Well that’s what happens when you frame housing as an investment. If it didn’t outpace the market and the consumer inflation rate, it wouldn’t be a good investment. So by definition it must become unaffordable for the masses.
Unlike many other sectors where prices drop thanks to constant advances in Tech, what is weird is how Tech hasn't made a dent in Housing.
Health I can understand cause it takes a long time to produce a Doc, and there is a high demand and low supply dynamic.
But we can easily build housing cheap. Even if the real estate/investment lobby is busy buying up all the "prime" land, its not like the US is a small country to work around them somewhere.
It's because of the government regulation and how localized it is so you can't pick a fight with just one regulator to force them to stop doing stupid, you need to pick fights with tens of thousands of local regulators (and their tens to hundreds of thousands of unionized government employees). On top of that, building is super capital intensive with long lead times to profitability that are fully controlled by said regulators so you can't pull an uber and just operate on a moderate sum of angel investor money while you also earn money from your service and flip the bird to the regulator. You don't make any money until you beat the regulator into submission, which makes beating the regulator a bad investment.
On top of all the above, you have teh general populace, of which a significant portion own housing they want to see go up so you won't ever get to the point where everyone sees the light and overwhelmingly supports you like uber got to, there will always be significant push back from the populace who want to abuse supply constraint to increase their personal benefit at the severe cost to all of us.
> Even if the real estate/investment lobby is busy buying up all the "prime" land, its not like the US is a small country to work around them somewhere.
Even the US being a big country doesn't help much. The value of land for the purpose of living on it is largely defined by the infrastructure around a particular piece of land: are there schools, shops, doctors, ... nearby, or do you have to drive through an empty desert for hours to reach them? And unless faster forms of individual travel are invented, this will limit the amount of "usable" land even in an imaginary country with unlimited boundaries.
The infrastructure problem should also have a relatively cheap technical solution. I assume the major bottleneck is bureaucracy, which largely has no technical workarounds so far.
It's not a problem of bureaucracy, but rather efficiency. Urban centers emerge because they make sense - grouping together labor, production, and consumption. If we just equally distribute people across the country our economy would implode on itself. How do you get to work? Where do you work? Where does your work go once you've worked on it? Who buys your work? And what work do you buy?
I'm not going to build a doctors office, or a train, or a corner store next to 10 people. I'm gonna build it next to 100,000 people. And now here we are, where we have space but not really because most of the space is worthless.
There are plenty of thriving towns in America with 5k-10k people. I think you need to just get out more. I grew up in one and it was fine. I now live in a slightly larger city (in the low hundred thousands) and enjoy the low cost of living with a high salary. But I'd never live in a major metro area, that's nuts.
> There are plenty of thriving towns in America with 5k-10k people
Very, very few. Rural areas are disproportionately impoverished. It's just statistical, not personal, and it makes complete sense once you consider what an economy is.
> But I'd never live in a major metro area, that's nuts
Those major metro areas make up the vast majority of the US' economic prowess. You don't have to live in them of course, but you should be aware that the American suburbs and rural areas are essentially on the welfare of more economically successful areas.
> Even if the real estate/investment lobby is busy buying up all the "prime" land, its not like the US is a small country to work around them somewhere.
40% of the US population lives in a coastal county:
People can't live inside Kubernetes pod, unfortunately :) . The problem is not technical, it's regulation in three ways - 1) regulations restricting building new housing altogether (USA and Commonwealth issues especially, due to obsession with detached homes and zoning). 2) increasingly long times to obtain all permits (Australia issue and likely many others), 3) economic downturn which is also a type of regulation.
"I will keep house prices rising" is an even better one, although its often funny that every party (in my country at least) wants to send that message but can't say it openly.
The simple fact is homeowners are a large voting block often with the most ability to vote. Gotta keep them happy or its electoral suicide.
There are a few things that could be done to remove the artificial advantage of (primary) residential property:
- remove the exemption (or reduction) for Capital Gains Tax
- remove Income Tax relief for mortgage interest
- remove any exemption (or reduction) for Inheritance Tax
Not all these advantages exist in all jurisdictions.
Then there are other changes that could mitigate distortions, inequality and volatility:
- separate interest rates for residential mortgages, commercial property, consumption and productive investments (industry, infrastructure, education)
- separate institutions for these different credit markets, with different reserve ratios and other regulations
- promote sound(er) money, to reduce inflation, and reduce the necessity to protect wealth by asset investment
- break cartels of real estate agents and aggregators to reduce transaction costs
- streamline the planning process to enable more houses to be built, without delay and costs of excessive eco/nimby appeals
- level the playing field between landlords and renters (means different things in different local jurisdictions)
Finally, there are more radical combinations of these things, such as removing the claim of mortgage interest as a business cost for landlords, which would raise their corporate taxes and deter high leverage.
>- separate interest rates for residential mortgages, commercial property, consumption and productive investments (industry, infrastructure, education)
How do you propose to do that? If I have money to lend, I'm pretty sure I'll lend it wherever I like the return I get. So interest rates are all related to each other - they should be risk-adjusted equal, because the lenders don't care about anything else.
Separate rates and markets already exist. Commercial property is a totally different market than residential, and agricultural is yet another market. Investment into residential is different than primary residence in origination rules and pricing.
- enforce security and building standards to old buildings, this pushing new ones to be built
Japan has this and it is used to enforce new civil engineering tech for earthquake/tsunami/disaster prevention, but it also makes old not up to standard buildings becomes less valuable
I think our homes are not as technological as they should be because we see them as investments to be preserved
Are you aware of the vast disparity of wealth among American families? On the order of 100k for white families, 10k for black families. Wealth being passed down family trees ensures immigrants and people who are worse off now will remain priced out.
Do you know the actual rates, what value the estate must be at for it to kick in, and in which states? Are you aware of spousal transfers and other mechanisms to reduce or avoid it?
Most people get very worried about “death tax”, until they do the numbers on their own estate and realise either it mostly doesn’t apply to them or it’s marginal.
In the UK this is often used as a major campaign point but the number of estates actually subject to it is quite small.
In the United States, federal tax applies when the estate is valued over $13.6M for 2024[1], though as you mention spousal transfers and other methods can be used for tax avoidance as well.
For you maybe. For 99% of the US population, it does absolutely nothing.
> Just over 7,100 estate tax returns will be filed for people who die in 2023, of which only about 4,000 will be taxable—less than 0.2 percent of the 2.8 million people expected to die in the year.
No great way out of this mess.