I’ve often wondered what will happen in 20 years if we do start accelerating home building. As the boomers die out, birthrates decline, and immigration slows, are we setting up to have a potential oversupply of housing and plummeting values right at the time millennials will be starting to retire? Is that a crazy thing to think? Genuinely curious about that one…
We could just abandon and tear down older housing and move to newer ones, same way we tore down tenements and moved to suburbs before. Housing is a physical good that depreciates; you need new construction just to stay ahead of the depreciation.
From some of your comments, I feel like you might be underestimating how durable old houses can be. I looked up the town where I live and the median construction year was 1961. Only 5% were built post 2000. (This is an NYC suburb.)
They’re durable in that they don’t physically fall down, but without updates and regular maintenance they will deteriorate pretty quickly. I just bought a house a few years ago and toured a bunch; the majority built before the 1990s or so were not places I’d want to live. Of course there were exceptions but usually a lot of work went into renovating those.
I live in a house that was built in 1985 that has appreciated significantly in the ~20 years we’ve had it, but we’ve also consistently had to put money into it over the years just to keep it the same as the condition when we bought it. Basically everything (flooring / wall covering / bathrooms) has been replaced or refurbished.
I live in a medium-rise apartment block built in the 1930s, which is positively new by Edinburgh standards! There have been some upgrades and repairs (e.g. we had to replace parts of the roof and outer cladding a few years ago, and we're no longer getting water from lead-lined tanks in the attic), but the basic structure is still fine. This is far from the oldest structure I've lived in - for three years in high school I boarded in the school's original dormitory block, constructed in the 1400s.
If you haven’t noticed, all those retirement centers that have been going up in the last couple decades with practically ZERO public outcry from the NIMBYs and just sailing on through approval boards… are built like 5-over-1’s.
They’ll be converted as soon as their residents die off.
I've occasionally wondered about this too but concluded I don't really care. I'll just pick up one of the empty beach condos. If all of this comes to pass it shouldn't cost me more than 50 cents.
If this scenario happens, can we call it "Detroit-ification"?
Because you can totally see local markets where this has already occurred. But it is not an interesting issue overall, because the oversupply is (by definition) in low-demand areas.
A fall in the price of housing, that lets people feel financially and socially stable earlier in life, is potentially a great step towards more people choosing to have more kids. Declining birthrates are not an inevitability, especially in a world where many Americans say they're having fewer kids than they'd like.
It’s an interesting thought experiment. I know Japan has quite a few abandoned countryside homes they are trying to get people to live in.
For the US, immigration could mean we don’t see our overall population decline in the same way or perhaps cheaper housing would make people more likely to have kids.
Home value is very convenient for retirement since it can be sold to pay for nursing home expenses and such, but most people won’t spend it before then.
Not if we effect smart policy changes to our immigration system so that our population doesn't contract. However even the actions this administration takes these next four years is going to set us pretty far back that your point has more salience.
Saying immigration will slow long-term is quite a bold prediction! And it would have to be an incredible slowdown to actually go in reverse.
But there are countries much, much farther along in these kinds of trends than the USA is. So you can look at Germany, Japan, Spain, Italy, etc... Sometimes there are localized gluts in housing, but immigration offsets them pretty quickly from what I understand.
That all said - and arguing against myself - population decline is more and more a global trend and accelerating in many places. So maybe gluts build up more quickly if the entire developed world is experiencing population decline.
People could just consume more housing per capita; a lot of other developed countries have like half or less of the floor space per capita as Americans; if their populations just used the same amount of space as Americans that would offset generations of population loss.
Unlikely. The US population is still increasing. This is a little bit like worrying about massive depopulation in 2150 after the collapse of birth rates.
It's a rather stagnant growth rate of around .5% (1.7 million) a year, and that was roughly before this administration's large scale deportation sweep policies were implemented. It's not impossible and wouldn't be surprising if the country started heading to the red by the time Trump leaves office.
I want to push back on framing housing as a financial asset though. The real benefit to owning your home is having a place to live that no longer carries a monthly payment. Same for owning a car, owning your clothes, owning your appliances... The world has transitioned to monthly payments for EVERYTHING, but a smarter approach is to focus on owning the things you need and then just not spending much money every month.
You still need to pay property taxes and insurance along with dealing with maintenance though (which is a huge pain compared to renting with a landlord with reputable maintenance staff on call), plus most people take 30 years to pay off the mortgage and sell before they even pay it off. Housing with no ongoing costs is impossible because it’s a physical good that inherently depreciates and incurs those costs.
In many places those tax & insurance costs are quite low though. Yes there are some maintenance costs as well, but the point remains that with home ownership you have substantially lowered your monthly costs.
IMO a real value is security and freedom. Tenants get kicked out for all sorts of random reasons, and they can’t renovate or even repair the home as they please.
The financials are attractive in large part due to subsidies Matt mentioned, but even if those went away I think most people would still aspire to be homeowners.
IMO, not having to move every few years is a bigger psychological benefit than the financial aspect. There are a lot of costs associated with homeownership even after paying off the mortgage.
Yea, I want to be able to fiddle, to tweak things to make life easier, to remodel as I want, to feel no concern when my nutjob kids knock a hole in a wall because drywall patches are easy and I have a spreadsheet of every color of paint, SKU of tile, brand of flooring, etc... that I've ever used.
If the real benefit is no longer carrying a monthly payment that remains true even if your home value doesn’t skyrocket, so why are people so obsessed with property values and/or appreciation of their home value? Even progressive politicians use the frame of “wealth building” around homeownership all the time - it’s a huge part of the narrative around housing for better or worse.
If you're in a place like Boston you know some people who bought a house for like 150k thirty years ago with 30k down and sold it for 1.5 million recently to downsize or move to South Carolina or whatever.
But, I think people over index on those stories as well as simple loss aversion once Zillow tells you your house is worth $x dollars people feel bad if it goes down.
are they obsessed? I don't know those people. I know a lot of people who own their homes and don't really think much about what they might be worth. I do think people are surprised when a nearby house sells for an unexpected price! That's interesting, true. But once you have a home, I find you tend to just think of it as a place to live.
Perhaps most people go into homeownership thinking of a house primarily as a place to live and over time they come to think of it as a financial asset they have to jealously protect. I know I have, and I don’t want to. But given how much my future economic security is now tied to this this house, it would be foolish of me not to.
??? but of course it DOES carry monthly payments, the mortgage. AND you are liable to unpredictble costs. Our n-year old boiler sprng a leak and had to be replaced RIGHT NOW. Depending on your liquidity and skill at managing a tiny housing corporation and the responsivelness of the hypthetical landlord altrnative, you may be better off owning a depreciating asset/appreciating asset combination. But maybe not.
On paper maybe, though I keep seeming to need to replace the roof one year, repipe the house another, and I still haven't got my insulated garage. There's advantages to renting; the real benefit is having a greater amount of control over your environment. Just because the monthly cost isn't a rent bill, it's still there.
Now one thing you can do is leverage your equity to pay for improvements and major maintenance if you really need to, but that's not the same as having a significantly appreciating asset.
Why is it a benefit specifically to put your money into ownership of durable goods and housing to avoid monthly payments, rather than doing something else sensible with that same money?
a) To prepare for income drops, including retirement but also potentially spells of unemployment
b) Lower total expenses over time. This is perhaps more obvious with cars, where it is clearly more costly to lease indefinitely versus owning a vehicle and driving until the end of its usable life. But it applies to many other things as well.
c) The things you own, you can potentially pass down to your children. I actually grew up around a lot of people who were pretty broke, but would own pretty large rural farms. Very common to just have an adult child drop a trailer onto a corner of the property and TADA they have a place to live.
Also I am curious what this "something else sensible" you envision might be.
Taking your money and putting it in other financial products does just as good a job preparing you for income drops. It's better in many ways, actually, since it's both much easier to access and less correlated with other important things in your life than home equity. Additionally financial assets can also be passed on to your children.
Also, it's true that paying for the service of having someone else ultimately responsible for maintenance costs some money but home ownership takes lots of work and expense as well.
The S&P 500 is pretty correlated with unemployment levels! I agree that many, many Americans are over-allocated to owner-occupied real estate and it’s (as we see) a real policy problem, but “people own stocks so we can’t let stocks go down” can be a problem too, and would likely be a bigger problem if half of current homeowners rented and put money into the S&P instead.
Yeah, having lived through some bad stock market crashes, it is the WORST time to need to access that money. You become a forced seller in a down market - yuck.
Howe ownership is an extremely valuable insurance policy that cannot be bought any other way.
You have to live somewhere, and your social ties / community / family / support network are determined by where you live. So when you buy a home, you are in effect buying an insurance policy that protects you from becoming homeless or being forced out of your community. There is no financial product that can do that. If you put all your money in the S&P500, the S&P500 could drop by 50% and never recover. If you put all your money in TIPS, your landlord could jack up the rent faster than inflation.
Yes, you have to pay property taxes even after you've paid off your mortgage. But in practice, there are lots of carveouts (Prop 13, homestead exemptions, etc) to make sure people don't lose their homes due to property taxes.
I do not think this is correct. The major risk in keeping your home is that you lose your job and have to move somewhere else to get a new one, because you need a job. Owning a home, even if you own it outright, does not fix this unless you are already retirement age (in which case the worry you expressed doesn't matter either). And if you lose your job, there's a significant chance that it's because of some bad thing happening to your town specifically which reduces the value of your home. Major drops in the stock market are in fact also correlated with drops in home prices (see 2008).
Isn’t a major byproduct of the design of home owning and mortgage in the US that the average person will never have better financial leverage than when they buy their house and put a mortgage on it. And some people still get to deduct some mortgage interest.
Well, I would counter that the 30-year mortgage is actually a pretty crappy financial product. For the first ten years you are mostly giving the bank interest payments and not building equity. I think THIS might be why people feel they "need" prices to go up on their homes, because the only equity they build is from price appreciation. But if we got rid of these crappy long mortgages and financed over 15 years by default, prices would be lower and everything would get better...
The standard deduction was much lower in those days. So you deducted your interest, but most people weren't better off and it biased the tax code toward larger mortgages which is unhelpful.
Before the 30 year mortgage, home loans were done as 10-year interest-only payments with a balloon payment to pay it all off at the end.
People do not generally make enough money to be able to do that on a 10 year basis — the value of a house even back then just far outstripped people’s income. And even if you DO responsibly save the entire payment over that 10 year period, you’re just ONE major inconvenience or repair away from missing the big one.
This is the market that banks came up with on their own. It did not work well. That’s why the 30 year mortgage was invented.
You’re doing WAY too much “assuming a can opener” and not living in the realistic world where no one has $300k just sitting around to instantly pay for a house in cash.
You've gone from A to Z and skipped lots of choices along the way. The 15-year self-amortizing mortgage is a fine product in my opinion.
Of course I do not expect many people to have the lump sum for a house available. But there's a balance, because home prices appear to rise based on the monthly payments people are willing to pay, and sadly longer term loans have made people willing to give up much more of their lives to interest payments for the banks.
>> because home prices appear to rise based on the monthly payments people are willing to pay
You’re going to have to elaborate on this theory of yours.
>> The 15-year self-amortizing mortgage is a fine product in my opinion.
While it’s true that longer loan terms have inflated total interest paid, the plain fact is that YOU have no way to get us from A to Z: There’s no reasonable path from 30 year mortgages on already-insanely-inflated housing prices to 15 year mortgages WITHOUT resorting to a whole bunch of deleveraging that you didn’t even gesture or hint at in your comment.
To the first part, you see house prices move as interest rates move - low rates lead to higher prices, and this is exactly the behavior you expect if the monthly payment is the constraint for most buyers. I believe this is well-understood in the real estate market.
On the second: It's true I don't have a path down from the 30-year mortgage, but that does not mean I have to like the product. I encourage people to accelerate their payments and chip away at that principal as much as possible.
For the first part, OK, I guess the way you phrased it was confusing at first.
But also, I’d point out that THAT phenomenon is pretty historically invariant regardless of housing supply or preexisting price level. Which means that for any given price level, you can only press the “have people pay off their houses faster and pay less total” button ONCE. After that, you still have to close the 10-20M unit gap.
Not to mention, shorter terms inherently means higher rates and higher payments. Even if the low rates are raising sale prices by 10-15% and you knock that 10-15% off by biasing against those rates, you still have a general market where the supply shortage means real AND nominal prices are inflating, vs using supply to get us to the point where real price inflation is negative but nominal price inflation is positive, which is basically the only politically feasible regime for deleveraging from decades of NIMBY insanity.
RE the second one, that’s just generally good advice, and yeah plenty of people don’t follow it, but also again, any legal effort to fix it is a button you can only press once.
The root problem is still that houses are too expensive — P/I ratios are now basically 4-7x vs historically <3x.
"The root problem is still that houses are too expensive" - I think we can go deeper!
The houses are too expensive because
1) We need more supply in high demand areas. But fundamentally this is a SUPPLY problem, and we can go to the known YIMBY solutions.
2) With supply constrained, longer terms and lower rates simply increase the debt buyers can take on, creating a windfall for existing owners. Since buyers are just competing with each other, helping them increase their spending just doesn't help. This is why I am opposed to so many simple-minded schemes to "help buyers". You cannot help everyone without creating more supply.
“I want to push back on framing housing as a financial asset though”
I recently read an essay that agreed with your idea and said, in part, “American policy toward saving, investment, and homeownership is kind of misguided.”
The sweet spot for housing is home values rising in nominal terms but falling in real terms. That way, no one goes underwater on their mortgage, but homes remain relatively affordable. This is, however, a very narrow target, so I am unsure what policies would actually bring it about.
I suspect the answer lies on the financing side. We could perhaps offer insanely good terms to builders who are working on densification projects as long as their local markets remained in this narrow range.
That’s kinda my point tho, but perhaps I didn’t elaborate enough:
First, you get rid of the zoning so that almost every project is a densification project.
Then, you open a spigot so that most of those projects can get financed at terms somewhere inside of the “real-nominal” window.
Obviously the macroeconomy will shift in uncontrolled ways beyond these limits, but that’s OK: the window is just the target for these specific projects. The goal is not to fix the ENTIRE market, it’s to anchor a segment of it so that the rest of the market
Also, the financing then becomes a spigot. If not enough housing is being built and housing inflation exceeds the upper bound of the window — the real term price — then we open the spigot. If too much is being built and housing inflation dips below steady nominal increase, then we close the spigot.
There’s a proposal to build a railroad in France, but the porters in one area argue for a gap in the line, because that will make them and (allegedly) everyone else in the area wealthier. So why not extend that logic to the entire route? Then everyone would win! Hence the “negative railroad,” which is made up entirely of gaps.
This essay should be more well-known. It would be great if Matt and writers like him could use "negative railroad" as a shorthand for various bad political ideas.
Matt actually wrote about a real-life "negative railroad" here several years ago, although he didn't use the term (I pointed it out in the comments): https://www.slowboring.com/p/good-trains
It reminds me of when I lived (as a renter in an apartment building) for two years in Upstate New York. I lived close enough to walk to tons of places, but it was rather treacherous because the roads were wide and heavily traveled, and the sidewalk was in patches - there would be a sidewalk for a short stretch, then it would disappear, then start again later. When I aksed why the town had such a stupid setup, I was told that at the time many of the houses were built, new homeowners could choose whether they wanted a sidewalk in front of their house for a small extra fee.
Many of them think that their kids are insane for forgoing children and refusing to “drive til they qualify”. They see it as turning away from the natural order of things, a form of secular apostasy to the suburban car-dependent lifestyle.
I think the above is unfair, but I think it's also well within most people's capacity to infinitely rationalize away anything that they support which hurts their kids, so the fact that they love them means much less than we might hope.
“I love my kids, I’m just preserving the neighborhood they grew up in against those evil developers and all the TRANSPLANTS they’re building apartments for. Nothing I ever do FOR MY KIDS could be wrong; I raised them myself and I KNOW how to parent my own damn kids.”
I... disagree. This is demonstrably not the case, otherwise more folks in my parents' cohort would, you know, move.
I suspect that a greater number of older people would express this as, "I want my grandkids to live close to me."
I know a fair number of people in my own age cohort whose parents are angry at them for raising their grandchildren where life, work, and other needs have taken them, instead of "moving back home."
In household terms, housing is closer to a law or medical license than to a hammer or car, because equity often dominates portfolios.
If medical licenses become easier to obtain, health care becomes cheaper and there are large welfare gains. However, doctors’ salaries would clearly fall. This is why doctors form organizations like the AMA that restrict the supply of medical licenses and residencies. The larger the asset, the more households will weigh distributional losses against social gains.
Houses are less valuable than medical licenses, but there are far more homeowners than doctors. That’s why this is a hard problem.
This all makes sense, of course. But if you're Trump, the calculation is more simple - there will be unhappy voters in 26 or 28 if home sales are sluggish and people who want to sell can't at the price they expected, and maybe as President he can do something to juice home sales in that short window.
But he can't realistically expect to implement federal policies that noticeably make housing more affordable on that time scale.
So it's a no-brainer for him to pick the easier and more-likely-to-succeed-in-the-short-term strategy: ask, What Would Peron Do? (Or Chavez, etc), and do that. That's Trump's economic policy in a nutshell.
Could YIMBYism be more popular if framed as a quality issue and not strictly an affordability one? Who wants to live in the shoddy decrepit 100-year-old housing that makes up a majority of the sub-$1m housing stock in a lot of our major cities when we could be building fancy new construction with all the modern comforts and amenities?
This is my intuition, too. I live in Rhode Island which is full of old, dilapidated, over-priced houses. The lower end of the housing market is paying too much to rent a floor in a duplex or triplex which hasn't been renovated since the 70s - there are hardly any apartment buildings, let alone modern ones. For landlords and tenants both, building up to date apartment buildings would be a huge benefit. And these two groups make up a lot of the electorate.
Saw Bowman promotes a “street votes” mechanism that allows homeowners to democratically capture the value of their land by up zoning[1]. I am not aware of Matt’s commenting on it.
Matt’s column today is a nifty thought exercise. I wish it grappled directly with the specifics of assembling a coalition for change, as street votes does.
There's an old MIT thread about the Boston mayor asking MIT to develop flamethrowers to help with the snow, and the school president politely replying that salt is the answer:
Has there been any discussion (here or somewhere else) about capital projects to increase e.g water/sewage treatment, firefighting, schooling capacity as a result of sharply increased building?
As someone who likes lower density living, having density and property taxes increase while property values decrease does not seem ideal XD
Just wondering if there was some type of tax (existing or ideal) involved for new construction. I know PA sales tax is 2% (1% from each party), but not sure how much of that filters into the county services level.
My brother-in-law was the supervisor of a water department in a very quickly growing area for many years. New developments pay a fee for these services. Whether that fee covers the actual cost, including the possible increasing scarcity of water that makes everyone's rates go up, is another story. . .
Typically new developments pay for their own water and sewer and roads. And the new residents pay the same taxes for schools or fire departments or anything else. Economies of scale often make things somewhat cheaper per person given growth.
The new residents pay the same as existing residents *per dollar of house value.* But if the cost the same to provide services as existing residents *per person*, and the new housing is cheaper than the existing housing, new housing increases taxes for existing residents.
This is why retirement communities get so much less pushback: they have a much lower cost of services per person, since they don't need schools which are the most expensive service.
In the long term, I agree economies of scale work out nicely, but in the short term, the water treatment system might need a new settling pond, the pipe to the new development might need to be increased in size, the school needs to rent a trailer and plan for adding a wing…
And eliminating zoning suddenly seems like it would create the worst version of this problem since the people who can get houses up quickest can take advantage of the pent-up demand and established high prices while the 10th apartment building or development built would likely see lower prices, so development seems like it would be very quick.
The main constraint will be the rate at which decently large properties with detached housing come onto market to be redeveloped in this manner, along with the actual physical limits of residential construction capacity.
To be frank, in the first few years I doubt much would change. The accumulation of infrastructure needs would take a decade or more to really dent capital needs and outlays therefore.
In SE PA, for instance, most suburban sanitary sewers are sized very conservatively; sporadically replacing single-family housing with townhomes would have little impact. And the rail suburb town centers are already well-equipped to deal with density.
Trump is a real estate developer who lives to use others' money so is laserlike focused on low interest rates. He doesn't actually care about individual homeowner's equity other than as additional rationale for his desperate desire for cheap $$$. Homeowners themselves don't oppose nearby growth because of impact on equity. Most of us like where we live and don't want change. And growth results in unpredictable change.
I feel like everyone is missing the problem. Too many people want to live on the coasts. I grew up in CA, and moved from LA County to Orange County in 1964.
The city I lived in first, Long Beach, had a slew of starter homes built for the workers in the defense industry. anywhere from 1000 sq ft to 1400 sq foot. Smallish back yards and one-car garages, all built post-WWII.
Orange County's explosion of housing had 1500 to 2500 sq ft homes with two-car garages built in the 60s and 70s. Collectively known as the burbs. Most of these homes had a bigger backyard and two-car garages. A mixture of one and two-story homes. SoCals population explosion fuled all this building in both counties. Every sq ft of land in these counties had a suburb put on it. Including those in the Golden Hills of the LA Basin that you see burn every year.
Today, you can drive the San Diego Freeway and see nothing but homes. Homes of all sizes are near the coast. Commute times for what is considered the LA Basin can run into the hours.
It seemed as if the entirety of the world descended on Southern California. There are whole cities made up of the various ethnicities who emigrated to America, along with the Hispanic population that had been there for 300 years.
Everybody wants to be near the coast. Those who live within an hour's drive get sweltering heat in the Summer, a dry heat that feels like an oven. Still, you are an hour or so from the beach.
There is very little open land to build another suburb. Even if you built a 1100 sq ft house for a new buyer, you might have a two-hour commute in the AM.
There is very little free land to build the 1950s-style home, AKA a starter home, in the LA Basin. The only available land is the desert, which in summer is miserable. It is like living in Phoenix. Another place that is rapidly experiencing issues with heat and water. During the summer, when you can have months ot triple digit temperatures, when you cannot place your hands on the steering wheel, people huddle in their air-conditioned homes to hide from the heat during the day.
The night doesn’t bring relief, but you feel as if the heat lamp is at least off. Too many people are piling into already built-up areas, forcing them to move farther and farther away from the places they want to live. There is no room for anything anywhere in LA, unless you go up. Meaning apartments or condos, forget backyard BBQs or pools. You live and work in concrete.
Or build new cities in the interior of the country. Modern new cities with tons of land for new suburbs. Where your commute might be 20 minutes instead of hours in traffic that crawls. Where land is cheap...Like Duh.
Remote workers could easily move to these newer cities; they can go to any smaller city in America, but for others, work is where they are.
If we want cheaper housing options in already developed areas, you're going to fail. Thinkers are failing young Americans when it comes to starter single-family homes, but pretending they can do them in Santa Monica is ludicrous. Pretending we can keep expanding suburbs in places that are already packed with people is really cruel. I now live in NJ, the land near NYC is expensive, and the costs of living are expensive. Unless you're going pay people a small fortune, young married couples will be stuck finding housing in places that are not where they want to live.
You could, you know, just blanket permit the construction of townhomes, or top-bottom duplex rows, which are a perfect starter home format.
Everyone has their own door, everyone gets a small yard, but you can build 5-15 on the land that one of the existing suburban houses is on, and preserve more local green space and parks than building more freestanding homes, for when a small yard isn't enough.
There are pleasant, verdant neighborhoods of rowhomes in the post-WWII areas of Philly that have great access to parks, easy parking, decent transit, perfect starter home floorplans, and would work brilliantly in wide swathes of Jersey or SE PA... if only they weren't illegal almost everywhere.
Fortunately we have developed techniques for building less expensive housing but fitting more of it per acre of land. Actually we developed these techniques a long time ago but then forgot.
It is just that there is no land available in our overcrowded coastal cities. In the past we had row homes that shared a wall. More like townhomes, but the single-family home that most want if they had kids can be built, but you need land, and there is no more. So the issue is getting people to the cheap land and having an infrastructure that they want. A good hospital, bars and restaurants, entertainment...all the stuff that make like pleasant. Still, I am not sure what to do about tornados
Americans want many things -- low taxes, expensive services, single family homes in popular cities that aren't expensive, 3 cars and no traffic. Unfortunately sometimes there are trade-offs in life.
This post kind of encapsulates the issue; you raised your kids in a single family detached home, so presume that everyone else wants to.
A much larger percentage of my cohort raises children in a row- or townhome than yours, myself included.
If we made it legal to build them, we could see who wants what.
IMO, the inner suburbs of northeastern cities are some of the most expensive real estate in the country; people want to live there even though the houses are old and drafty, have tons of deferred maintenance, and are tightly spaced with tiny yards. Replacing a bunch of them with rowhomes over the next several decades would not change the QoL the region offers at all but would accommodate many times as many young people.
If this turns out not to be true, a few townhomes will be built, then developers will lose their shirts, and no more will follow.
But right now we have no clue because it's illegal.
Their property value is almost entirely the land, not the decrepit house. There are *plenty* of instances where someone buys the land, tears down the house, and replaces it with something nicer. Or occasionally even gets permission to subdivide, or build a twin, or something similar!
All that's required is for the state government to say "yea, anywhere with public sewer service a developer can build rowhomes on that plot if they want."
There’s an easy way to see if you are right. Let’s make it legal to build townhomes and apartment buildings in coastal cities and see if people build them and if people buy or rent there. If there is no demand, we’ll find out soon enough.
If you build townhomes in the Palisades with the view of Catalina and the ocean, you’ll sell them at a cost of $1.5 million. It is the land that is expensive, not the wood and glass.
Elimination of scarcity for essentials is a better message than "affordability." Rather than "you'll pay what you do now, but it'll be a bit cheaper" the message should be "we're going to produce so much of this that you won't have to think about it." Housing, food, healthcare, etc. The automation of paperwork is just as valuable here as the automation of the agriculture supply chain. Not to rip off "Abundance" directly but I think 'mass zoning reform for affordability' is a bit too small-ball wonky for people to understand.
I get pissed every time a townhouse in my community sells for an insane price and I know I will get screwed on property taxes the next year.
I just bought 3 years ago and assuming I don't list my job I'm not leaving anytime soon. Why would I want prices to go up?
House value going up is literally only a good thing the one year in your life when you are selling, and even then everything else went up to so you don't have profit unless you move to a way cheaper place.
It's very weird for people to be obsessed with home value (which just costs you money in taxes for decades) so that you get a nicer payday when you die/become senile and move to a nursing home.
This essay won't reassure the older voters who see the idea that housing values should go up, not down, as just common sense. Your net worth is concentrated in your appreciating, paid-off house. You're not going to sell it to buy a comparable one; you're going to cash out of an investment you made through decades of work paying off a 30 year mortgage, then move into a small apartment or a spot in an assisted living community, takes cruises, and have lots of cash for the first time in your life. If your house goes down in value, that directly impoverishes your golden years.
For this person, isn't NIMBY/YIMBY closer to a zero-sum conflict between old and young?
I do hope that the understandable but misguided progressive impulse to favor the exact opposite of everything Trump proposes will lead them to view housing scarcity as indelibly besmirched by Trump’s fascism and embrace housing abundance in all its forms.
I’ve often wondered what will happen in 20 years if we do start accelerating home building. As the boomers die out, birthrates decline, and immigration slows, are we setting up to have a potential oversupply of housing and plummeting values right at the time millennials will be starting to retire? Is that a crazy thing to think? Genuinely curious about that one…
We could just abandon and tear down older housing and move to newer ones, same way we tore down tenements and moved to suburbs before. Housing is a physical good that depreciates; you need new construction just to stay ahead of the depreciation.
From some of your comments, I feel like you might be underestimating how durable old houses can be. I looked up the town where I live and the median construction year was 1961. Only 5% were built post 2000. (This is an NYC suburb.)
They’re durable in that they don’t physically fall down, but without updates and regular maintenance they will deteriorate pretty quickly. I just bought a house a few years ago and toured a bunch; the majority built before the 1990s or so were not places I’d want to live. Of course there were exceptions but usually a lot of work went into renovating those.
I live in a house that was built in 1985 that has appreciated significantly in the ~20 years we’ve had it, but we’ve also consistently had to put money into it over the years just to keep it the same as the condition when we bought it. Basically everything (flooring / wall covering / bathrooms) has been replaced or refurbished.
I live in a medium-rise apartment block built in the 1930s, which is positively new by Edinburgh standards! There have been some upgrades and repairs (e.g. we had to replace parts of the roof and outer cladding a few years ago, and we're no longer getting water from lead-lined tanks in the attic), but the basic structure is still fine. This is far from the oldest structure I've lived in - for three years in high school I boarded in the school's original dormitory block, constructed in the 1400s.
If you haven’t noticed, all those retirement centers that have been going up in the last couple decades with practically ZERO public outcry from the NIMBYs and just sailing on through approval boards… are built like 5-over-1’s.
They’ll be converted as soon as their residents die off.
Huh? You can absolutely find NIMBYs killing senior living centers and such. Search "NIMBYS senior living" and you immediately find stuff like this: https://www.reddit.com/r/yimby/comments/1hdf5yz/nimbys_melting_down_on_nextdoor_over_the_mere/
Wierd, every single one I’ve seen has sailed through.
I wonder if there’s any good data here, since otherwise we’re just takeslinging at each other.
I've occasionally wondered about this too but concluded I don't really care. I'll just pick up one of the empty beach condos. If all of this comes to pass it shouldn't cost me more than 50 cents.
If this scenario happens, can we call it "Detroit-ification"?
Because you can totally see local markets where this has already occurred. But it is not an interesting issue overall, because the oversupply is (by definition) in low-demand areas.
Cheap housing has helped Detroit rebound.
People who want to fearmonger about housing becoming more affordable will definitely call it something like that.
A fall in the price of housing, that lets people feel financially and socially stable earlier in life, is potentially a great step towards more people choosing to have more kids. Declining birthrates are not an inevitability, especially in a world where many Americans say they're having fewer kids than they'd like.
It’s an interesting thought experiment. I know Japan has quite a few abandoned countryside homes they are trying to get people to live in.
For the US, immigration could mean we don’t see our overall population decline in the same way or perhaps cheaper housing would make people more likely to have kids.
Home value is very convenient for retirement since it can be sold to pay for nursing home expenses and such, but most people won’t spend it before then.
Same thing in Italy, too. My big retirement plan is to buy a house in some coastal village and rehab it.
They also famously allow rebuilding in Tokyo, which has kept prices flat while supporting growth.
Letting old housing stock fall apart seems normal.
That's what we have marketd for, so "we" do not have to worry about such things. Let investors take care of themselves. :)
Not if we effect smart policy changes to our immigration system so that our population doesn't contract. However even the actions this administration takes these next four years is going to set us pretty far back that your point has more salience.
Saying immigration will slow long-term is quite a bold prediction! And it would have to be an incredible slowdown to actually go in reverse.
But there are countries much, much farther along in these kinds of trends than the USA is. So you can look at Germany, Japan, Spain, Italy, etc... Sometimes there are localized gluts in housing, but immigration offsets them pretty quickly from what I understand.
That all said - and arguing against myself - population decline is more and more a global trend and accelerating in many places. So maybe gluts build up more quickly if the entire developed world is experiencing population decline.
People could just consume more housing per capita; a lot of other developed countries have like half or less of the floor space per capita as Americans; if their populations just used the same amount of space as Americans that would offset generations of population loss.
I rent and have a 401K. Cheap houses on the market when I retire sounds amazing.
Unlikely. The US population is still increasing. This is a little bit like worrying about massive depopulation in 2150 after the collapse of birth rates.
It's a rather stagnant growth rate of around .5% (1.7 million) a year, and that was roughly before this administration's large scale deportation sweep policies were implemented. It's not impossible and wouldn't be surprising if the country started heading to the red by the time Trump leaves office.
I want to push back on framing housing as a financial asset though. The real benefit to owning your home is having a place to live that no longer carries a monthly payment. Same for owning a car, owning your clothes, owning your appliances... The world has transitioned to monthly payments for EVERYTHING, but a smarter approach is to focus on owning the things you need and then just not spending much money every month.
You still need to pay property taxes and insurance along with dealing with maintenance though (which is a huge pain compared to renting with a landlord with reputable maintenance staff on call), plus most people take 30 years to pay off the mortgage and sell before they even pay it off. Housing with no ongoing costs is impossible because it’s a physical good that inherently depreciates and incurs those costs.
In many places those tax & insurance costs are quite low though. Yes there are some maintenance costs as well, but the point remains that with home ownership you have substantially lowered your monthly costs.
IMO a real value is security and freedom. Tenants get kicked out for all sorts of random reasons, and they can’t renovate or even repair the home as they please.
The financials are attractive in large part due to subsidies Matt mentioned, but even if those went away I think most people would still aspire to be homeowners.
IMO, not having to move every few years is a bigger psychological benefit than the financial aspect. There are a lot of costs associated with homeownership even after paying off the mortgage.
PS. I realized that I since I moved to the US, I have stayed in 8 different places across 4 states in 13 years before we bought our first home.
Yea, I want to be able to fiddle, to tweak things to make life easier, to remodel as I want, to feel no concern when my nutjob kids knock a hole in a wall because drywall patches are easy and I have a spreadsheet of every color of paint, SKU of tile, brand of flooring, etc... that I've ever used.
If the real benefit is no longer carrying a monthly payment that remains true even if your home value doesn’t skyrocket, so why are people so obsessed with property values and/or appreciation of their home value? Even progressive politicians use the frame of “wealth building” around homeownership all the time - it’s a huge part of the narrative around housing for better or worse.
If you're in a place like Boston you know some people who bought a house for like 150k thirty years ago with 30k down and sold it for 1.5 million recently to downsize or move to South Carolina or whatever.
But, I think people over index on those stories as well as simple loss aversion once Zillow tells you your house is worth $x dollars people feel bad if it goes down.
are they obsessed? I don't know those people. I know a lot of people who own their homes and don't really think much about what they might be worth. I do think people are surprised when a nearby house sells for an unexpected price! That's interesting, true. But once you have a home, I find you tend to just think of it as a place to live.
I suppose your mileage may vary. This is not my experience
I'm sincerely curious. These are homeowners you know?
Perhaps most people go into homeownership thinking of a house primarily as a place to live and over time they come to think of it as a financial asset they have to jealously protect. I know I have, and I don’t want to. But given how much my future economic security is now tied to this this house, it would be foolish of me not to.
??? but of course it DOES carry monthly payments, the mortgage. AND you are liable to unpredictble costs. Our n-year old boiler sprng a leak and had to be replaced RIGHT NOW. Depending on your liquidity and skill at managing a tiny housing corporation and the responsivelness of the hypthetical landlord altrnative, you may be better off owning a depreciating asset/appreciating asset combination. But maybe not.
On paper maybe, though I keep seeming to need to replace the roof one year, repipe the house another, and I still haven't got my insulated garage. There's advantages to renting; the real benefit is having a greater amount of control over your environment. Just because the monthly cost isn't a rent bill, it's still there.
Now one thing you can do is leverage your equity to pay for improvements and major maintenance if you really need to, but that's not the same as having a significantly appreciating asset.
Why is it a benefit specifically to put your money into ownership of durable goods and housing to avoid monthly payments, rather than doing something else sensible with that same money?
a) To prepare for income drops, including retirement but also potentially spells of unemployment
b) Lower total expenses over time. This is perhaps more obvious with cars, where it is clearly more costly to lease indefinitely versus owning a vehicle and driving until the end of its usable life. But it applies to many other things as well.
c) The things you own, you can potentially pass down to your children. I actually grew up around a lot of people who were pretty broke, but would own pretty large rural farms. Very common to just have an adult child drop a trailer onto a corner of the property and TADA they have a place to live.
Also I am curious what this "something else sensible" you envision might be.
Taking your money and putting it in other financial products does just as good a job preparing you for income drops. It's better in many ways, actually, since it's both much easier to access and less correlated with other important things in your life than home equity. Additionally financial assets can also be passed on to your children.
Also, it's true that paying for the service of having someone else ultimately responsible for maintenance costs some money but home ownership takes lots of work and expense as well.
The S&P 500 is pretty correlated with unemployment levels! I agree that many, many Americans are over-allocated to owner-occupied real estate and it’s (as we see) a real policy problem, but “people own stocks so we can’t let stocks go down” can be a problem too, and would likely be a bigger problem if half of current homeowners rented and put money into the S&P instead.
Yeah, having lived through some bad stock market crashes, it is the WORST time to need to access that money. You become a forced seller in a down market - yuck.
Howe ownership is an extremely valuable insurance policy that cannot be bought any other way.
You have to live somewhere, and your social ties / community / family / support network are determined by where you live. So when you buy a home, you are in effect buying an insurance policy that protects you from becoming homeless or being forced out of your community. There is no financial product that can do that. If you put all your money in the S&P500, the S&P500 could drop by 50% and never recover. If you put all your money in TIPS, your landlord could jack up the rent faster than inflation.
Yes, you have to pay property taxes even after you've paid off your mortgage. But in practice, there are lots of carveouts (Prop 13, homestead exemptions, etc) to make sure people don't lose their homes due to property taxes.
I do not think this is correct. The major risk in keeping your home is that you lose your job and have to move somewhere else to get a new one, because you need a job. Owning a home, even if you own it outright, does not fix this unless you are already retirement age (in which case the worry you expressed doesn't matter either). And if you lose your job, there's a significant chance that it's because of some bad thing happening to your town specifically which reduces the value of your home. Major drops in the stock market are in fact also correlated with drops in home prices (see 2008).
Isn’t a major byproduct of the design of home owning and mortgage in the US that the average person will never have better financial leverage than when they buy their house and put a mortgage on it. And some people still get to deduct some mortgage interest.
Well, I would counter that the 30-year mortgage is actually a pretty crappy financial product. For the first ten years you are mostly giving the bank interest payments and not building equity. I think THIS might be why people feel they "need" prices to go up on their homes, because the only equity they build is from price appreciation. But if we got rid of these crappy long mortgages and financed over 15 years by default, prices would be lower and everything would get better...
“For the first ten years you are mostly giving the bank interest payments “
That used to be tax deductible for everyone. What a deal.
The standard deduction was much lower in those days. So you deducted your interest, but most people weren't better off and it biased the tax code toward larger mortgages which is unhelpful.
This is insane and ahistorical.
Before the 30 year mortgage, home loans were done as 10-year interest-only payments with a balloon payment to pay it all off at the end.
People do not generally make enough money to be able to do that on a 10 year basis — the value of a house even back then just far outstripped people’s income. And even if you DO responsibly save the entire payment over that 10 year period, you’re just ONE major inconvenience or repair away from missing the big one.
This is the market that banks came up with on their own. It did not work well. That’s why the 30 year mortgage was invented.
You’re doing WAY too much “assuming a can opener” and not living in the realistic world where no one has $300k just sitting around to instantly pay for a house in cash.
You've gone from A to Z and skipped lots of choices along the way. The 15-year self-amortizing mortgage is a fine product in my opinion.
Of course I do not expect many people to have the lump sum for a house available. But there's a balance, because home prices appear to rise based on the monthly payments people are willing to pay, and sadly longer term loans have made people willing to give up much more of their lives to interest payments for the banks.
>> because home prices appear to rise based on the monthly payments people are willing to pay
You’re going to have to elaborate on this theory of yours.
>> The 15-year self-amortizing mortgage is a fine product in my opinion.
While it’s true that longer loan terms have inflated total interest paid, the plain fact is that YOU have no way to get us from A to Z: There’s no reasonable path from 30 year mortgages on already-insanely-inflated housing prices to 15 year mortgages WITHOUT resorting to a whole bunch of deleveraging that you didn’t even gesture or hint at in your comment.
To the first part, you see house prices move as interest rates move - low rates lead to higher prices, and this is exactly the behavior you expect if the monthly payment is the constraint for most buyers. I believe this is well-understood in the real estate market.
On the second: It's true I don't have a path down from the 30-year mortgage, but that does not mean I have to like the product. I encourage people to accelerate their payments and chip away at that principal as much as possible.
For the first part, OK, I guess the way you phrased it was confusing at first.
But also, I’d point out that THAT phenomenon is pretty historically invariant regardless of housing supply or preexisting price level. Which means that for any given price level, you can only press the “have people pay off their houses faster and pay less total” button ONCE. After that, you still have to close the 10-20M unit gap.
Not to mention, shorter terms inherently means higher rates and higher payments. Even if the low rates are raising sale prices by 10-15% and you knock that 10-15% off by biasing against those rates, you still have a general market where the supply shortage means real AND nominal prices are inflating, vs using supply to get us to the point where real price inflation is negative but nominal price inflation is positive, which is basically the only politically feasible regime for deleveraging from decades of NIMBY insanity.
RE the second one, that’s just generally good advice, and yeah plenty of people don’t follow it, but also again, any legal effort to fix it is a button you can only press once.
The root problem is still that houses are too expensive — P/I ratios are now basically 4-7x vs historically <3x.
"The root problem is still that houses are too expensive" - I think we can go deeper!
The houses are too expensive because
1) We need more supply in high demand areas. But fundamentally this is a SUPPLY problem, and we can go to the known YIMBY solutions.
2) With supply constrained, longer terms and lower rates simply increase the debt buyers can take on, creating a windfall for existing owners. Since buyers are just competing with each other, helping them increase their spending just doesn't help. This is why I am opposed to so many simple-minded schemes to "help buyers". You cannot help everyone without creating more supply.
even if you have a mortgage you technically own your home.
“I want to push back on framing housing as a financial asset though”
I recently read an essay that agreed with your idea and said, in part, “American policy toward saving, investment, and homeownership is kind of misguided.”
The sweet spot for housing is home values rising in nominal terms but falling in real terms. That way, no one goes underwater on their mortgage, but homes remain relatively affordable. This is, however, a very narrow target, so I am unsure what policies would actually bring it about.
I suspect the answer lies on the financing side. We could perhaps offer insanely good terms to builders who are working on densification projects as long as their local markets remained in this narrow range.
I’m very suspicious that we are very good at manipulating the market outside of the pricing mechanism besides crude controls like zoning.
That’s kinda my point tho, but perhaps I didn’t elaborate enough:
First, you get rid of the zoning so that almost every project is a densification project.
Then, you open a spigot so that most of those projects can get financed at terms somewhere inside of the “real-nominal” window.
Obviously the macroeconomy will shift in uncontrolled ways beyond these limits, but that’s OK: the window is just the target for these specific projects. The goal is not to fix the ENTIRE market, it’s to anchor a segment of it so that the rest of the market
Also, the financing then becomes a spigot. If not enough housing is being built and housing inflation exceeds the upper bound of the window — the real term price — then we open the spigot. If too much is being built and housing inflation dips below steady nominal increase, then we close the spigot.
Better yet, just put the Fed in charge of it.
Might work. Very contingent on relaxing zoning.
High inflation?
That has its own problems, of course, but it widens the gap between real and nominal.
It would have to be insanely high inflation.
I hear what you are saying here, but this sounds a lot like government planning and high regulation.
Scarcity as a route to wealth reminds me of Bastiat’s classic essay about the “negative railroad: https://www.libertarianism.org/publications/essays/negative-railroad
There’s a proposal to build a railroad in France, but the porters in one area argue for a gap in the line, because that will make them and (allegedly) everyone else in the area wealthier. So why not extend that logic to the entire route? Then everyone would win! Hence the “negative railroad,” which is made up entirely of gaps.
This essay should be more well-known. It would be great if Matt and writers like him could use "negative railroad" as a shorthand for various bad political ideas.
Matt actually wrote about a real-life "negative railroad" here several years ago, although he didn't use the term (I pointed it out in the comments): https://www.slowboring.com/p/good-trains
https://www.slowboring.com/p/good-trains/comment/2250495
I have never heard of this. Thanks for posting!
It reminds me of when I lived (as a renter in an apartment building) for two years in Upstate New York. I lived close enough to walk to tons of places, but it was rather treacherous because the roads were wide and heavily traveled, and the sidewalk was in patches - there would be a sidewalk for a short stretch, then it would disappear, then start again later. When I aksed why the town had such a stupid setup, I was told that at the time many of the houses were built, new homeowners could choose whether they wanted a sidewalk in front of their house for a small extra fee.
Gives new meaning to the phrase “God of the gaps”. 🤣
I'd say to people in their 60s, do you want your kids to have long commutes or short ones? Do you want your grandkids to live nearby or far away?
To be fair for most of us who live in flyover states, coastal NIMBYism probably makes it more likely that our kids will stay around, lol…
TBH it’s mostly ensured that I can’t build up the kind of wealth and security that would allow me to take more risks to move back to the Midwest.
Many of them think that their kids are insane for forgoing children and refusing to “drive til they qualify”. They see it as turning away from the natural order of things, a form of secular apostasy to the suburban car-dependent lifestyle.
Many of them do not care. They’ve been told their whole life to care about themselves and that’s what they’re going to do.
Yes. We all know tons of people who hate their own kids and grandkids.
I think the above is unfair, but I think it's also well within most people's capacity to infinitely rationalize away anything that they support which hurts their kids, so the fact that they love them means much less than we might hope.
“I love my kids, I’m just preserving the neighborhood they grew up in against those evil developers and all the TRANSPLANTS they’re building apartments for. Nothing I ever do FOR MY KIDS could be wrong; I raised them myself and I KNOW how to parent my own damn kids.”
Everyone wants to live as close as possible to their grandkids.
I... disagree. This is demonstrably not the case, otherwise more folks in my parents' cohort would, you know, move.
I suspect that a greater number of older people would express this as, "I want my grandkids to live close to me."
I know a fair number of people in my own age cohort whose parents are angry at them for raising their grandchildren where life, work, and other needs have taken them, instead of "moving back home."
Florida exists. So does Arizona.
In household terms, housing is closer to a law or medical license than to a hammer or car, because equity often dominates portfolios.
If medical licenses become easier to obtain, health care becomes cheaper and there are large welfare gains. However, doctors’ salaries would clearly fall. This is why doctors form organizations like the AMA that restrict the supply of medical licenses and residencies. The larger the asset, the more households will weigh distributional losses against social gains.
Houses are less valuable than medical licenses, but there are far more homeowners than doctors. That’s why this is a hard problem.
The AMA has been asking for more residencies for decades now.
And the liability environment means medical licenses will never be much easier to get.
This all makes sense, of course. But if you're Trump, the calculation is more simple - there will be unhappy voters in 26 or 28 if home sales are sluggish and people who want to sell can't at the price they expected, and maybe as President he can do something to juice home sales in that short window.
But he can't realistically expect to implement federal policies that noticeably make housing more affordable on that time scale.
So it's a no-brainer for him to pick the easier and more-likely-to-succeed-in-the-short-term strategy: ask, What Would Peron Do? (Or Chavez, etc), and do that. That's Trump's economic policy in a nutshell.
Could YIMBYism be more popular if framed as a quality issue and not strictly an affordability one? Who wants to live in the shoddy decrepit 100-year-old housing that makes up a majority of the sub-$1m housing stock in a lot of our major cities when we could be building fancy new construction with all the modern comforts and amenities?
This is my intuition, too. I live in Rhode Island which is full of old, dilapidated, over-priced houses. The lower end of the housing market is paying too much to rent a floor in a duplex or triplex which hasn't been renovated since the 70s - there are hardly any apartment buildings, let alone modern ones. For landlords and tenants both, building up to date apartment buildings would be a huge benefit. And these two groups make up a lot of the electorate.
Saw Bowman promotes a “street votes” mechanism that allows homeowners to democratically capture the value of their land by up zoning[1]. I am not aware of Matt’s commenting on it.
Matt’s column today is a nifty thought exercise. I wish it grappled directly with the specifics of assembling a coalition for change, as street votes does.
[1] https://www.sambowman.co/p/the-importance-of-alienability
You have been looking for the wrong equipment IMO. I would have used a flamethrower to melt the ice.
There's an old MIT thread about the Boston mayor asking MIT to develop flamethrowers to help with the snow, and the school president politely replying that salt is the answer:
https://alum.mit.edu/slice/1948-mit-president-mayor-try-salt
No need to click; just read the URL.
https://www.wral.com/video/man-uses-blowtorch-to-melt-ice-sets-house-on-fire/22313667/
Unfortunately it takes a lot of energy to melt ice so you'd need an impractically large fuel tank. Jet powered snow blowers are a real thing though..
https://what-if.xkcd.com/130/
Seriously though . . . there is a much better tool out there: https://www.acehardware.com/departments/lawn-and-garden/snow-removal-and-equipment/sidewalk-scrapers/7213176
I'm sure they are also scarce, but if you can find it, a much better option.
The only thing I’ve ever used one of those for was swiping an old floor clear of 5 decades of accumulated carpet staples.
It works well for that purpose.
Has there been any discussion (here or somewhere else) about capital projects to increase e.g water/sewage treatment, firefighting, schooling capacity as a result of sharply increased building?
As someone who likes lower density living, having density and property taxes increase while property values decrease does not seem ideal XD
Just wondering if there was some type of tax (existing or ideal) involved for new construction. I know PA sales tax is 2% (1% from each party), but not sure how much of that filters into the county services level.
My brother-in-law was the supervisor of a water department in a very quickly growing area for many years. New developments pay a fee for these services. Whether that fee covers the actual cost, including the possible increasing scarcity of water that makes everyone's rates go up, is another story. . .
Typically new developments pay for their own water and sewer and roads. And the new residents pay the same taxes for schools or fire departments or anything else. Economies of scale often make things somewhat cheaper per person given growth.
This doesn't quite work in practice.
The new residents pay the same as existing residents *per dollar of house value.* But if the cost the same to provide services as existing residents *per person*, and the new housing is cheaper than the existing housing, new housing increases taxes for existing residents.
This is why retirement communities get so much less pushback: they have a much lower cost of services per person, since they don't need schools which are the most expensive service.
I don't think this is right, new housing is usually more expensive than existing housing unless it's in a dramatically worse location.
In the long term, I agree economies of scale work out nicely, but in the short term, the water treatment system might need a new settling pond, the pipe to the new development might need to be increased in size, the school needs to rent a trailer and plan for adding a wing…
And eliminating zoning suddenly seems like it would create the worst version of this problem since the people who can get houses up quickest can take advantage of the pent-up demand and established high prices while the 10th apartment building or development built would likely see lower prices, so development seems like it would be very quick.
The main constraint will be the rate at which decently large properties with detached housing come onto market to be redeveloped in this manner, along with the actual physical limits of residential construction capacity.
To be frank, in the first few years I doubt much would change. The accumulation of infrastructure needs would take a decade or more to really dent capital needs and outlays therefore.
In SE PA, for instance, most suburban sanitary sewers are sized very conservatively; sporadically replacing single-family housing with townhomes would have little impact. And the rail suburb town centers are already well-equipped to deal with density.
Trump is a real estate developer who lives to use others' money so is laserlike focused on low interest rates. He doesn't actually care about individual homeowner's equity other than as additional rationale for his desperate desire for cheap $$$. Homeowners themselves don't oppose nearby growth because of impact on equity. Most of us like where we live and don't want change. And growth results in unpredictable change.
I feel like everyone is missing the problem. Too many people want to live on the coasts. I grew up in CA, and moved from LA County to Orange County in 1964.
The city I lived in first, Long Beach, had a slew of starter homes built for the workers in the defense industry. anywhere from 1000 sq ft to 1400 sq foot. Smallish back yards and one-car garages, all built post-WWII.
Orange County's explosion of housing had 1500 to 2500 sq ft homes with two-car garages built in the 60s and 70s. Collectively known as the burbs. Most of these homes had a bigger backyard and two-car garages. A mixture of one and two-story homes. SoCals population explosion fuled all this building in both counties. Every sq ft of land in these counties had a suburb put on it. Including those in the Golden Hills of the LA Basin that you see burn every year.
Today, you can drive the San Diego Freeway and see nothing but homes. Homes of all sizes are near the coast. Commute times for what is considered the LA Basin can run into the hours.
It seemed as if the entirety of the world descended on Southern California. There are whole cities made up of the various ethnicities who emigrated to America, along with the Hispanic population that had been there for 300 years.
Everybody wants to be near the coast. Those who live within an hour's drive get sweltering heat in the Summer, a dry heat that feels like an oven. Still, you are an hour or so from the beach.
There is very little open land to build another suburb. Even if you built a 1100 sq ft house for a new buyer, you might have a two-hour commute in the AM.
There is very little free land to build the 1950s-style home, AKA a starter home, in the LA Basin. The only available land is the desert, which in summer is miserable. It is like living in Phoenix. Another place that is rapidly experiencing issues with heat and water. During the summer, when you can have months ot triple digit temperatures, when you cannot place your hands on the steering wheel, people huddle in their air-conditioned homes to hide from the heat during the day.
The night doesn’t bring relief, but you feel as if the heat lamp is at least off. Too many people are piling into already built-up areas, forcing them to move farther and farther away from the places they want to live. There is no room for anything anywhere in LA, unless you go up. Meaning apartments or condos, forget backyard BBQs or pools. You live and work in concrete.
Or build new cities in the interior of the country. Modern new cities with tons of land for new suburbs. Where your commute might be 20 minutes instead of hours in traffic that crawls. Where land is cheap...Like Duh.
Remote workers could easily move to these newer cities; they can go to any smaller city in America, but for others, work is where they are.
If we want cheaper housing options in already developed areas, you're going to fail. Thinkers are failing young Americans when it comes to starter single-family homes, but pretending they can do them in Santa Monica is ludicrous. Pretending we can keep expanding suburbs in places that are already packed with people is really cruel. I now live in NJ, the land near NYC is expensive, and the costs of living are expensive. Unless you're going pay people a small fortune, young married couples will be stuck finding housing in places that are not where they want to live.
You could, you know, just blanket permit the construction of townhomes, or top-bottom duplex rows, which are a perfect starter home format.
Everyone has their own door, everyone gets a small yard, but you can build 5-15 on the land that one of the existing suburban houses is on, and preserve more local green space and parks than building more freestanding homes, for when a small yard isn't enough.
There are pleasant, verdant neighborhoods of rowhomes in the post-WWII areas of Philly that have great access to parks, easy parking, decent transit, perfect starter home floorplans, and would work brilliantly in wide swathes of Jersey or SE PA... if only they weren't illegal almost everywhere.
Boston has a smaller population than it had in 1950. That’s because of building restrictions.
Fortunately we have developed techniques for building less expensive housing but fitting more of it per acre of land. Actually we developed these techniques a long time ago but then forgot.
It is just that there is no land available in our overcrowded coastal cities. In the past we had row homes that shared a wall. More like townhomes, but the single-family home that most want if they had kids can be built, but you need land, and there is no more. So the issue is getting people to the cheap land and having an infrastructure that they want. A good hospital, bars and restaurants, entertainment...all the stuff that make like pleasant. Still, I am not sure what to do about tornados
There is in fact lots of land near expensive coastal cities; it's just all zoned for exclusively single family homes.
Americans want SUVs, they single-family homes. They don’t want condos of glass and steel for those who want kids. That is what you are facing.
Americans want many things -- low taxes, expensive services, single family homes in popular cities that aren't expensive, 3 cars and no traffic. Unfortunately sometimes there are trade-offs in life.
Bro, I am hoping that someday the Monday after Superbowl will be a holiday
Ok, then all the childless couples and old people and weirdos can buy the townhomes, and that will leave more single-family homes for the "Americans".
This post kind of encapsulates the issue; you raised your kids in a single family detached home, so presume that everyone else wants to.
A much larger percentage of my cohort raises children in a row- or townhome than yours, myself included.
If we made it legal to build them, we could see who wants what.
IMO, the inner suburbs of northeastern cities are some of the most expensive real estate in the country; people want to live there even though the houses are old and drafty, have tons of deferred maintenance, and are tightly spaced with tiny yards. Replacing a bunch of them with rowhomes over the next several decades would not change the QoL the region offers at all but would accommodate many times as many young people.
If this turns out not to be true, a few townhomes will be built, then developers will lose their shirts, and no more will follow.
But right now we have no clue because it's illegal.
It is illegal because the residents don’t want the value of their property to go down.
Their property value is almost entirely the land, not the decrepit house. There are *plenty* of instances where someone buys the land, tears down the house, and replaces it with something nicer. Or occasionally even gets permission to subdivide, or build a twin, or something similar!
All that's required is for the state government to say "yea, anywhere with public sewer service a developer can build rowhomes on that plot if they want."
This whole article is about how that view is wrong!
There’s an easy way to see if you are right. Let’s make it legal to build townhomes and apartment buildings in coastal cities and see if people build them and if people buy or rent there. If there is no demand, we’ll find out soon enough.
If you build townhomes in the Palisades with the view of Catalina and the ocean, you’ll sell them at a cost of $1.5 million. It is the land that is expensive, not the wood and glass.
Ok, but they will be a lot cheaper to purchase than single-family homes in the Palisades.
Elimination of scarcity for essentials is a better message than "affordability." Rather than "you'll pay what you do now, but it'll be a bit cheaper" the message should be "we're going to produce so much of this that you won't have to think about it." Housing, food, healthcare, etc. The automation of paperwork is just as valuable here as the automation of the agriculture supply chain. Not to rip off "Abundance" directly but I think 'mass zoning reform for affordability' is a bit too small-ball wonky for people to understand.
I get pissed every time a townhouse in my community sells for an insane price and I know I will get screwed on property taxes the next year.
I just bought 3 years ago and assuming I don't list my job I'm not leaving anytime soon. Why would I want prices to go up?
House value going up is literally only a good thing the one year in your life when you are selling, and even then everything else went up to so you don't have profit unless you move to a way cheaper place.
It's very weird for people to be obsessed with home value (which just costs you money in taxes for decades) so that you get a nicer payday when you die/become senile and move to a nursing home.
This. My state does not have a property tax cap.
Most municipalities just tweak the millage as valuations change to hold revenues constant in real terms, or slightly growing.
Is yours just taking the windfall?
Your property tax rises aren't capped? I'm not saying it's the BEST policy, but it is very common precisely to address the concerns you have.
This essay won't reassure the older voters who see the idea that housing values should go up, not down, as just common sense. Your net worth is concentrated in your appreciating, paid-off house. You're not going to sell it to buy a comparable one; you're going to cash out of an investment you made through decades of work paying off a 30 year mortgage, then move into a small apartment or a spot in an assisted living community, takes cruises, and have lots of cash for the first time in your life. If your house goes down in value, that directly impoverishes your golden years.
For this person, isn't NIMBY/YIMBY closer to a zero-sum conflict between old and young?
Another way of thinking about this is a conflict between the past and the future.
I do hope that the understandable but misguided progressive impulse to favor the exact opposite of everything Trump proposes will lead them to view housing scarcity as indelibly besmirched by Trump’s fascism and embrace housing abundance in all its forms.
My thoughts as well!
But my worry is the more populist side of the right has the opposite instinct and partisan conflict is usually bad for an issue.