive to repair. Some places are selling for $1 or giving away free houses because they know no one can afford them. Japan, Italy, Midwest America sometimes even pays you to move there out of desperation.
1€ houses were not because no one can afford them. It was because no one wanted them. And they were crap. For slightly more(tens of thousands) you could get something at least habitable. These schemes are not to combat prices, but desirability of area due to things like no opportunities.
There are quite many places that are still reasonable. I live in globally small city. It is not entirely unaffordable. Current "condo" slightly outside downtown is reasonable enough in price. And even near it is not bad. Going even further would make it entirely payable.
Worst thing is that in some places you do not even get loans to buy or repair property anymore as it is expected to be worthless...
Over here 20% of apartments in capital city stay unoccupied. The owners don't even need to rent, prices increase alone is ridiculous. The earth is neither full nor we need more houses.
You hear this kind of thing constantly, but it's such an absurd claim. Imagine being a property owner and having two choices: (a) having a property you own accrue value over time, and (b) the exact same thing as before, but also getting paid hard cash by renters. And the claim is somehow that you will, because of your landlord greed (?!) take the door with less money.
We need to have fewer conspiracy theories about landlords and immigrants, and we need to build more bloody houses.
>You hear this kind of thing constantly, but it's such an absurd claim. Imagine being a property owner and having two choices: (a) having a property you own accrue value over time, and (b) the exact same thing as before, but also getting paid hard cash by renters. And the claim is somehow that you will, because of your landlord greed (?!) take the door with less money.
Maybe? I vaguely reading somewhere that some NYC commercial landlords would rather keep a building empty after the pandemic rather then lower the rents.
IIRC part of the reason was because the building's possible rental income was used as part of building's valuation. The higher the potential income, the higher the valuation is, and looking more attractive as collateral on a loan. Hence the problem being that if they did lower the actual rent, it would lower the building's valuation and negatively impact whatever loans they had using the property as leverage. More so then any loss of any rental income.
No idea how true it is, seems a little ponzi like for me, and eventually you do need to come up with some sort of income if nothing else to make interest payments. On the other hand I don't know enough about financial world to say otherwise, so it could be very well true.
That's part of what makes it greed. People regularly lose money in the pursuit of more money. I have seen houses go unrented for ages because owners refuse to accept that their worthless shack in the middle of nowhere is not worth what it used to be.
Where did you hear that house prices are expensive because the "earth is full"? Did you notice that housing prices doubled and almost tripled in the last 4 years alone?
If I recall correctly, what's happening here is that a property is valued at a particular level based on the rent, and the owner can borrow against that to make other investments. Demand drops, and lower rents would affect the valuation of the property, the owner wouldn't be eligible to borrow as much against it any more and may not have the liquidity to readjust things. So it's more profitable and secure to keep the rents at a higher, but vacant, level. It kind of suggests the solution here is more regular and rigorous revaluations of property, or limits on how much it can be leveraged.
Vacancy in areas where people want to live are historically low.
Bad valuation in contracts doesn't change the big picture. (As it mostly affects office buildings.)
Urbanization is ongoing for hundreds of years (and got absolutely turbocharged since agriculture productivity skyrocketed), but a sufficiently high number of incumbents/voters in cities don't want their city to densify, so they have the resources to block most effective redevelopments.
States, governments, politics mostly managed this by providing more cheap loans/mortgages, and mostly by ignoring the problem, or even by not even believing that the demand is real. (Remember when housing was called a bubble because prices were rising too fast? Yeah, prices are much higher.)
A very significant portion of young people's economic output is basically converted into spending a lot of money on shitty inefficient and extremely uneconomic housing and its consequences. (More and more and more .. and more suburbs, roads, cars, etc.)
1. https://www.ons.gov.uk/peoplepopulationandcommunity/housing/...