[HN Gopher] The Anti-Abundance Critique on Housing Is Dead Wrong
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The Anti-Abundance Critique on Housing Is Dead Wrong
Author : rbanffy
Score : 50 points
Date : 2025-07-31 21:28 UTC (1 hours ago)
(HTM) web link (www.derekthompson.org)
(TXT) w3m dump (www.derekthompson.org)
| donatj wrote:
| The bigger problem, at least in my neck of the woods, is they're
| not building affordable housing. By-and-large they are building
| luxury apartments and luxury homes. We've torn down half the city
| to build luxury apartments that sit at 20-30% occupancy.
|
| Building luxury housing won't help the housing crisis until the
| sellers are on the brink of bankruptcy and forced to sell their
| properties at a reasonable price.
| Ericson2314 wrote:
| Asking why they don't build affordable housing is like asking
| why don't they build used cars
| bsder wrote:
| The problem is that you don't generally destroy the used car
| in order to build a new one. So increasing the new cars on
| the road eventually also increases the number of used cars on
| the road.
| JumpCrisscross wrote:
| > _you don 't generally destroy the used car in order to
| build a new one_
|
| There is very little de-densification construction
| happening in hot housing markets.
| tiahura wrote:
| Why don't they build $10,000 Ford Rangers anymore?
| JumpCrisscross wrote:
| > _Why don 't they build $10,000 Ford Rangers anymore?_
|
| Fleet economy standards.
| bullfightonmars wrote:
| The same reason housing isn't being built, it was regulated
| out of existence.
| PaulHoule wrote:
| The project to build
|
| https://www.libraryplaceithaca.com/
|
| was almost a decade late, like a nuclear reactor, and they
| realized only after it was built that there is no market in
| our town for "luxury senior housing" because seniors with
| money go to Florida or Arizona. If they could fill the places
| you might say that it's better business to build expensive
| rather than cheap apartments but when these places are vacant
| you start to wonder if they are farming tax writeoffs or
| something
|
| https://www.youtube.com/watch?v=9wfblqh9icQ
|
| What you expect first is they are going to tell the local
| town they can't pay the property taxes, in a few years
| they'll tell the bank they can't afford the loans they took
| out to build it.
|
| Other "luxury apartment" projects outside of Collegetown
| usually have some segment of subsidized "affordable" units,
| one of these has at least two police calls to it a day and in
| the last few weeks these have included murder and arson.
| kccqzy wrote:
| How are they still able to live in subsidized affordable
| housing after they are convicted of murder or arson? Don't
| we have jails for this kind of criminals?
| galangalalgol wrote:
| Except that outside of Japan, it is unusual for detached
| homes to depreciate in value. Apartments though you do have a
| point. Unless the location adds the value they will
| depreciate over time.
| freddie_mercury wrote:
| It's not unusual at all. Here's a bunch in America just
| over the past 12 months and during a huge economic
| expansion with low unemployment.
|
| https://www.realtor.com/news/trends/zip-codes-cities-home-
| pr...
| nradov wrote:
| Detached houses almost always depreciate in value
| _everywhere_ and require constant maintenance expenses just
| to keep from falling apart. It 's the land under the house
| that appreciates in value. People often mix those two
| numbers up.
| infotainment wrote:
| Exactly -- all _new_ housing is going to be marketed as
| "luxury".
|
| Who is going to build a brand-new apartment and say "well,
| this is janky low-quality housing, you might want to live
| here if you're poor or something"?
| elliotec wrote:
| No... it's like asking why they don't build cheap cars. Which
| they do.
| kfajdsl wrote:
| Do they? Are there any production cars under 20k? Plenty of
| used ones for that.
| lambda wrote:
| This is a perfectly succinct way to put it.
|
| New housing is simply more expensive; so it's marketed as
| "luxury", and it's sold at a premium to the higher end of the
| housing market. This reduces demand for the older, more
| affordable existing housing stock, and with depreciation and
| wear and tear, the new housing will become more affordable as
| time goes on.
|
| If you're in a market with a shortage of housing, those with
| more money will simply outbid those with less, even for
| older, less desirable housing. I've seen it, where when I
| moved out of my last apartment before I bought a house, my
| landlady raised rent considerably when looking for a new
| tenant, and even then she got a tenant who wanted to pay her
| over the rate that she was asking for to ensure that they
| were able to get the apartment over all of the other
| applicants. Wealthy empty-nesters who were downsizing, and
| willing to pay a premium for an older apartment in a
| desirable neighborhood, forcing out anyone who might have
| otherwise been able to afford it.
|
| So yes, while it does help for there to be some push to build
| more affordable housing, if taken to an extreme building only
| luxury housing will leave an unbalanced market, in a lot of
| cases building luxury housing is exactly what you want to do
| to reduce the competition for the existing, more affordable
| housing stock.
| JumpCrisscross wrote:
| > _New housing is simply more expensive_
|
| There is no natural reason for this to be the case. If
| anything, learning curves and economies of scale should
| result in new units costing less, not more, than ones built
| by artisans.
| supertrope wrote:
| Baumol's Cost Disease means construction labor cost rises
| faster than productivity. We're allergic to prefab
| construction - banks and insurance companies block it. A
| lot of construction workers left the industry after 2007.
| Baby Boomers are retiring and told their kids to not get
| a blue collar job. New housing has to be ADA compliant.
| People expect to give each kid their own bedroom and have
| two car garage instead of one car or no garage at all.
| Recent immigration crackdowns and trade wars are the
| icing on the cake.
| JumpCrisscross wrote:
| > _Baumol's Cost Disease means construction labor cost
| rises faster than productivity_
|
| Baumol's applies to jobs that "experienced little or no
| increase in labor productivity." I'm arguing there may be
| extraneous causes for construction's productivity stasis.
| pydry wrote:
| With cars you can build a high margin luxury and a low
| margin affordable model if there are two buyers and collect
| profit from both.
|
| With an apartment if there's one plot available, you build
| the high margin apartment.
|
| Land constraints matter.
|
| A 100% land value tax would help solve this problem and
| would make buying apartments more like buying a car.
| tptacek wrote:
| When you build the high-margin apartment, people vacate
| other housing units to move into it, reducing demand on
| the older units, which reduces prices in the area. This
| is just the law of supply and demand, but you don't have
| to derive it axiomatically: it's empirically what happens
| when we increase supply at market rates.
|
| I'd like a land value tax too, but it's not going to
| happen, and an LVT would _guarantee_ market-rate
| development.
| steveBK123 wrote:
| Exactly
|
| Plus housing you are mostly paying for the land. The land is
| expensive because it is finite and because zoning constrains
| how much housing you can build on it.
|
| In many places the land is 2/3 the cost of the housing. The
| cost difference in building what left nimbys deride luxury
| and what would be considered affordable is really marginal.
| It's like $100k in finishes in a $1.5M condo type difference.
| AlexandrB wrote:
| Toronto's housing market has a similar problem, except they
| also mostly built one bedroom shoeboxes for investors. Will be
| interesting to see how this unwinds[1].
|
| [1] https://financialpost.com/news/toronto-condo-market-falls-
| of...
| JumpCrisscross wrote:
| Affordable housing is NIMBY whitewashing of reducing supply
| through rationining. (Note the supporters of affordable housing
| programmes count the largest landowning families in San
| Francisco and New York among their ranks.)
|
| There is an article on the front page, right now, about Denver
| moderating its rents through construction [1]. We've also seen
| this in Montana [2].
|
| [1] https://denverite.com/2025/07/25/denver-rent-prices-
| drop-q2/
|
| [2] https://montanafreepress.org/2024/09/09/can-bozeman-find-
| rel...
| echelon wrote:
| 100%
|
| "Supply and Demand" is a law of nature.
|
| If you build infinite luxury apartments, in the limit their
| value is zero.
|
| Build more luxury housing and the inventory increases. If
| you've met the city's housing demands (which you probably
| won't since nearly every city is behind on meeting demand),
| then it follows that typically less desirable inventory
| experiences less demand and will subsequently experience a
| price drop.
|
| The problem is nobody is building enough. The equations of
| taxes, property value, and developer profit all balance each
| other out and control the rate of building. Regulations slow
| this equilibrium even more.
|
| A few policies that can help:
|
| - Remove stupid regulations against building dense housing.
| Keep the fire safety regulations, but nix the multifamily
| zoning regulations, the building height regulations, curb
| space and parking space minimums, etc. There are so many
| NIMBY and outdated 1950's era regulations that make it costly
| and time consuming to break ground.
|
| - Tax unproductive land use, eg. storage units and parking
| garages. This will convert those plots into housing and
| businesses.
|
| - Heavily tax unused and dilapidated land that is not
| currently occupied by businesses or residents. Burned out
| houses have no place in the city. Tax these properties to the
| point that they fall into foreclosure and give cities the
| power to take over the land and sell it at a profit to
| developers. Give owners the chance to cure the issue, but
| make quick work of clearing these useless plots.
|
| - More controversially, tax single family housing more than
| multi-family housing. Tax it proportional to how many people
| could live on the plot if it were occupied by a 10-story
| development. Or if you don't want to raise taxes, lower taxes
| on multi-family housing. This will encourage density.
|
| - Give tax breaks to developers, apartment and condo
| complexes, and businesses that help underwrite development.
|
| Note that these policies only make sense in dense
| metropolitan cities. Suburbs and rural areas don't need to
| operate in this way.
| JumpCrisscross wrote:
| > _" Supply and Demand" is a law of nature_
|
| It's a law of human nature. Value is inherently subjective,
| which makes deriving it from natural laws conditional upon
| a physical explanation for humanity.
| kccqzy wrote:
| Building only affordable housing is how you get cities into a
| downward spiral. The people who want luxury housing are the
| well-to-do. They probably contribute 10x the sales tax per
| capita than the people who live in affordable housing. And
| almost by definition luxury housing causes more property tax to
| be paid to cities than affordable housing. Both sales tax and
| property tax revenues shrink. And the city gets into a fiscal
| crisis. The city reduces services. People leave. Housing
| becomes more affordable but also more undesirable.
| supertrope wrote:
| If US car sales were capped at 10 million cars per year
| manufacturers would immediately focus on their luxury brands
| and leave their regular brands out of stock. When you keep
| strict zoning, give NIMBYs veto power, let environmental review
| be weaponized as a delay tactic, you are capping new
| construction.
| davidw wrote:
| Building "luxury" apartments dropped rents in Bozeman, Montana,
| which is one of those cities that "everyone wants to move to"
|
| https://montanafreepress.org/2025/06/23/has-bozemans-rental-...
| tptacek wrote:
| So much of the journalism we read is heavily processed and
| barely-reported and it's startling to see how much of a
| superpower simple shoe-leather reporting actually is. Derek
| Thompson's an incredibly sharp writer, but not really a subject
| matter expert on housing economics; all he did here was read
| papers and call up the authorities they cited, and the narrative
| behind those papers collapsed.
|
| We're often so down on journalism on HN, and I believe a big part
| of that is we tend to read so much opinion and analysis and so
| little basic reporting.
|
| I've been loving Thompson's substack (which is mostly not about
| housing policy so far).
| delusional wrote:
| I sometimes think back to a passage in "dialectic of
| enlighenment" where the authors write what amounts to "input
| without analysis is meaningless, but analysis without new input
| is madness as the analysis eventually becomes only analysis of
| other analysis".
|
| I think that generally a true problem nowadays. Popular culture
| does a lot of "analysis", but not a lot of reality seeking.
| evil-olive wrote:
| > The sharpest criticisms of the book Abundance have sometimes
| come from the antitrust movement. This group, mostly on the left,
| insists that the biggest problems in America typically come from
| monopolies and the corruption of big business.
|
| ctrl-F "RealPage" - nothing. hmm.
|
| ctrl-F "rent" - also nothing. really?
|
| from about a year ago: Justice Department Sues RealPage for
| Algorithmic Pricing Scheme that Harms Millions of American
| Renters [0]
|
| > The Justice Department, together with the Attorneys General of
| North Carolina, California, Colorado, Connecticut, Minnesota,
| Oregon, Tennessee, and Washington, filed a civil antitrust
| lawsuit today against RealPage Inc. for its unlawful scheme to
| decrease competition among landlords in apartment pricing and to
| monopolize the market for commercial revenue management software
| that landlords use to price apartments.
|
| > ...
|
| > Another landlord commented about RealPage's product, "I always
| liked this product because your algorithm uses proprietary data
| from other subscribers to suggest rents and term. That's classic
| price fixing..."
|
| if I hear about antitrust in the context of housing policy,
| RealPage making it easier for apartment buildings to collude on
| rent prices is the very first thing that leaps to mind.
|
| it seems like Thompson is being awfully selective about which
| antitrust-related criticisms he's responding to here. he seems to
| be focusing exclusively on building single-family homes, and
| completely ignoring the concrete example of monopoly power being
| used for apartment rentals, and antitrust laws being used to
| address that.
|
| 0: https://www.justice.gov/archives/opa/pr/justice-
| department-s...
| freddie_mercury wrote:
| Thompson is responding to a specific paper.
|
| 'One of the most detailed articles in this space is an analysis
| of the Dallas, Texas, housing market by the lawyer and writer
| Basel Musharbash. In "Messing With Texas: How Big Homebuilders
| and Private Equity Made American Cities Unaffordable"'
|
| Musharbash doesn't mention RealPage either, so go blame him,
| since he doesn't think RealPage contributes to Dallas's
| problems.
| smcg wrote:
| Thompson writes these articles to deflect valid criticism.
| evil-olive wrote:
| > Thompson is responding to a specific paper.
|
| yes, he's responding to [0] which was written by Musharbash
| and published in Matt Stoller's newsletter.
|
| and as I said, he's being selective about what criticism he's
| responding to and what he's ignoring. because Stoller has
| also published, in the same newsletter, articles about
| RealPage price fixing [1, 2].
|
| Thompson says:
|
| > The antitrust left, however, claims...
|
| if he's going to say "here's what the antitrust left
| believes" and then proceed to debunk it, I think it's
| reasonable to point out that his response is cherry-picking
| only part of what that "antitrust left" believes.
|
| of course, if he wants to publish a follow-up article
| defending RealPage, I'd _love_ to read it.
|
| 0: https://www.thebignewsletter.com/p/messing-with-texas-how-
| bi...
|
| 1: https://www.thebignewsletter.com/p/antitrust-enforcers-
| the-r...
|
| 2: https://www.thebignewsletter.com/p/up-to-a-quarter-of-
| rental...
| tptacek wrote:
| It's not on him to rebut every single argument Stoller has
| ever made. Several arguments Stoller made were refuted by
| the authorities Stoller himself cited, which is both
| interesting to read and also telling.
|
| Stoller is free to find similarly decisive refutations of
| arguments Thompson had made (they're unlikely to be
| forthcoming).
| jeffbee wrote:
| Can you cite some evidence of a place where RealPage's supposed
| power has led to a consumer harm like higher rents? I may be
| biased because my research has been cited by RealPage in their
| suit against the city of Berkeley, but to me RealPage just
| finds the market clearing price, and that's not particularly
| evil in my book.
| nradov wrote:
| Collusion among landlords can only work in a housing shortage.
| With an abundance of rental units, individual landlords would
| "defect" (in a game theory sense) and lower rents in order to
| fill their vacant units at the market price.
| radixdiaboli wrote:
| > it seems like Thompson is being awfully selective about which
| antitrust-related criticisms he's responding to here
|
| He was responding to a specific critique of his book. So...
| yes. That's how that works.
| davidw wrote:
| I wish everyone who cares about the price of housing could go
| to a hearing like this one. Sadly, they happen in every
| community so if you're curious, you ought to go:
|
| https://bendyimby.com/2024/04/16/the-hearing-and-the-housing...
|
| That is your housing shortage right there.
|
| Now, Real page probably jacks up prices a bit. A bit multiplied
| by a lot of renters means real harm and it was probably worth
| taking them to court over.
|
| However, at the end of the day, RealPage is simply not enough
| to get Los Angeles rents out of Houston property. Supply and
| demand are still where it's at.
| thegrim33 wrote:
| You're claiming that your idea of 'X' is true, and for
| evidence of this, you're linking to a site that was created
| by people whose mission is to advocate for the idea of X.
|
| Am I likely to be getting an impartial view of the situation
| from a source which solely exists to push X-related
| messaging?
|
| Is such a group/site really going to give a fair shake to
| other theories Y and Z, or to conflicting data?
| ThinkBeat wrote:
| There is an incredibly large lobby group who is fully invested in
| house prices rising or at least not falling, namely homeowners.
| and since most politicians at a high level usually own one or
| more houses, they are fully invested in it as well.
| simpaticoder wrote:
| What about wealth inequality as the root cause of housing
| shortage? Even if supply is eased, the wealthy (those who have
| enough capital to earn passive income) will buy the extra supply
| and rent to the poor. The Piketty effect takes over, they invest
| their profit in more housing, wealth inequality continues to get
| worse, and while more housing exists, it owned by an increasingly
| small cohort.
|
| Personally I'd like to see legal constraints on investment in
| primary, single-family homes, and fewer legal constraints on
| building them.
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