[HN Gopher] It's the land, stupid: How the homebuilder cartel dr...
___________________________________________________________________
It's the land, stupid: How the homebuilder cartel drives high
housing prices
Author : nth_degree
Score : 110 points
Date : 2024-08-15 18:55 UTC (4 hours ago)
(HTM) web link (www.thebignewsletter.com)
(TXT) w3m dump (www.thebignewsletter.com)
| mikece wrote:
| Cornering the market, or a sufficiently large portion of it,
| doesn't necessarily drive prices higher. Demand plus cheap credit
| (and Wall Street shenanigans) are at least as much to blame.
| JumpCrisscross wrote:
| > _Demand plus cheap credit (and Wall Street shenanigans)_
|
| This is unfalsifiable voodoo. It can be used to describe
| practically any economic phenomenon.
| the_gastropod wrote:
| Interest rates tripled in the past few years, and home prices
| continued their upward march throughout most of the U.S. Do you
| mean something else by "cheap credit"?
| sroussey wrote:
| Tripled from a hundred year low. Kinda normal to mildly low
| still.
|
| Prices are up since people did 30yr mortgages at obscenely
| low rates, and don't sell/move in order to keep them. That
| group will eventually rotate out. Ironically, somewhat lower
| rates will cause a housing price decline.
| sirspacey wrote:
| Unless you are willing to hold the asset at 40% occupancy
| without changing prices because preserving the on paper value
| is more important than profiting from rent.
|
| Then you get New York City.
| dan-robertson wrote:
| This is maybe a stupid question, but if credit is cheap,
| shouldn't it be easier to finance a housebuilding operation? In
| the very low interest rates from say 2008-2020, I think we saw
| less housebuilding in the United States than before.
| JumpCrisscross wrote:
| Have there been serious attempts at describing how a Georgist
| land tax would appraise the value of the land?
| kaibee wrote:
| Yes, its pretty straight forward and there are many countries
| who already do it.
|
| https://www.astralcodexten.com/p/does-georgism-work-part-3-c...
| smallmancontrov wrote:
| The mistake made by Georgism is to assume that rent extraction is
| a bug. It's not. The economy is literally owned by rich people --
| that's what capitalism is -- so rich peoples' opinion is the one
| that counts, and rich people want to get paid for being rich.
| Rent extraction is a feature not a bug. Georgism will never see
| political success due to this misunderstanding of political
| economy.
| xnx wrote:
| No shortage of land in the US, but everyone wants to live in the
| same few places (for good reason), and those places have a lot of
| restrictions on what can be built where.
|
| It's satisfying to blame a big bad "them" for this, but the
| problem is "us". We all want our properties to increase in value
| so we collectively conspire to suppress supply that would make
| our properties less valuable.
| netbioserror wrote:
| Land and homes also make for excellent inflation hedges; thus,
| property owners become advocates for money printing and
| suppressed interest rates.
| lapcat wrote:
| > No shortage of land in the US, but everyone wants to live in
| the same few places
|
| It's not enough to have land, though. The land needs access to
| water and electricity, not to mention roads, or it's a
| nonstarter, especially if you want to build a bunch of homes on
| the land. And the new homeowners will need access to food and
| supplies, i.e., stores. You need an entire community.
| kaibee wrote:
| The neat thing about capitalism is that stores will be built
| to serve the community if there's a market for it. We don't
| need to centrally plan the whole community up front. We do
| need zoning laws that ALLOW those stores to be built though.
| toomuchtodo wrote:
| This is not borne out by the evidence.
|
| https://www.ruralhealthinfo.org/topics/food-and-hunger
|
| https://www.propublica.org/article/food-desert-grocery-
| store...
| kaibee wrote:
| Those are about rural communities. It makes perfect sense
| that a very low-density community doesn't generate enough
| demand for a robust grocery store. The 2nd article
| mentions that the community used the newly built grocery
| store for a while, before going back mostly shopping at a
| Walmart 30 miles away. My guess is that those people were
| going to that Walmart anyway for this or that in many
| cases. So at that point, why drive to two locations, esp
| for most people in the rural area, that grocery store
| isn't actually that much more convenient, and can't
| compete on price with Walmart?
| toomuchtodo wrote:
| You said:
|
| > The neat thing about capitalism is that stores _will_
| be built to serve the community if there 's a market for
| it.
|
| I am pointing out that this is not a given, magic that
| will just happen. Capitalism is not always efficient nor
| reliable, based on the evidence.
|
| > before going back mostly shopping at a Walmart 30 miles
| away. My guess is that those people were going to that
| Walmart anyway for this or that in many cases. So at that
| point, why drive to two locations, esp for most people in
| the rural area, that grocery store isn't actually that
| much more convenient, and can't compete on price with
| Walmart?
|
| https://www.washingtonpost.com/graphics/business/walmart-
| clo...
|
| https://www.washingtonpost.com/news/wonk/wp/2016/02/05/wh
| at-...
| kaibee wrote:
| > I am pointing out that this is not a given, magic that
| will just happen. Capitalism is not always efficient nor
| reliable, based on the evidence.
|
| I said 'if there's a market for it'.
|
| The simple fact is that these rural communities are just
| not as economically viable as they used to be. Most rural
| communities exist around 'base input' types of industries
| that made money by exporting stuff extracted from the
| land. Farming, mining, logging, etc. The community
| existed because extracting those resources required a lot
| of labor, and that labor wanted to buy services after
| work. When you had 100 people who worked in the fields
| all day, they'd come back to town and patronize local
| bars, stores etc. However, farming, like mining, has
| continued to become less and less labor intensive because
| of better automation. There isn't 100 people coming back
| from the fields in most cases now. There's 1 dude who was
| driving a combine harvester all day. Or a planter, etc.
| And more recently, its one guy who was monitoring a dozen
| combine harvesters that were self-driving based on GPS.
|
| Editing in a reply to below comments bc depth limit.
|
| > This is why I'm very pro remote work for the broader
| economy. > It's much easier for remote workers who want
| to live in rural areas to patronize these local bars,
| stores, etc, when they're not already commuting to places
| with a much larger collection of services.
|
| I'm also pro-remote work, but even if every job that is
| do-able remote becomes remote, that won't revitalize
| every rural community. No one is moving to North Dakota
| just because they got a remote job. The US is just too
| big and the number of remote-able jobs is too small.
| Sure, some rural communities, with particularly nice
| outdoors, etc will be winners. But you need actual
| 'large' numbers of people to sustain those local
| bars/stores. A few software developers moving to a dying
| mining town is just not going to be enough patrons to
| sustain a bar, stores, schools, etc. Even if they all
| keep their 500k Google paychecks, they can still only
| drink so much beer at once.
|
| > In which case, that reminds me:
|
| > The neat thing about central planning is that it can
| invest in things-- like rural electrification-- which are
| cost prohibitive for a market-based solution, if/when
| that need arises.
|
| > So would you agree they are both neat in their own way?
|
| Yes, they are both neat in their own way. I like that the
| post office has to deliver mail to everyone.
|
| Central planning can react faster than the market, if the
| central planners have good foresight. But they can't see
| into the future either. If you have some rural mining
| community that could sustain a population of 5,000 in
| 1970, it made a lot of sense to electrify it. But then 40
| years later, the mine is more productive than ever
| before, but only needs 20% of the labor because of
| advances in automation. It kinda sucks that you built an
| electric system sized for a population of 10,000, right?
| Cuz now you have a town of 5,000 where unemployment is
| extremely high.
|
| Though I'd argue that rural electrification at this point
| (or in the next few years) is probably best by a home-
| solar-battery combo.
| Loudergood wrote:
| This is why I'm very pro remote work for the broader
| economy.
|
| It's much easier for remote workers who want to live in
| rural areas to patronize these local bars, stores, etc,
| when they're not already commuting to places with a much
| larger collection of services.
| blargey wrote:
| The problem with remote workers is that they will only
| move to a town _after_ there's a healthy crop of local
| businesses competing for patronage on quality.
|
| So they can't become the _motive_ for such businesses to
| start in a town. It's a crop of local workers flocking to
| location-specific, non-remote job opportunities that
| creates that attractive opportunity for service
| businesses to follow.
| medvezhenok wrote:
| To be fair, rich people could theoretically jump start
| the process by paying people to open businesses in a
| town. It just takes startup costs. And if the flywheel
| gets going, you could see a new "popular" town spring up.
|
| But it's a risk.
| jancsika wrote:
| > I said 'if there's a market for it'.
|
| In which case, that reminds me:
|
| The neat thing about central planning is that it can
| invest in things-- like rural electrification-- which are
| cost prohibitive for a market-based solution, _if /when
| that need arises_.
|
| So would you agree they are both neat in their own way?
| Qworg wrote:
| Food deserts also exist in urban areas, particularly poor
| and historically disadvantaged communities. No magic to
| capitalism - the local communities don't get a grocery
| because they can't pay (and, of course, other reasons),
| even if the population density is high.
| jbellis wrote:
| "Food deserts" are a demand problem, not a supply
| problem. https://www.nyu.edu/about/news-
| publications/news/2019/decemb...
| lapcat wrote:
| > The neat thing about capitalism is that stores will be
| built to serve the community if there's a market for it. We
| don't need to centrally plan the whole community up front.
|
| There's a chicken-and-egg problem here, though. Would you
| buy a new home and move in with no groceries or other
| stores in the area yet? If there's an existing community,
| then yes, stores will be built eventually, but that can't
| just happen overnight, so how do homeowners survive in the
| meantime?
|
| That's why most new housing is built in the suburbs around
| existing cities. All of the amenities needed by homeowners
| are already nearby, or at least within reasonable driving
| distance. Starting a new community in the middle of nowhere
| would be extremely difficult, and would certainly cost a
| lot more money to the home builders, reducing profit.
| xnx wrote:
| Very true. There are many areas in the US (Detroit for
| example) that have lost population over the past 50 years
| that wouldn't have to start from scratch with new
| development.
| ghaff wrote:
| That's a bit of a strawman though. There are plenty of cities
| and towns that have infrastructure and have stores at some
| level that have much lower costs. (They may or may not have
| good local jobs.) It's not a choice between NYC/SF/etc. and
| the wilds of Wyoming.
| lapcat wrote:
| I'm not sure what exactly you think is a straw man?
|
| When the OP said "everyone wants to live in the same few
| places", I didn't interpret that to mean specifically
| NYC/SF, because that's plainly false. I interpreted it to
| mean urban vs. rural/undeveloped areas in general.
|
| But the problem is that home builder cartels exist all
| across the country, and they own a lot of the desirable
| land around the urban areas. For example, in my own area of
| Madison, Wisconsin, we have a company Veridian Homes that
| owns giant tracts of land all around the outskirks of the
| Madison area. They're the dominant home builder here.
| ghaff wrote:
| It was in reference to: _The land needs access to water
| and electricity, not to mention roads, or it 's a
| nonstarter, especially if you want to build a bunch of
| homes on the land._
|
| (The comment may indeed be true--sort of by definition to
| at least some degree--for new construction, although
| getting that access can be pretty straightforward, to the
| degree anything involving construction is
| straightforward. It's more that housing prices are an
| issue in popular places where a lot of people want to
| live. And, yes, vibrant college towns fall into that
| category although not to the same degree as elite
| cities.)
| lapcat wrote:
| Fair enough, it would be possible to scale up smaller
| towns, much smaller than Madison. However, I'm not sure
| that's practical, at least to the extent required to meet
| the housing shortage, for several reasons. First, the
| reason you already mentioned: "They may or may not have
| good local jobs." Second, there may not be enough home
| builders available in smaller towns. The builders
| themselves have to come from somewhere, and they're
| likely to be somewhat scarce the smaller and more remote
| the town.
|
| I just don't think the conspiracy that the OP postulated,
| "We all want our properties to increase in value so we
| collectively conspire to suppress supply" is a very
| plausible explanation when applied in general to the
| entire country. For example, again in the Madison area,
| most of the home building is occurring not in the city
| proper but rather out in the suburbs and exurbs, which
| are independently governed. Indeed, in a fast-growing
| suburb, the property values can actually _increase_ as
| homes are built and the town becomes a more desirable
| place to live.
| toomuchtodo wrote:
| The fix is to enshrine remote work for jobs that can be remote
| (labor regulation and whatnot), enabling labor mobility to
| where housing is affordable, but the ideological challenges
| prevent that. So, instead, we gnash teeth and say there is no
| solution while we slowly build more housing stock and hope
| that'll catch us up eventually. It will, eventually, as
| immigration slows, and the death rate exceeds the birth rate
| and household formation (see: Japan), but that will take time.
|
| To destroy housing values to increased affordability, you must
| destroy locality as a value factor.
| Aurornis wrote:
| > The fix is to enshrine remote work for jobs that can be
| remote (labor regulation and whatnot), enabling labor
| mobility to where housing is affordable,
|
| Not really a fix. When people's location becomes free from
| their jobs, they don't move to remote locations where land is
| cheap. They move to cities they want to live in, or cities
| where they have friends and family.
|
| The subset of people who prefer to move to the middle of
| nowhere and prioritize the cheapest housing above all else is
| very small (and probably overrepresented online)
| toomuchtodo wrote:
| Can you provide a citation with data demonstrating this?
| Here's mine:
|
| https://www.yardikube.com/blog/remote-workers-leading-the-
| mi...
|
| https://www.wcnc.com/article/money/charlotte-north-
| carolina-...
|
| https://www.fanniemae.com/media/48891/display
|
| https://www.americanexperiment.org/study-finds-that-
| remote-w...
|
| https://web.archive.org/web/20230127175520/https://www.rura
| l...
|
| (also, I said where housing is affordable, not the middle
| of nowhere)
| galdosdi wrote:
| But they're a lot more willing to choose outer exurbs or
| nearby towns that have a lot more space, or if they really
| prefer city life, are more willing to consider cities with
| good lifestyle/affordability but second-rate job
| opportunities. This rebalancing is still overall good for
| everyone.
| ghaff wrote:
| And _some_ move to established mountain towns and the
| like. But, yeah, in general there are a lot of good
| reasons to move to the periphery of decent-sized cities
| if you don 't care much about city amenities day to day.
| That doesn't help you much with housing prices in the Bay
| Area necessarily but it does in a lot of places.
| ssimpson wrote:
| In the US, per state employment regulations can hamper this
| as well.
| onemoresoop wrote:
| Why does everyone want to live in the same few places? Because
| all ways to make money and a living are there! Give people the
| option to work remotely and they can live wherever they want,
| and that is not in crowded expensive cities most of the time.
| mulmen wrote:
| There's a lot more to life than a job. Most jobs can't be
| done remotely. How do you convince a barista to move to New
| Billings? Is there anything to do there after work?
| bluGill wrote:
| There is a lot to do there, but it might not to be to your
| liking. If you don't like guns the fact that you can safely
| shoot off your deck is f no value. Meanwhile you get one
| musical in town per year and they expect you to be in it
| (that is not very high quality).
| bratwurst3000 wrote:
| i work remote and i live in an expensive city. why? because I
| was raised here and have many friends and there is much
| cultural events going on. work aint everything
| Aurornis wrote:
| > Give people the option to work remotely and they can live
| wherever they want, and that is not in crowded expensive
| cities most of the time.
|
| COVID dramatically increased the opportunities for remote
| work. Yet housing prices in major cities went up, not down.
|
| Anecdotally, my friends who moved during COVID remote work
| all moved to cities they wanted to live in. I knew more
| people leaving mid-sized towns to move to Seattle, NYC, and
| the Bay Area than the opposite.
| stouset wrote:
| We have made an enormous shift in that direction post-COVID
| and it turns out that: [drumroll] people still largely prefer
| to live in cities when financially viable. The price tag of
| cities is itself evidence of this. San Francisco isn't
| expensive in a vacuum. If there wasn't demand for housing at
| these prices, they would fall. And yet people continue to
| willingly pay an enormous premium for the privilege of living
| here.
|
| I can walk _across the street_ to get my groceries. I have at
| least fifty restaurants within walking distance. My doctor is
| four blocks away and a large hospital is six. I have access
| to a large park three blocks away.
|
| There is a streetcar that goes straight downtown one block
| away and three buses that go throughout the city are right at
| the end of my block. I can bike to virtually anywhere I want
| to go if walking is too far or transit is annoying.
|
| And all of this _keeps us healthy_. It's no secret that
| obesity is approaching near universality in areas of the
| country where driving is the only option to reach basic
| amenities. It also correlates with reduced energy use and
| therefore to reduced greenhouse gas emissions.
|
| Making cities cheaper goes a lot further than trying to make
| cheap but fundamentally broken suburbs and exurbs less
| hostile. And part of that is precisely what this article
| highlights: the rentier class siphoning away the profits of
| workers while providing little to no value themselves. And I
| say this as a homeowner (and therefore landowner) myself.
| TulliusCicero wrote:
| That's part of it, yes. But some areas can be more desirable
| for other reasons, too.
|
| It'd be better overall for society if we just got rid of
| exclusionary zoning and made it easier for people to live
| where they wanna live.
| linguae wrote:
| Even with remote work, it may still be beneficial to live in
| or near a large metro area. From an American point of view,
| large metro areas generally offer many amenities such as a
| variety of cultural events (concerts, exhibits, festivals), a
| variety of shops and restaurants, international airports, a
| populace that is diverse and is more accepting of people from
| diverse backgrounds, expanded opportunities for education,
| and much more. Even if one chooses not to live in the Bay
| Area or New York City due to housing costs, there are still
| other desirable metro areas in the United States that offer
| these amenities and have lower (though definitely not low)
| housing costs. To add, if one could afford the housing costs
| of the Bay Area and New York City, there are many reasons to
| live in those places.
| VancouverMan wrote:
| It's a similar situation in Canada, but with the added problem
| of horribly flawed immigration policies that have flooded the
| country with a huge number of foreigners each year. While this
| has been going on for decades now, it has really intensified
| over the last nine years.
|
| The equivalent of a large (by Canadian standards) city's worth
| of people is being added each year, but there is nowhere near
| that much residential construction taking place in total.
| doubled112 wrote:
| As long as Canadians live 4 to a bed, the housing situation
| is keeping up.
|
| Maybe it can be like hot desking at the office. Just have to
| make sure you and your roommates work opposing shifts.
|
| https://www.tvo.org/article/ontarios-housing-crisis-is-
| becom...
| ekez wrote:
| If "we" all got together and reduced permitting costs, "our"
| homes would be much more valuable because a developer can build
| a highrise where the house is.
| dnissley wrote:
| I feel like I need to make this point again and again: It's not
| about increasing the value of properties for most (after all,
| allowing apartments to be built in your neighborhood would
| increase the value of the remaining SFHs). It's about keeping
| the character of the neighborhood the same as it is now (SFH
| vibes), and all that comes with that ("family friendliness",
| etc).
| aorloff wrote:
| Everyone wants to _keep the character of their neighborhood_.
|
| Forget that ! When you go to a dense city like Barcelona
| where every block is nearly 4 story high rise apartments, its
| wonderful.
|
| Change is beautiful, people enhance neighborhoods
| dnissley wrote:
| I agree, and I think even the folks who are against that
| would actually end up enjoying it more. But people hate
| change, especially when it means changing something that
| has been that way for generations at this point. My main
| point though is that people who think this is about money
| are simply wrong. Trying to argue numbers with these folks
| will not move them an inch. It has everything to do with
| emotion.
| nineplay wrote:
| > I agree, and I think even the folks who are against
| that would actually end up enjoying it more
|
| That's a pretty remarkable belief. Many of us happy
| suburbanites have lived in large dense cities in our
| younger days. We are not ignorant of the joys of city
| living, we've just changed priorities.
| dnissley wrote:
| The neighborhoods I have in mind here aren't "true
| suburbs" but rather "pre-war suburbs" that are already
| fairly dense. Think west SF, Fremont/Ballard in Seattle,
| etc.
| ndriscoll wrote:
| Lots of people who want to live in suburbs have in fact
| visited or even lived in large, dense cities. They're well
| aware of the tradeoffs.
| chgs wrote:
| Barcalona is a terrible place to live due to mass tourism
| that the intenet has enabled.
| aorloff wrote:
| Yup I hear nobody goes there anymore because its so
| popular.
| chgs wrote:
| Tourists go. That doesn't mean it's a good place to live.
|
| The extreme example is of course Venice.
| sokoloff wrote:
| People who think it's wonderful to live in a place where
| every block is 4-story apartments should feel free to move
| to such a place.
| TulliusCicero wrote:
| Translation: keep out them poors.
|
| Zoning that mandates low densities is used to economically
| segregate areas. They're invisibly gated communities enforced
| by the government. "Can't live here unless you can afford to
| buy/rent this much land."
|
| One of the things I noticed while living in Munich was that
| the differences in apparent neighborhood prosperity in
| different parts of the city were vastly less extreme than in
| major US cities. Almost every neighborhood looked kind of
| vaguely middling, it was rare for a place to look obviously
| well-to-do or obviously run down.
|
| And it makes that it's harder to get extreme differences
| there if at least medium density dwellings are allowed just
| about everywhere. Working class people may not be able to
| afford a whole house, but they may be able to afford an
| apartment in a given neighborhood.
| hackermatic wrote:
| I think people in the US overestimate how much upzoning "has
| to" affect most neighborhoods, especially infill development
| or removing default single-family home zoning. I used to live
| in Minneapolis, which has lots of century-old duplexes and
| fourplexes mixed in with single-family homes on similar lot
| sizes. Traffic, activity/noise, appearance, and overall
| "niceness" were almost the same as on single-family-only
| blocks -- but the bump in density supported lots of corner
| stores and restaurants in walking distance that made people
| want to live there or visit the neighborhood for the day.
|
| Part of the apprehension might be caused by the difficulty of
| rezoning itself. The only people with the determination and
| money to get a zoning variance are big developers who need a
| big building to make it worthwhile. That's how you get 50- or
| 100-unit apartments going up in single-family neighborhoods,
| and a "missing middle" of density and affordability.
| 1986 wrote:
| Did you know that a third of the US population lives in a
| rental property?
| xnx wrote:
| I didn't. Unfortunately, renters vote at a lower rate and
| don't vote with the same focus as property owners.
| nomel wrote:
| You missed a costly part of grabbing a chunk of land:
| utilities. Getting them onto your land, so you can live with
| modern creature comforts, some of them dictated by law, is
| often prohibitively expensive. You can DIY with the alternative
| being a well (hit or miss), a septic system, and setting up a
| solar/battery farm, which isn't cheap either.
| whartung wrote:
| > You missed a costly part of grabbing a chunk of land:
| utilities.
|
| There is a 15 acre lot down the street. A good spot for
| another small housing development.
|
| But one issue with it is that it has legacy utility and power
| poles on the periphery. Anyone wanting to develop that space
| is obliged to route all of that underground, which easily add
| several M$ to the project.
|
| Eventually, someone will bite, buy the lot, and develop it.
|
| But it's going to be low on the list because all of that cost
| will notably bounce up the new home costs. Cheaper places to
| build elsewhere.
| bluGill wrote:
| What is wrong with powar poles? They are reliable and work
| well.
| nomel wrote:
| Above ground is ugly, and less reliable, in terms of
| frequency (about half) and total duration (about 20%
| more, since underground takes around 1.6x longer per
| outage) [1]. But, underground is so expensive that they
| end up being a net social loss, at least in NY [2].
|
| [1] https://pdi2.org/wp-
| content/uploads/2021/03/51-EdisonElectIn...
|
| [2]
| https://dps.ny.gov/system/files/documents/2023/09/final-
| repo...
| nineplay wrote:
| Property values are a small-to-none factor.
|
| I don't want more noise.
|
| I don't want more traffic.
|
| I don't want more students at my kid's schools, which are
| already at a 35/1 kid to teacher ratio.
|
| That's it for me. I think that's it for a lot of people,
| whether they live in cities or suburbs or far out in the
| country. Very few people want more crowding. The people who
| like living in dense cities already live there.
|
| Blaming greed and property values is just a distraction.
| chgs wrote:
| Presumably double the density you also double the size of the
| school and double the teachers.
|
| If you don't, the problem isn't the density.
| nineplay wrote:
| There are a lot of problems, none of which are going to be
| addressed if the only focus is property values.
|
| A school was knocked down in my neighborhood to build a
| pricey apartment complex. The district and the developers
| made a bunch of promises about how current schools would be
| expanded and more resources would be available. Those were
| all lies, of course. Apartment complexes make money, public
| schools do not. Guess which one wins.
| jjav wrote:
| > Presumably double the density you also double the size of
| the school and double the teachers.
|
| It's not that easy. If you doubled the density, maybe there
| is nowhere left to go for the school to expand, or the land
| is now so expensive there is no way for the town to afford
| expanding the school.
|
| My town is an example. The middle school had two quite
| large empty lots on two sides.
|
| Those lots have now multi-story apartment buildings in
| construction. Presumably those apartments will attract
| younger families who might have kids going to middle
| school. But if that school ever needs to expand, it is now
| boxed in by housing on all sides. Time will tell how it
| goes.
| nemo44x wrote:
| I could never understand why some people don't understand
| that people buy into a community because they like the
| community in the state when they bought into it. And that
| making large changes to the community would alter the
| community and what people liked about it will be diminished.
| Not to mention the practical aspects like utilities, road
| capacity, schools, etc. as you've pointed out.
|
| For some reason, some people outside a community believe they
| should have a voice on what the actual community wants. As if
| a community should be expected to want to ruin what makes
| their space attractive so interlopers can infest it?
|
| Some development where it makes sense - sure. But no, we
| aren't converting our homes and properties into multi-family
| dwellings.
| camel_Snake wrote:
| I'm probably one of those people you're referring to, and
| quite honestly it's not that I don't realize or understand
| - it's that I don't care. The community you love wasn't
| always that way - it changed to become what you enjoy,
| likely to the similar anger/detriment of the previous
| residents who like the "old" community. I imagine racial
| segregationists and apartheid advocates used
| disconcertingly similar arguments.
| nemo44x wrote:
| > it's that I don't care.
|
| Can you understand why a community would want to exclude
| you? That antisocial attitudes like this are shunned
| accordingly and projects that would attract them are
| avoided. We actively select to avoid these kinds of
| antagonistic attitudes getting a foothold because we know
| what makes our community attractive. Certainly it isn't
| people that "don't care" about what the community values.
| You'll need to find somewhere lower rent for that.
|
| > The community you love wasn't always that way - it
| changed to become what you enjoy, likely to the similar
| anger/detriment of the previous residents who like the
| "old" community.
|
| How do you know this? Likely even? Communities do change,
| of course. But there's a reason why the most highly
| sought after places continue to be the most highly sought
| after places and it isn't because they gleefully rip down
| the very things that make them sough after. Especially so
| "don't cares" can move in and not care about the place.
|
| > I imagine racial segregationists and apartheid
| advocates used disconcertingly similar arguments.
|
| What does that have to do with a community wanting to
| limit and select what they consider appropriate
| development in the modern age?
| jjav wrote:
| > it's that I don't care
|
| Ok. So hoefully you can see why people who like their
| homes and their town will rationally do everything
| possible to oppose a person who is an outsider and comes
| in saying they don't care about anything the residents
| enjoy and just wants to change it all (destroy it)?
| tourmalinetaco wrote:
| So, if I convinced a bunch of people in nearby rural
| areas, none of which live in your city, to demand to your
| mayor to do things in a way you personally dislike, you
| would welcome the change with open arms? Or is your
| belief that all external change is good only extend as
| long as you personally do not receive repercussions?
|
| This mentality is the same one that's leading California
| and New York to ruin, by the way. :D
| secstate wrote:
| Your last point is very important. Zoning at a federal
| level would be required to clear some basic anti
| segregation. Would it be perfect? No. But the zoning in
| my town is 100% in the same spirit as redlining. No one
| would describe themselves as racist or classist. Maybe
| that's just human nature?
| kaibee wrote:
| > For some reason, some people outside a community believe
| they should have a voice on what the actual community
| wants. As if a community should be expected to want to ruin
| what makes their space attractive so interlopers can infest
| it?
|
| I don't understand the notion that that community exists in
| a vacuum where they're entitled to be insulated from the
| world changing around them.
| sokoloff wrote:
| I don't think that it's entitled to be insulated from the
| world changing around it, but I do think that the
| residents of, say, Palo Alto, should have more say about
| the planning and permitting in Palo Alto than I do
| (living 3000 miles away from there), no matter how much
| "some people outside a community believe they should have
| a voice on what the actual community wants."
|
| I don't live there; I shouldn't have any say on their
| policies (except via federal law-making, limited by the
| 10th Amendment delegation of powers).
| medvezhenok wrote:
| They should have some say, but they should not be able to
| act as a cartel and prevent permitting altogether. And I
| say that as a new homeowner.
|
| General zoning policy should be decided at a state level
| (or federal) - like in Japan. Otherwise, no individual
| community wants more development (of course), but it's a
| bitter pill that they have to swallow together if we want
| to solve the housing problem.
| SkyPuncher wrote:
| I used to agree with this when I was a kid. Then I realized
| that it's literally just a part of live in a modernized
| country.
|
| Both my wife's and I home were "out in the country" when we
| were kids. Now they're surrounded by houses. The same
| pattern is basically everywhere. If you want the community
| of 20 years ago, move to a new one that looks like it.
|
| It's simply part of the constant change of life. Being
| bitter over it isn't helpful or anyone.
| m_fayer wrote:
| Asking people to sacrifice for the greater good requires that
| they trust their leaders and systems to do everything
| possible to maximize the benefits and ameliorate the harms.
| Absent that, it's every man for themselves.
| nineplay wrote:
| Asking people to sacrifice for the greater good is
| generally a non-starter and I'm not just taking about
| housing. It's certainly not something to consider when
| planning public policies.
| mint2 wrote:
| None of those are required in cities, and actually suburbs
| are the main cause of traffic jams.
|
| The main noise in most places is traffic, and traffic is
| usually caused caused by sprawl, low density and car oriented
| building.
|
| What you're objecting to is fixed by more density
| nineplay wrote:
| So your assertion is that if all the open space near me was
| mowed down to make room for massive apartment complexes,
| then I would actually experience less noise and traffic.
|
| It's a bold theory but not one I want to try out in
| practice.
| smcin wrote:
| This on the same day that the SF Bay Area pulled its $20
| billion housing bond from the November ballot [0], after
| objectors claimed the published costings were inaccurate. (
| _SJMercuryNews: "The total cost, including principal and
| interest on the bond, is estimated at $48.3 billion and would
| take more than 50 years to pay off."_)
|
| Another relevant project is the Solano County ("California
| Forever") proposal [1], which is being dropped from the 2024
| ballot but is still active (presumably for March 2026 ballot,
| when there will be gubernatorial primary and high turnout).
|
| Also, after 2024 CA Proposition 5 ("Lower Supermajority from
| 66.67% to 55% for local bond measures to fund housing projects
| and public infrastructure")[2] has been voted on. (It's also
| being challenged by the Howard Jarvis Taxpayers Association.)
|
| We will be able to compare timelines/costs/delays between the
| two development proposals and get answers on whether
| costs/delays in CA homebuilding are primarily due to the
| homebuilder, the city/county, CA state, the development process
| in general, or nearby residents' objections. The Solano County
| proposal is more greenfield and seems to have more supporters
| and fewer existing homeowners to object, so this outcome should
| be interesting and informative. (Of course, it's a distinct
| possibility that both proposals get killed politically, which
| would also give us the answer that it's not really about costs
| or timelines, and that a vocal minority of existing
| homeowners/landowners can game the process to pretty much kill
| any proposal, regardless how antisocial that might be.)
|
| --
|
| [0]: https://www.mercurynews.com/2024/08/13/20b-bay-area-
| housing-...
|
| [1]: KQED Forum "What's Next for California Forever's Proposal
| to Build a New City in Solano County"
| https://www.kqed.org/forum/2010101906729/whats-next-for-cali...
|
| [2]: Ballotpedia: CA Prop 5
| https://ballotpedia.org/California_Proposition_5,_Lower_Supe...
| davidw wrote:
| > It's satisfying to blame a big bad "them" for this, but the
| problem is "us"
|
| Yep. People want a bogeyman _so bad_ , but time after time, I
| show up to hearings, read about efforts to build housing and
| the problem is local NIMBYism:
| https://bendyimby.com/2024/04/16/the-hearing-and-the-housing...
|
| My own take on the 'bogeyman' theories:
| https://bendyimby.com/2023/01/11/the-bogeyman/
| dachworker wrote:
| So basically, if you're an individual, or a contractor who
| reinvests their earnings into the housing market, you face two
| challenges: getting competitive financing, and finding a plot of
| land to build on.
|
| Question: is finance screwing up capitalism? Real estate is
| supposed to be one of the most competitive and dynamic markets.
| If you can turn even this very simple and basic market into a
| quasi-monopoly, then there is something fundamentally wrong with
| the whole economy. And it seems all fingers point to Wall Street.
| lotsofpulp wrote:
| Real estate is not competitive nor dynamic because of the
| disproportionately low property (specifically land value) tax
| that property owners pay relative to the utility they get from
| society (police/military and courts to protect their land as
| well as myriad other policies that ensure a stable society).
|
| Simply hoarding land should not be profitable, and yet it is
| one of the most profitable businesses because of subsidies (too
| low property taxes, 1031 exchange, various "farming" and other
| exemptions).
| 23B1 wrote:
| Absent from this article:
|
| - Financing requirements & anticompetitive lending practices
|
| - Municipal/state building codes and the regulatory capture
| thereof
|
| - NIMBYism and activist urban planners
|
| - The tyranny of the commute
| crooked-v wrote:
| Overconsolidating is bad, but the article's chain of logic falls
| apart for me because it doesn't actually make any connection to
| indicate that these companies wouldn't make even more money by
| building more homes, while ignoring that local permitting and
| approval process have gotten ever more pricey and complicated
| over even just the past two decades.
|
| For the extreme example, take a look at San Francisco, which has
| approved a grand total of 16 housing units so far this year
| (https://www.newsweek.com/san-francisco-only-agreed-
| build-16-...). Only a tiny margin of ultra-high-price housing can
| even be sustainable, let alone profitable, in that environment.
| kaibee wrote:
| > because it doesn't actually make any connection to indicate
| that these companies wouldn't make even more money by building
| more homes,
|
| I think it comes down to risk, effort, and available
| labor/resources. If it costs them nothing to hold the land and
| build only when they're very sure that the building will be
| profitable, then that's what they'll do. But once they have the
| whole construction side working on projects... if there's
| capital left over... why not buy up more land in the mean time?
| It makes it harder for your competition to build while you work
| through your backlog and it costs you basically nothing.
| nnf wrote:
| > tax the land of lot developers so they don't hold land off the
| market.
|
| This is something I dealt with a few years ago. There were a few
| acreage lots (5-15 acres) my partner and I were considering
| buying and building a house on, and all of them had been in the
| $200k range a year or two before but had been bought by land
| speculators (in some cases by the same person). Prices went from
| ~$200k to ~$750k, which we weren't interested in.
|
| Most of them sold. One of the larger lots was around $350k and is
| still for sale, now for almost $2 million.
|
| I don't think developers should be forced to sell land just
| because I want to buy it, but the taxes they pay on their empty
| lots is extremely low. I checked on a couple of the ~$750k lots,
| and the taxes were something like $115 per year. At that rate, it
| costs the developer/speculator basically nothing to hold onto it
| while prices rise.
|
| If lots like this were taxed at, say, 20x the current rate for
| lots that are near areas that are being built up and are ready to
| be bought, then there would be a stronger incentive for the
| owners to sell to people who are ready to build and start paying
| property taxes. It seems like such an increase would benefit
| everyone except the speculators.
| lotsofpulp wrote:
| > It seems like such an increase would benefit everyone except
| the speculators.
|
| Correct, a simple power law tax formula on unimproved/vacant
| land that forever increases the cost to hold onto land near and
| in the middle of population centers would do wonders.
| kaibee wrote:
| Really we just need a Land Value Tax.
|
| https://www.investopedia.com/terms/l/land-value-tax.asp
| theoreticalmal wrote:
| This seems a lot like a tax on unrealized gains. You're taxing
| something that _might_ have value in the future, rather than
| it's actual value now.
| lotsofpulp wrote:
| Yes, it's called property tax, calculated by multiplying a
| property tax rate times assessed value of the property. Does
| anywhere not already have that?
| sroussey wrote:
| Farther up they are talking about taxing based on what it
| could be worth, not what it is worth.
| woah wrote:
| Land Value Tax (the Georgeism discussed in the article)
| just taxes the land on what it is worth, not the
| buildings on it. So holding land vacant costs more
| because the speculator is not making any money from it,
| while they could be making money from a building.
|
| A side benefit for homeowners is that improvements
| increase equity and resale value without raising taxes
| sroussey wrote:
| So SFH should get taxed like a high rise.
|
| In CA there was/is a ban on SFH zoning. So at least in
| that case every homeowner should get taxed like at least
| a fourplex. Considering your wage didn't increase that
| means less money for mortgage, etc., so buyers have less
| to spend on a house and your property goes down in value.
| kaibee wrote:
| A property tax is typically assessed on the value of land +
| property, and honestly, we don't do a good job of
| accurately pricing the land value aspect of it. So if you
| don't build anything and just own the land, your property
| tax will be very low.
| lotsofpulp wrote:
| theoreticalmal's comment seems to imply that taxes on
| unrealized gains are not a thing, to which I was replying
| that property taxes are an example of a tax on unrealized
| gains. Everyone whose home has gone up in market value
| knows this because their property tax has surely
| increased over the years even though they haven't sold
| their home.
| Spartan-S63 wrote:
| That's the idea, though. If you're sitting on an undeveloped
| or underdeveloped parcel of land, you should bear the cost of
| the value of the land. If it's in a rural area, you can
| probably weather the tax burden because it's worth a lot less
| than a surface parking lot in an urban area.
|
| The idea behind such taxation is to destroy the deadweight
| losses created by land speculators. You either buy the land,
| develop it, and bear the weight of the tax on the fair
| assessment of the land's value, or you don't buy the land at
| all.
|
| Property tax is predicated on the value of the structure
| _now_. Land-value taxes are predicated on the value of the
| land, developed or not. That will fluctuate based on the
| desirability of the surrounding area.
|
| The irony is that property taxes are predicated on the value
| of the structure, but the practicalities of market forces are
| that the land is what's actually valuable. So rather than
| keep playing this mis-labeled game, we should embrace land-
| value taxes and have municipalities asses taxes without
| regard to the structure, just the potential economic value of
| the land.
| TulliusCicero wrote:
| And that's a good thing, because unlike other valuables, you
| can't just create or mine more land. Land is inherently
| valuable based on its location, you can't just get more of it
| somewhere and import it in.
|
| There _needs_ to be pressure to actually make productive use
| of land so that people don 't just uselessly sit on it.
| JumpCrisscross wrote:
| > _you can 't just create or mine more land_
|
| Sure you can [1].
|
| [1] https://en.m.wikipedia.org/wiki/Land_reclamation_in_the
| _Neth...
| sroussey wrote:
| Seems like the developer wasn't the problem.
| chgs wrote:
| Yes the inability for society to tax the land is the problem
| sroussey wrote:
| "Society".
|
| Tax all land so after 6 months it is not profitable to
| hold. I guess after 6 months all land everywhere will be
| built.
| tigen wrote:
| This paragraph looks wrong. "In 2005, when D.R. Horton sold a
| record number of homes, it made $1.47 billion. In 2023, when it
| built roughly half as many, its profit was a little over three
| times as high, or $4.7 billion. "
|
| It did not build half as many homes, it was 82917 homes in 2023
| vs. 51172 in 2005. Also, the profit number should be corrected
| for inflation when comparing across almost 2 decades.
| mulmen wrote:
| 1.47 billion 2005 dollars is 2.29 billion 2023 dollars.
|
| Profit per house in 2023 dollars:
|
| $44,751.04 in 2005
|
| $56,683.19 in 2023
| biomcgary wrote:
| Thanks for doing this calculation! It would be interesting to
| know if the average square footage of houses built by the
| company has changed. If they have increased by 25%, the
| profit per square foot would be roughly unchanged.
| simoncion wrote:
| > > In 2023, when it built roughly half as many...
|
| > It did not build half as many homes, it was 82917 homes in
| 2023 vs. 51172 in 2005.
|
| Unless my math is wrong: (82917-51172)/82917 ~= 0.38
|
| ~40% _is_ roughly half.
| tamimio wrote:
| Fun fact: About 89% of Canada's land area (8,886,356 km2 or
| 3,431,041 sq mi) is Crown land: 41% is federal Crown land and 48%
| is provincial Crown land. The remaining 11% is privately owned.
| For example, 92% of Quebec, 87% of Ontario, 95% of Newfoundland
| and Labrador, and 94% of the land in British Columbia are Crown
| land. So when you "buy" land, you actually become a tenant to the
| Crown. If you don't pay the property taxes, "your" property can
| be registered for sale. The laws around properties in Canada are
| extremely complicated and stupid. A friend of mine, after
| building their house and wanting to connect the sewer to the
| municipal one, was required to pay more than $50k! After 2 years,
| they ended up having a septic tank instead.
|
| Unfortunately, there's no hope to fix the housing issue in a
| democratic way because the majority of the voters are landlords.
| The only possible solution is like Japan (where houses are
| depreciated assets) by having centralized control over housing,
| zoning, permits, and everything to maintain a flat price. Other
| than that, the future is grim for young people or anyone who
| doesn't already own a house. I remember a year ago I saw a
| mortgage here in Canada of 70 years, so if you bought a house at
| 30, you will become a Crown tenant by 100!
|
| (1) https://en.m.wikipedia.org/wiki/Crown_land
| bbarnett wrote:
| Wildly inaccurate. No one owns crown land, if you buy land,
| that's "privately owned" If you don't pay property tax, eg you
| are in arrears, your land is seized and sold to pay your debt.
| Again, that has nothing to do with crown land.
| aorloff wrote:
| If you don't pay property taxes for long enough (usually 5
| years) in the US, typically your property will be auctioned off
| at a county tax sale (assuming your lender hasn't paid the
| taxes and foreclosed first).
| delichon wrote:
| Nearly 40% of the United States is public land, supported by
| taxpayers and managed by federal, state, or local governments. --
| https://headwaterseconomics.org/public-lands/protected-
| lands/public-land-ownership-in-the-us/
|
| Allocating a few more percentage points of that for housing could
| have a large effect on prices.
| warkdarrior wrote:
| Yes, and nobody wants to live there.
| delichon wrote:
| Look at a digital U.S. map with a private / public land
| overlay and zoom in on the satellite images. It quickly
| becomes clear that people will live wherever they are allowed
| to. Sometimes the population stays low and sometimes bare
| desert turns into the Las Vegas metropolitan area.
| jjav wrote:
| > It quickly becomes clear that people will live wherever
| they are allowed to.
|
| Doesn't seem to be true. You can buy land in e.g. Nevada
| for less than $1000 per acre, but it sits empty because
| approximately nobody wants to live in the middle of the
| desert.
| theoreticalmal wrote:
| Probably any land the federal government would be okay selling
| to developers is also land that no developers would have the
| capital or physical ability to improve to the point of being
| valuable. Most of Nevada is federal land. Almost no one wants
| to live on it.
| sroussey wrote:
| The major of Los Vegas says otherwise.
|
| https://www.reviewjournal.com/opinion/commentary-
| government-...
| treis wrote:
| >And I realized that to call these businesses "homebuilders" is
| misleading. It's striking how little of their business has to do
| with, well, building. For instance, here's D.R. Horton in 2023:
| "Substantially all of our land development and home construction
| work is performed by subcontractors." Here's Lennar in 2023: "We
| use independent subcontractors for most aspects of land
| development and home construction." I suspect most of the other
| big guys would say something similar. These aren't builders, they
| are financiers that borrow cheaper than real developers and use
| that cheap credit to speculate in land, hiring contractors to do
| the work. They are, in other words, middlemen.
|
| This is pretty far out there. They are the general contractor and
| have substantial value add to the project.
|
| Most of the rest of the article is misunderstandings like that.
| schlauerfox wrote:
| Don't forget the Lennar tax they impose permanently on the land
| deed (runs with the land) they sell you you pay each transfer.
| https://labusinessjournal.com/news/lennar-forces-donation-on...
| burnte wrote:
| Never heard of this, and I'm glad I know now. I'm putting
| this right under HOAs as things to avoid at all costs.
| vundercind wrote:
| The structure of neighborhoods I've seen pop up in the last
| couple decades (maybe also earlier, I dunno) is that of a
| neighborhood developer who farms out the work of building the
| houses to (usually) a few select other firms, which do the
| actual GC work and sell the houses, having bought the lots
| they're building on from the owner of the neighborhood. The
| neighborhood developer is mostly in land speculation, they
| don't GC the building of houses. IDK if such outfits bill
| themselves as "home builders" in some contexts, but it wouldn't
| surprise me.
| allturtles wrote:
| If you're talking about developing an entirely new
| neighborhood, that involves a lot of work beyond just buying
| the land, carving it up into lots with a pencil and then
| selling them for a profit. They have to survey and plan and
| layout the neighborhood, including the lots, roads, drainage
| systems and any common areas. Then they have to get all the
| necessary approvals from the local government, which
| typically includes drainage studies, traffic studies, school
| impact studies, architectural reviews, discussions with
| residents who live on adjacent properties, etc. This often
| involves multiple rounds that requires revisiting the
| original design. Then they have to actually get all the
| infrastructure built out to the point where homes can
| actually be built on the lots (roads, sewers, drainage ponds,
| sidewalks, land grading, etc.).
| mikem170 wrote:
| And they build them for maximum profit, with nothing besides
| cookie cutter houses, each with a new tree out front, and
| nothing else unless you get in the car to drive to the
| nearest gas station or plaza with a chain restaurant or big
| box store.
| BenFranklin100 wrote:
| This was a poor article. Stoller reveals his ignorance of the
| industry. The GC is far from some middleman. They are the one
| that coordinate all aspects of the construction, from the
| digging of the foundation, the rough-in carpentry for the frame
| of the home, the electrical work, painting, roofing, and
| everything in between. No single craftsperson could be versed
| in so many trades, so of course they use subcontractors.
| Aurornis wrote:
| I don't find this article very compelling. The core argument
| comes from a single 2018 paper from a single author who used IV
| regressions to claim that increased consolidation of homebuilders
| is consistent with a reduced amount of new construction.
|
| The argument in this article is that small homebuilders got
| caught in the credit crunch and had to flip their lots to the
| mega builders, who maintained access to capital and credit that
| the small players didn't have. So now the big players are
| hoarding land and not building on it to control the market.
|
| I can believe that a credit crunch has cooled the construction
| market. Nothing about that would be surprising. I have a harder
| time believing that the major home builders have bought up so
| much land that nobody else can build anything, leaving them to
| control the market price of houses by artificially limiting
| supply.
|
| Anecdotally, the most expensive housing markets are in cities
| where most of the buildable land has already been used by
| something. This is where these supposed land-hoarding mega
| builders would have the least influence. In my experience there
| are a lot of affordable houses being built in smaller cities and
| in the outskirts of major cities, but the demand just isn't
| there. More people want to live in dense and desirable locations
| and they're willing to pay a premium for it.
| lapcat wrote:
| One of the worst aspect of these big home builders is that they
| impose homeowners associations on all of their new homes. It's
| difficult to find new homes free of HOAs.
| pdonis wrote:
| I think this is at least partly driven by the locality (city or
| county) wanting more property taxes from the new homes. In a
| city near me, there have been five new subdivisions approved in
| the past few years, all of which have not only HOAs but CDDs,
| which are basically extra property taxes (ostensibly to fund
| the building of more amenities in these communities like pools
| and community centers) that get split between the developer and
| the city/county until the community is fully built out, and
| then the city continues to collect them for an additional
| period that, I believe, is something like 30 years. The
| city/county required the HOA/CDD setup as a condition for the
| subdivisions to be developed.
| gist wrote:
| Can't afford 'high' prices? Work harder spend less time on play
| or leisure pursuits. Realize maybe you should have studied harder
| in high school or picked a career based on earnings rather than
| 'what you enjoyed'. While this doesn't cover all situations for
| sure it does cover many 'whiners' who wish things were just
| easier for them 'because they should be and that's why'.
|
| Not everyone can 'win' and the people who try harder often win
| more. And of course don't forget 'luck'. It plays a large part as
| well.
|
| And guess what? Many of those people who win actually worked
| harder and weren't born or inherited and are from disadvantaged
| groups. Nobody wants to think that. Everyone thinks the other
| person has an edge 'and if I just had that edge things would be
| fine for me'.
|
| (My father came to this country with nothing. My mother grew up
| and her father died back when there was no social safety net. All
| the children went to work. And yes because of that and in
| addition to my personal hard work and attention to school things
| are better for me for sure.)
|
| We have a DR Horton home. It's really nice and well built. They
| deserve to make money.
| xt00 wrote:
| If the companies that are holding land are able to maintain
| steady profits with minimal competition, then the logical
| approach is to say we should incentivize them to build on the
| land, make improvements etc _now_ to ideally decrease the value
| of the existing land to make it more affordable to people. So
| could you essentially say "if you own more than 20 properties
| that are not owner occupied, you have to pay a tax.. but if you
| sell the house, you get some large chunk of the tax money back"..
| something that should encourage the big builders to build
| something and to sell it -- not to build and potentially rent it
| out -- which is in many cases the most expensive type of house to
| rent.
| JackYoustra wrote:
| Changing financing doesn't actually change underlying
| affordability. If your distinction is "rent vs own" and you ban
| doing it primarily you're either going to have pretty miserable
| housing outcomes or essentially shadow mortgages.
|
| As well as push things to subletting or force people to stay in
| one place for most of their life.
| iambateman wrote:
| Housing can't be both a good investment AND affordable. As a kid,
| I was told that my house was a good investment and the houses
| rise in value overtime. Now, I own two houses which of both
| appreciated by about 9% per year for a decade.
|
| We agree there is a problem.
|
| But I doubt the premise that land hoarding is the key issue. It
| seems to me that everyone wants to live in a 3,500 square foot
| detached house near the city. But only so much of that exists.
|
| At least one major reason is that neighborhoods actively fight
| the installation of semi-dense housing because it would "ruin the
| character of the neighborhood." This gets encoded in zoning.
|
| The people who have most power over local zoning regulations are
| neighborhood boards, not home builders.
| vundercind wrote:
| Poorer kids tend to be harder to teach. School "quality"
| largely measures how easy-to-teach the kids are. School quality
| plays a huge role in home value.
|
| That and related factors (likelihood to commit crimes of the
| sort that affect home values, say) are a lot of why communities
| try to keep affordable housing away. High prices are your buy-
| in to good schools if you can't afford good private schools.
| Once you've bought in at a price inflated by school quality,
| you definitely don't want to see that slip or there goes all
| the money you spent (maybe literally all of it--I've seen
| premiums for "good" versus "just ok" districts near one another
| that are well into the levels of mortgage down payments--20%,
| 30%)
| BenFranklin100 wrote:
| This Matt Stoller guy paints a misleading picture of the dynamics
| of what is to be in the industry.
|
| I grew up in the housing industry as the son of a homebuilder.
| Not to date myself, but I wrote what was probably one of the
| first cost accounting spreadsheets on the nascent PC of the day
| using VisiCalc. The spreadsheet took into account all costs
| associated with building a starter single family home, including
| land acquisition, financing, municipal fees, material, and labor
| costs, I.e. everything one one need to run a successful business
| as a home builder. I know this industry intimately.
|
| Yes, Stoller is correct it's harder to be a small (i.e. 10-20
| homes per year) home builder than it was 40 years ago. But it's
| not due to some conspiracy. It's because the local zoning has
| become much more arcane and the red tape so Byzantine that the
| little guys have been effectively pushed out. For instance, you
| need a full time staff person to negotiate with your local ZBA
| (Zoning Board Association) to get permission to get something
| built. Beyond the direct costs, the delays and uncertainties are
| killer as they eat into your profits. (The gross margin is slim,
| somewhere between 10-20% on a home for a small time builder. I
| know - I wrote the damn spreadsheet that calculated it.) As a
| consequence of all these regulations, only the big builders can
| afford to absorb and amortize these costs over tens to hundreds
| of homes. Of course, this also means the big guys still need a
| fatter profit to to deal with zoning hurdles, long time frames,
| uncertainties, and what have you, thus margins need to be higher
| on average even for them. This is what is going on. Not some
| monopolistic conspiracy.
|
| I looked Stoller up. Here's the Wiki:
|
| https://en.wikipedia.org/wiki/Matt_Stoller
|
| His gig is railing against monopolies. The housing industry is
| just another nail for his one-size fits all monopolistic hammer
| explanations.
|
| The real culprit here actually is a cartel ironically. But this
| cartel is made up of homeowners who flex their power through
| local zoning codes that make it near impossible to build new
| homes, especially apartments.
|
| TLDR: In other words, the YIMBYs are right: the problem is zoning
| restrictions on new supply. Reform zoning and small time home
| builders will be back with a gusto.
| jmyeet wrote:
| So you see a problem like this and your reaction generally falls
| into one of three buckets:
|
| 1. There is no problem. This is working as intended. Everything
| is fine;
|
| 2. There are a few bad apples on an otherwise good and
| functioning system; or
|
| 3. The entire system is fundamentally broken.
|
| To blame the "homebuilder cartel" sounds very much like (2) to
| me. My view is that the entire system is broken and it goes back
| to enclosures and private property borne from capitalism and
| liberalism, respectively.
|
| Liberalism is the deification of individualism, implicitly
| rejecting any sort of collectivism. A key pillar is the idea of
| _private property_ , that is the ability to acquire and maintain
| a state-backed exclusive use of land well beyond your personal
| needs.
|
| Capitalism is really the evolution of feudalism and the origins
| were in England with the Enclosure Acts [1]. These transformed
| land use for grazing by all to people having exclusive use
| thereof. You might hear as a counterargument things like "the
| tragedy of the commons". Interestingly, this term originated in
| 1968, some 350+ years later.
|
| I bring this up because when I see people hoarding land and
| people voting out of narrow short-term self-interest to restrict
| supply and reduce housing in order to increase housing costs, I
| don't necessarily see that as a failure of government or the
| fault of a few bad actors. I see it as _inevitable_ given our
| economic system.
|
| So much of history can be viewed as simply a land grab.
|
| I don't expect our economic system to change anytime soon but the
| governmentr can do a lot to alleviate this. At a minimum:
|
| 1. Ban single-family house zoning in urban areas. Multi-family
| units should be legal anywhere within city limits;
|
| 2. Stop subsidizing suburban expansion to the degree we do by
| building roads to a ridiculous degree;
|
| 3. Build public transit infrastructure. For the successfully-
| propagandized Americans who will fight this because "it'll raise
| our taxes", people on trains will make it faster and more
| convenient for you to drive. Literally everyone benefits.
|
| 4. Punitive taxes on non-prrimary residences (ie investment
| properties, second/vacation homes); and
|
| 5. Get rid of tax breaks for home buying.
|
| I have zero confidence any of this will happen.
|
| [1]: https://www.thecollector.com/what-were-the-enclosure-acts/
| daft_pink wrote:
| I'm just not sure about this article. To me, it seems like these
| large homebuilders can only efficiently operate in tract housing
| so if you want to live in the middle of nowhere and have total
| uncertainty regarding the quality of the neighborhood that you
| live in and quality of the schools, etc because they just built
| it and pay through the nose for a brand new home, you can buy
| into tract housing, but I think many people want to live in
| established neighborhoods, where newly built homes are custom
| built and they mostly aren't built by these new companies or they
| have to build large condos or apartments, because that's the only
| way to efficiently add large numbers of units. High housing
| prices are the result of the fact that most people purchase used
| homes, because the risk of purchasing a used home in an
| established neighborhood is simply lower and there just aren't
| that many used homes, because people want to live in established
| neighborhoods.
| anon291 wrote:
| We need to make it so that most neighborhoods are developed by
| homebuyers rather than large conglomerates. My 1920s streetcar
| suburb was platted by the original farmer/owner and then sold off
| in lots. Today, this would be illegal / cost-prohibitive. It also
| leads to nicer / more varied neighborhoods where people actually
| own their land. Instead of yet another branded neighborhood where
| everything looks the same and the HOA board thinks too highly of
| themselves
| tootie wrote:
| That's a pretty good formula for unsustainable sprawl.
| anon291 wrote:
| Except.. that is not what happened when we actually did that.
| If anything, the neighborhoods are denser, and more walkable.
| quantified wrote:
| Having a stable, rather than growing, population would go along
| way to reducing the price of housing. Competition would be much
| reduced.
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