My neighborhood is mostly single-family houses, and there are lots of apartment buildings being built on every empty lot -- as well as small single-family houses and, not too far away, lots of townhouses. Commercial property can be rezoned to high-density residential easily, and that is happening often.
No one can do anything about it so people just accept it. The State of Oregon wants this, the City of Bend wants this, so we get it.
Prices still go up and up. New housing doesn't seem to cause less pricing pressure so much as attracting even more people moving in from out of state (locals are still priced out). Oregon just got an additional seat in the U.S. House of Representatives (which Democrats quickly gerrymandered).
Since you can't make having a bed in your office illegal - they had it in Mad Men in the 60s.
Companies have extra space, wondering what to do with it. Here is the solution, which also raises the housing supply:
Encourage companies to add private offices that happen to have beds in them. Nice queen sized ones.
Think about it - we already moved offices into our bedrooms. Why not do the reverse? Most tech companies (not sure about others) have massive kitchens, bathrooms, showers (usually for people who bike to work), and pretty much everything you need. What stops us from taking it up a notch, offering housing in your office as a benefit?
The best thing about my idea is that no zoning board can block it. Even Aaron Peskin, the SF supervisor who has never met a tech worker amenity he wasn't jealous of, could not get a new law in SF that banned *new* corporate kitchens from being made in company offices (his selling point: make those pesky tech workers get lunch at local restaurants instead of their posh cafeteria food...).
This isn't that far fetched. There are already stories of tech workers using sleeping bags in conference rooms while on call.... why not just make it nicer. What is the city going to do, ban offices from having anything more than a day bed?
Matt’s points about wealth-building, as well as the cynical observation that those in charge of making zoning rules are among the people that benefit from zoning status quo, are well-taken. If lawmakers held a disproportionately high share of cars, we probably would be hearing arguments for why soaring used car prices are secretly good.
That said, in my view, the examples of cars and houses are not as analogous as Matt would have us believe, partially due to elements about which Matt tends to be dismissive. Namely, the disruptive role of housing speculation (beyond the middlemen sort he mentions here) and the absence of a comparable dynamic in the automotive market.
A thought experiment: If car purchasers rented each seat in a purchased car to commuters; creating rent rolls and financial models anticipating ROIs of various vehicle purchases; purchasing multiple vehicles to increase seat rental revenues over time; how, if at all, would the FRED chart Matt included highlighting CPI for new and used vehicles be different? Would we have seen the same stark rise in price index coinciding with onset of the pandemic? Or would the baseline trend, which is flat or declining in Matt’s chart, have been trending up all along such that the effect of the Pandemic, while not zero, was significantly smaller? My money’s on the latter.
The premise of this thought experiment is admittedly absurd, but the extent to which the situations are not analogous is proportional to this absurdity. There are important psychological factors at work with respect to the housing speculation scenario that Classical Economic Theory doesn’t handle well without a new-school behavioral bent. I contend that the extent to which these returns on investment in real estate are painstakingly modeled creates anchoring biases at prices that may objectively be above what the market, absent speculation, would yield. This dynamic contributes to the higher vacancy rates than would be typical of even a properly functioning real estate market, which is fodder for those who disagree with Matt’s viewpoints on housing abundance.
All else equal, does increasing the supply of housing decrease the cost of housing? Of course it does. But is that price decrease at all commensurate with what Matt’s automotive analogy suggests? In my opinion, no.
Liberal progressives, as a species, are anxious scarcity mindset people. They are really quite broken in that they never can walk the full fact pattern on the consequences of their policy actions. They stop at the point that the policy makes them feel less anxious, and then demand the action to enact it. Then the consequences are ugly, and they just do the same thing... come up with the next scarcity idea to try and address the problems caused by the previous.
So it is the uncontrolled anxiety of the liberal species that results in this constant spiral downward into dystopia.
The correct mindset is one of abundance.
Let's use an example. There are some that say we should tax the crap out of wealth people to reduce the wage and wealth gap. That is scarcity policy.
The abundance policy would be tax incentives for small business and start-ups, and incentives for capital holders to make investments in industries with high paying jobs.
Global Warming is a giant scarcity policy enabler. It gives the anxious liberal progressive backing to push even more scarcity policy.
COVID has been a scarcity policy enabler.
Liberal progressives are made anxious with change and progress. They don't feel that they can compete well in the abundance space. It is not virtue that causes them to push scarcity, it is their own selfish interest to wreck the abundance and progress train to hobble the free competitive world and slow it down so they, the anxious liberal progressive, can feel more confident in their ability for looting more resources.
Though our current experience with how responsive supply chains are kinda suggests that radical changes to housing policy (a) wouldn’t have any near term results because supply isn’t actually that reactive to demand and (b) greatly reducing the price of housing would drive up prices everywhere else for the same reason.
"In the housing context, left-NIMBYs often deride the idea that adding supply of new upscale housing will impact the affordability of older units as “trickle-down economics.”
I have a self-awarded PHD in debating left-NIMBYs on this topic. And the explanation above is wrong in that it attributes some rational disagreement. There is none... and the real explanation for the basis of the left-NIMBY position on housing growth transcends this topic and explains almost everything else.
Left-NUMBYs are elites. They are the most insecure and selfish people in the community that, given the astounding quality of our education system and economic opportunity, have manged to rise to positions of high economic and social status. They then use their education achievement to manufacture a web of face-saving virtue-signaling excuses for their positions that are always 100% based on their own selfish interests.
They block housing because it keeps their real estate values high and they also like their exclusive white gated communities.
Literal vanguardists, who believe that they are the socialist elite and should get the nice houses because they made the revolution happen or something like that.
Socialism is great in theory until you meet the kind of people drawn to socialism.
I'm just going to remark that this should be one of your public posts. We need concise statements of how _dumb_ left-NIMBY housing talking points are that can be shared out regularly, to help immunize low-info people who aren't bought in to any political line yet.
Great analogy. Beyond zoning deregulation, is the right wealth-building policy alternative to shift home ownership incentives like the mortgage interest deduction to programs that spur participation in capital markets (e.g., some lessening in capital gains rates for lower brackets, personal finance literacy outreach or direct action, etc.)? Saps NIMBYism of its economic incentives - though would of course face a ton of pushback.
This is a very good comparative perspective of the housing and automotive markets and I believe it is correct. Nothing more to be said on that score.
But when it comes to supply chain problems in the automotive industry and particularly microchips I do not think this problem is well understood. Nor is the reason it is difficult to address. Generally speaking cars do not require very advanced chip designs. Advanced designs are where the big margins are. They draw off the low end of fabrication market. Margins are low and I very much doubt there will be a lot of competition to invest in this end of the market.
I'll make an informed guess though, Tesla is setting themselves up for a very large recall with the strategy they have adopted for dealing with the shortage. And now, when it comes to software upgrades, they will have to keep a very good track on which vehicles are equipped with which chipsets and tailor upgrades accordingly. Which is why no one else is doing that.
Cynically, knowing how traditional car companies are really bad at software and computing tech in general, it is not a huge surprise that part of the problem is that manufacturers have been overly specific on the chip types that can go in.
For comparison AWS and cloud providers, generally, get all the chips they want (within reason - GPUs have been scarce everywhere for different reasons). Because they run commodity stuff you can get widely from many sources most of the time. they are less prone to these things.
My guess is whomever the suppliers of the chips promoted a proprietary connector design that has high switching costs. If I were a supplier seeking to lock in a long term advantage, making sure switching costs between different suppliers would be in my obvious best interest. So you end up with the special 4269X chip from Specialist Fab, Inc, which only they can make at scale. Checkmate.
"I'll make an informed guess though, Tesla is setting themselves up for a very large recall with the strategy they have adopted for dealing with the shortage. And now, when it comes to software upgrades, they will have to keep a very good track on which vehicles are equipped with which chipsets and tailor upgrades accordingly. Which is why no one else is doing that."
Tesla is the software developer though. They can probably push firmware updates over the air if they were needed.
Tesla is gambling on multiple levels that they can move too quickly for the patchwork of regulatory agencies with an interest in them to keep up.
The problem with this plan is that it works right up until a critical mass of bad press accumulates, at which point you discover the difference between an indifferent regulatory apparatus and a motivated one.
This does not sound correct to me. Different fabs produce different varieties of semiconductors. You cannot generally transfer products from one node (feature size) to another because the lithography requirements are different.
Additionally, there are billions upon billions of dollars of sales in ICs that are unrelated to "advanced chip designs." Texas Instruments did $14B in revenue last year. Analog Devices did $7B. These are almost entirely large feature size devices (Analog and Power). It seems highly improbable that we aren't just waiting for the market to finish readjusting and catch up with itself. (I have worked in IC design for 31 years)
This is a fantastic piece, but I'm confused about this line:
"Nobody says that you can walk around any city and see tons of vacant cars and that must be the real problem — even though it is true that at any given time, there are tons of vacant cars."
I'm unfamiliar with the analogous argument in favor of NIMBYism, or at least not making the connection.
I've heard people argue that vacation homes/Pieds-a-Terre are the "real problem" with the housing shortage; that seems obviously untrue to me, a card-carrying YIMBY, but I guess there's a logic to it. But that seems to analogize better to the rich car collectors who own far more vehicles than they actually drive.
On the flip side, when I think of a "vacant" home, I'm generally thinking of one on the market - no one lives there now, and it could be contributing to housing supply shortage because the seller or landlord is asking for "too much," I guess - but the analogy there would be to cars on the lot, not "vacant" cars that are just parked somewhere.
To me, it seems like a "vacant" car is most likely a car that someone drove recently and will drive again soon, but is currently parked while that person is at work or out shopping or at a cooking class or whatever. But that person's home is also "vacant" by the same definition, in that she is not currently using it but slept there last night and will be back home in time for dinner.
I guess I'm just not getting it - I'm hoping the commentariat will help me see the light. I loved the rest of this piece, but I really bumped on this one line.
There’s a persistent meme from the Left that there are something like 10 vacant homes in the US for each homeless person, so there’s no need to build more housing. Your analysis is largely correct—most vacancies are rentals in between letting, homes under repair, vacation homes, etc. Moreover, most vacancies are where people aren’t—it’s why they’re vacant. So it’s basically Matt responding to a common left-NIMBY talking point that falls apart upon any close analysis.
Thanks for the explanation! I have seen this (really dumb) argument before, but was not thinking of it in this context.
I still think the analogy is imperfect at best:
Vacation homes that are used primarily by the owner seem to be the car-collector analogy - and you don’t need to be a rich collector to have one nice car you don’t use that much but keep as a hobby/sometimes drive around for fun. My eight-grade math teacher was hardly wealthy, but he had a car he only drove on special occasions.
Vacation homes that are primarily rented out to others, on the other hand, seem clearly analogous to rental cars.
Houses that are vacant because they are intended to be rented or sold are like cars at the dealership.
All of these usages of cars and homes seem appropriate to me, and do not indicate a failure in the car/housing market, even though the cars/homes are underutilized.
But I think the vast majority of “vacant” cars that you’ll see “walking around the city” are cars that are currently empty but still being used the way we expect cars to be used. When people make the dumb 10-vacant-homes-per-homeless-person argument, they’re not talking about my apartment that is currently empty but to which I will return later today, right?
Yesterday I learned that not only has housing construction been surging, and that not only has multi-family construction been surging, and that not only has multi-family construction been outpacing single family home construction, but that multi-family home construction is at the greatest volume in the past fifty years: https://www.calculatedriskblog.com/2022/01/december-housing-starts-most-housing.html
I'd love to know the details behind all this, but it suggests at least that we tend to focus on, and hotly debate, the epiphenomena, while larger trends that will fundamentally change the situation may be happening without our noticing.
I don't typically comment but I liked this a lot. One way to think about housing is the only truly scarce resource w/r/t housing is land in built-up cities. Lumber isn't typically scarce, nor concrete, nor steel, nor appliances. Skilled and unskilled labor might be. The constraints like permitting and NIMBYs and land use requirements. You can buy cheap cookies from a grocery store bakery or cheaper cookies from shelves at Dollar General, or you can buy expensive bougie cookies from a gourmet bakery or Milk Bar, or you can make cookies at home, but because cookie production isn't limited by quotas or caps, there's fundamentally a tether there that cookie costs don't have to exceed the input costs.
Off topic, but it's worth pointing out that IF the Fed had already credibly established that it was NOT going to allow the supply shock of the pandemic to lead to insufficiency of demand, automakers would not have cut back their demand for chips. What the Fed DID was pretty close to optimum (sooner would have been better, of course) but this was a huge surprise. Markets still expected a (possibly mitigated) repeat of the 2008-2000 disaster. [Look at the fall in inflation expectations in March 2020. If markets had expected the Fed to maintain aggregate demand, inflation expectations would have risen.]
Possibly so. Although in retrospect not so much. Republicans never have a problem with deficits when a Republican is in the WH.
AND in my (still minority) view, fiscal "stimulus" although mostly good for transferring income to worthy people and causes did not "simulate", did not affect macroeconomic aggregates. The Fed could have bought more private sector and less treasury debt.
I think this lesson, while a good one, does leave out:
1) Progressives’ hostility to market solutions to problems -- housing prices, college costs, climate change –is not specific to housing. [As a rhetorical strategy it may be a good idea NOT to highlight the commonality. (Am I violating my own insight here?) 😊]
2) Progressives do not really desire housing scarcity and high prices for existing homes per se and much less because it increases the wealth of existing real estate owners.* They oppose specific measures (or just market forces) that would increase housing (and commercial development, same issues) because they see costs (some legitimate) without understanding/believing that the increase in housing/commercial development would have benefits, potentially greater benefits than the costs they are concerned about. [At a micro level homeowner association X opposing development project Y may indeed be driven by concern for housing values or the perceived externalities that would drive them lower. They ae (rightly) not concerned that more housing will reduce the equity in their homes.] Part of a strategy for overcoming NIMBYism is to find ways to share some of the aggregate gains with the affected losers.
*There probably IS a good public policy reason to promote home buying. It is a form of simi-forced savings. It’s pretty unlikely that most renters are saving the equivalent of the principle reduction of the mortgage payment.
I often think of Bryan Caplan’s cynical theory of right and left - what unites the left is being anti-market, and what unites the right is being anti-left.
That's his claim but I think what unites the right is opposition to downward income (and maybe status) distribution and there is a Left that is pro-market.
I really think that a nontrivial amount of This Here Mess can be attributed to unintended blowback from the Robert Moses era. When your experience of "development" is someone leveling your entire neighborhood to run a freeway through it, it's _really_ easy for "developers are evil" to become a shibboleth, which it 100% has.
(It doesn't help of course that many developers _are_ scummy and are definitely prone to trying to back-room their deals with local politicos. Of course part of the problem is that no one trusts them and therefore backroom deals are the only way to get stuff built...)
This is a great article but Matt completely ignored motorhomes which are both vehicle and housing
My neighborhood is mostly single-family houses, and there are lots of apartment buildings being built on every empty lot -- as well as small single-family houses and, not too far away, lots of townhouses. Commercial property can be rezoned to high-density residential easily, and that is happening often.
No one can do anything about it so people just accept it. The State of Oregon wants this, the City of Bend wants this, so we get it.
Prices still go up and up. New housing doesn't seem to cause less pricing pressure so much as attracting even more people moving in from out of state (locals are still priced out). Oregon just got an additional seat in the U.S. House of Representatives (which Democrats quickly gerrymandered).
Since you can't make having a bed in your office illegal - they had it in Mad Men in the 60s.
Companies have extra space, wondering what to do with it. Here is the solution, which also raises the housing supply:
Encourage companies to add private offices that happen to have beds in them. Nice queen sized ones.
Think about it - we already moved offices into our bedrooms. Why not do the reverse? Most tech companies (not sure about others) have massive kitchens, bathrooms, showers (usually for people who bike to work), and pretty much everything you need. What stops us from taking it up a notch, offering housing in your office as a benefit?
The best thing about my idea is that no zoning board can block it. Even Aaron Peskin, the SF supervisor who has never met a tech worker amenity he wasn't jealous of, could not get a new law in SF that banned *new* corporate kitchens from being made in company offices (his selling point: make those pesky tech workers get lunch at local restaurants instead of their posh cafeteria food...).
This isn't that far fetched. There are already stories of tech workers using sleeping bags in conference rooms while on call.... why not just make it nicer. What is the city going to do, ban offices from having anything more than a day bed?
Matt’s points about wealth-building, as well as the cynical observation that those in charge of making zoning rules are among the people that benefit from zoning status quo, are well-taken. If lawmakers held a disproportionately high share of cars, we probably would be hearing arguments for why soaring used car prices are secretly good.
That said, in my view, the examples of cars and houses are not as analogous as Matt would have us believe, partially due to elements about which Matt tends to be dismissive. Namely, the disruptive role of housing speculation (beyond the middlemen sort he mentions here) and the absence of a comparable dynamic in the automotive market.
A thought experiment: If car purchasers rented each seat in a purchased car to commuters; creating rent rolls and financial models anticipating ROIs of various vehicle purchases; purchasing multiple vehicles to increase seat rental revenues over time; how, if at all, would the FRED chart Matt included highlighting CPI for new and used vehicles be different? Would we have seen the same stark rise in price index coinciding with onset of the pandemic? Or would the baseline trend, which is flat or declining in Matt’s chart, have been trending up all along such that the effect of the Pandemic, while not zero, was significantly smaller? My money’s on the latter.
The premise of this thought experiment is admittedly absurd, but the extent to which the situations are not analogous is proportional to this absurdity. There are important psychological factors at work with respect to the housing speculation scenario that Classical Economic Theory doesn’t handle well without a new-school behavioral bent. I contend that the extent to which these returns on investment in real estate are painstakingly modeled creates anchoring biases at prices that may objectively be above what the market, absent speculation, would yield. This dynamic contributes to the higher vacancy rates than would be typical of even a properly functioning real estate market, which is fodder for those who disagree with Matt’s viewpoints on housing abundance.
All else equal, does increasing the supply of housing decrease the cost of housing? Of course it does. But is that price decrease at all commensurate with what Matt’s automotive analogy suggests? In my opinion, no.
Liberal progressives, as a species, are anxious scarcity mindset people. They are really quite broken in that they never can walk the full fact pattern on the consequences of their policy actions. They stop at the point that the policy makes them feel less anxious, and then demand the action to enact it. Then the consequences are ugly, and they just do the same thing... come up with the next scarcity idea to try and address the problems caused by the previous.
So it is the uncontrolled anxiety of the liberal species that results in this constant spiral downward into dystopia.
The correct mindset is one of abundance.
Let's use an example. There are some that say we should tax the crap out of wealth people to reduce the wage and wealth gap. That is scarcity policy.
The abundance policy would be tax incentives for small business and start-ups, and incentives for capital holders to make investments in industries with high paying jobs.
Global Warming is a giant scarcity policy enabler. It gives the anxious liberal progressive backing to push even more scarcity policy.
COVID has been a scarcity policy enabler.
Liberal progressives are made anxious with change and progress. They don't feel that they can compete well in the abundance space. It is not virtue that causes them to push scarcity, it is their own selfish interest to wreck the abundance and progress train to hobble the free competitive world and slow it down so they, the anxious liberal progressive, can feel more confident in their ability for looting more resources.
Though our current experience with how responsive supply chains are kinda suggests that radical changes to housing policy (a) wouldn’t have any near term results because supply isn’t actually that reactive to demand and (b) greatly reducing the price of housing would drive up prices everywhere else for the same reason.
"In the housing context, left-NIMBYs often deride the idea that adding supply of new upscale housing will impact the affordability of older units as “trickle-down economics.”
I have a self-awarded PHD in debating left-NIMBYs on this topic. And the explanation above is wrong in that it attributes some rational disagreement. There is none... and the real explanation for the basis of the left-NIMBY position on housing growth transcends this topic and explains almost everything else.
Left-NUMBYs are elites. They are the most insecure and selfish people in the community that, given the astounding quality of our education system and economic opportunity, have manged to rise to positions of high economic and social status. They then use their education achievement to manufacture a web of face-saving virtue-signaling excuses for their positions that are always 100% based on their own selfish interests.
They block housing because it keeps their real estate values high and they also like their exclusive white gated communities.
Literal vanguardists, who believe that they are the socialist elite and should get the nice houses because they made the revolution happen or something like that.
Socialism is great in theory until you meet the kind of people drawn to socialism.
The housing cartel 😔
I'm just going to remark that this should be one of your public posts. We need concise statements of how _dumb_ left-NIMBY housing talking points are that can be shared out regularly, to help immunize low-info people who aren't bought in to any political line yet.
Great analogy. Beyond zoning deregulation, is the right wealth-building policy alternative to shift home ownership incentives like the mortgage interest deduction to programs that spur participation in capital markets (e.g., some lessening in capital gains rates for lower brackets, personal finance literacy outreach or direct action, etc.)? Saps NIMBYism of its economic incentives - though would of course face a ton of pushback.
This is a very good comparative perspective of the housing and automotive markets and I believe it is correct. Nothing more to be said on that score.
But when it comes to supply chain problems in the automotive industry and particularly microchips I do not think this problem is well understood. Nor is the reason it is difficult to address. Generally speaking cars do not require very advanced chip designs. Advanced designs are where the big margins are. They draw off the low end of fabrication market. Margins are low and I very much doubt there will be a lot of competition to invest in this end of the market.
I'll make an informed guess though, Tesla is setting themselves up for a very large recall with the strategy they have adopted for dealing with the shortage. And now, when it comes to software upgrades, they will have to keep a very good track on which vehicles are equipped with which chipsets and tailor upgrades accordingly. Which is why no one else is doing that.
Cynically, knowing how traditional car companies are really bad at software and computing tech in general, it is not a huge surprise that part of the problem is that manufacturers have been overly specific on the chip types that can go in.
For comparison AWS and cloud providers, generally, get all the chips they want (within reason - GPUs have been scarce everywhere for different reasons). Because they run commodity stuff you can get widely from many sources most of the time. they are less prone to these things.
My guess is whomever the suppliers of the chips promoted a proprietary connector design that has high switching costs. If I were a supplier seeking to lock in a long term advantage, making sure switching costs between different suppliers would be in my obvious best interest. So you end up with the special 4269X chip from Specialist Fab, Inc, which only they can make at scale. Checkmate.
"I'll make an informed guess though, Tesla is setting themselves up for a very large recall with the strategy they have adopted for dealing with the shortage. And now, when it comes to software upgrades, they will have to keep a very good track on which vehicles are equipped with which chipsets and tailor upgrades accordingly. Which is why no one else is doing that."
Tesla is the software developer though. They can probably push firmware updates over the air if they were needed.
Tesla is gambling on multiple levels that they can move too quickly for the patchwork of regulatory agencies with an interest in them to keep up.
The problem with this plan is that it works right up until a critical mass of bad press accumulates, at which point you discover the difference between an indifferent regulatory apparatus and a motivated one.
This does not sound correct to me. Different fabs produce different varieties of semiconductors. You cannot generally transfer products from one node (feature size) to another because the lithography requirements are different.
Additionally, there are billions upon billions of dollars of sales in ICs that are unrelated to "advanced chip designs." Texas Instruments did $14B in revenue last year. Analog Devices did $7B. These are almost entirely large feature size devices (Analog and Power). It seems highly improbable that we aren't just waiting for the market to finish readjusting and catch up with itself. (I have worked in IC design for 31 years)
This is a fantastic piece, but I'm confused about this line:
"Nobody says that you can walk around any city and see tons of vacant cars and that must be the real problem — even though it is true that at any given time, there are tons of vacant cars."
I'm unfamiliar with the analogous argument in favor of NIMBYism, or at least not making the connection.
I've heard people argue that vacation homes/Pieds-a-Terre are the "real problem" with the housing shortage; that seems obviously untrue to me, a card-carrying YIMBY, but I guess there's a logic to it. But that seems to analogize better to the rich car collectors who own far more vehicles than they actually drive.
On the flip side, when I think of a "vacant" home, I'm generally thinking of one on the market - no one lives there now, and it could be contributing to housing supply shortage because the seller or landlord is asking for "too much," I guess - but the analogy there would be to cars on the lot, not "vacant" cars that are just parked somewhere.
To me, it seems like a "vacant" car is most likely a car that someone drove recently and will drive again soon, but is currently parked while that person is at work or out shopping or at a cooking class or whatever. But that person's home is also "vacant" by the same definition, in that she is not currently using it but slept there last night and will be back home in time for dinner.
I guess I'm just not getting it - I'm hoping the commentariat will help me see the light. I loved the rest of this piece, but I really bumped on this one line.
There’s a persistent meme from the Left that there are something like 10 vacant homes in the US for each homeless person, so there’s no need to build more housing. Your analysis is largely correct—most vacancies are rentals in between letting, homes under repair, vacation homes, etc. Moreover, most vacancies are where people aren’t—it’s why they’re vacant. So it’s basically Matt responding to a common left-NIMBY talking point that falls apart upon any close analysis.
Thanks for the explanation! I have seen this (really dumb) argument before, but was not thinking of it in this context.
I still think the analogy is imperfect at best:
Vacation homes that are used primarily by the owner seem to be the car-collector analogy - and you don’t need to be a rich collector to have one nice car you don’t use that much but keep as a hobby/sometimes drive around for fun. My eight-grade math teacher was hardly wealthy, but he had a car he only drove on special occasions.
Vacation homes that are primarily rented out to others, on the other hand, seem clearly analogous to rental cars.
Houses that are vacant because they are intended to be rented or sold are like cars at the dealership.
All of these usages of cars and homes seem appropriate to me, and do not indicate a failure in the car/housing market, even though the cars/homes are underutilized.
But I think the vast majority of “vacant” cars that you’ll see “walking around the city” are cars that are currently empty but still being used the way we expect cars to be used. When people make the dumb 10-vacant-homes-per-homeless-person argument, they’re not talking about my apartment that is currently empty but to which I will return later today, right?
Yesterday I learned that not only has housing construction been surging, and that not only has multi-family construction been surging, and that not only has multi-family construction been outpacing single family home construction, but that multi-family home construction is at the greatest volume in the past fifty years: https://www.calculatedriskblog.com/2022/01/december-housing-starts-most-housing.html
I'd love to know the details behind all this, but it suggests at least that we tend to focus on, and hotly debate, the epiphenomena, while larger trends that will fundamentally change the situation may be happening without our noticing.
I don't typically comment but I liked this a lot. One way to think about housing is the only truly scarce resource w/r/t housing is land in built-up cities. Lumber isn't typically scarce, nor concrete, nor steel, nor appliances. Skilled and unskilled labor might be. The constraints like permitting and NIMBYs and land use requirements. You can buy cheap cookies from a grocery store bakery or cheaper cookies from shelves at Dollar General, or you can buy expensive bougie cookies from a gourmet bakery or Milk Bar, or you can make cookies at home, but because cookie production isn't limited by quotas or caps, there's fundamentally a tether there that cookie costs don't have to exceed the input costs.
Off topic, but it's worth pointing out that IF the Fed had already credibly established that it was NOT going to allow the supply shock of the pandemic to lead to insufficiency of demand, automakers would not have cut back their demand for chips. What the Fed DID was pretty close to optimum (sooner would have been better, of course) but this was a huge surprise. Markets still expected a (possibly mitigated) repeat of the 2008-2000 disaster. [Look at the fall in inflation expectations in March 2020. If markets had expected the Fed to maintain aggregate demand, inflation expectations would have risen.]
The Fed AND Congress - I would argue the fiscal stimulus was even more unprecedented and unexpected than the monetary stimulus.
Possibly so. Although in retrospect not so much. Republicans never have a problem with deficits when a Republican is in the WH.
AND in my (still minority) view, fiscal "stimulus" although mostly good for transferring income to worthy people and causes did not "simulate", did not affect macroeconomic aggregates. The Fed could have bought more private sector and less treasury debt.
I think this lesson, while a good one, does leave out:
1) Progressives’ hostility to market solutions to problems -- housing prices, college costs, climate change –is not specific to housing. [As a rhetorical strategy it may be a good idea NOT to highlight the commonality. (Am I violating my own insight here?) 😊]
2) Progressives do not really desire housing scarcity and high prices for existing homes per se and much less because it increases the wealth of existing real estate owners.* They oppose specific measures (or just market forces) that would increase housing (and commercial development, same issues) because they see costs (some legitimate) without understanding/believing that the increase in housing/commercial development would have benefits, potentially greater benefits than the costs they are concerned about. [At a micro level homeowner association X opposing development project Y may indeed be driven by concern for housing values or the perceived externalities that would drive them lower. They ae (rightly) not concerned that more housing will reduce the equity in their homes.] Part of a strategy for overcoming NIMBYism is to find ways to share some of the aggregate gains with the affected losers.
*There probably IS a good public policy reason to promote home buying. It is a form of simi-forced savings. It’s pretty unlikely that most renters are saving the equivalent of the principle reduction of the mortgage payment.
I often think of Bryan Caplan’s cynical theory of right and left - what unites the left is being anti-market, and what unites the right is being anti-left.
That's his claim but I think what unites the right is opposition to downward income (and maybe status) distribution and there is a Left that is pro-market.
"Unearthing a huge cache of unused homes in in-demand areas would have the same effect. Of course, we are very unlikely to find such a cache."
In Canada, Mike Moffatt has a suggestion to add rental housing quickly in expensive markets: Build more student residences. https://www.tvo.org/article/the-quick-fix-part-1-how-ontario-can-improve-its-housing-situation-now
I really think that a nontrivial amount of This Here Mess can be attributed to unintended blowback from the Robert Moses era. When your experience of "development" is someone leveling your entire neighborhood to run a freeway through it, it's _really_ easy for "developers are evil" to become a shibboleth, which it 100% has.
(It doesn't help of course that many developers _are_ scummy and are definitely prone to trying to back-room their deals with local politicos. Of course part of the problem is that no one trusts them and therefore backroom deals are the only way to get stuff built...)
Hard agree from an exasperated urban planner.
When it makes sense, please let’s plan an NYC SB meetup, maybe with a housing policy theme?!
The Globe and Mail seems to be on the right track. https://www.theglobeandmail.com/opinion/editorials/article-canada-needs-a-lot-more-rental-housing-vancouver-is-leading-the-way/