They Don't Build Them Like They Used To: The New Construction Shortage(zillow.com)
zillow.com
They Don't Build Them Like They Used To: The New Construction Shortage
https://www.zillow.com/research/new-construction-shortgage-20991/
82 comments
That graph is pretty useless by only focusing on single family homes in metropolitan areas. Single family homes may hold nationwide as a housing growth indicator but one would expect mature and rising cities to have more multifamily residences even if they had a space boon from obsolete industrial jobs move elsewhere due to urban areas providing less of an advantage due to high numbers of workers being less needed with increased automation. Similarly sixteen high rise permits would do more for housing than one hundred sixty single family homes despite there technically being fewer new construction permits - evem though they would rightfully be more involved in making sure it wouldn't cause disaster. While I do not doubt that many urban areas have a housing shortage that isn't very good evidence given the caveats.
That graph doesn't tell the story, it's just picked because single family is the simplest indicator and has well defined economic benefit. The figures always incorporate new housing units -- a 20 story high-rise does not look like a single family home in the stats.
You can look at the raw data and see single/multi/large residential starts: https://www.census.gov/construction/nrc/pdf/bpsa.pdf
Single family construction is the canary in the coal mine because the costs are escalating to the point where more and more people are priced out. New construction is $150-275/sqft (10% more if no garage is present). When I started working in 2000, it was about half that. Per-unit costs drop with multi-family, but it's still creeping up there. The minimum price for finished new construction condos in my area (which is usually a 50th percentile market in the US) is about $350k.
You can look at the raw data and see single/multi/large residential starts: https://www.census.gov/construction/nrc/pdf/bpsa.pdf
Single family construction is the canary in the coal mine because the costs are escalating to the point where more and more people are priced out. New construction is $150-275/sqft (10% more if no garage is present). When I started working in 2000, it was about half that. Per-unit costs drop with multi-family, but it's still creeping up there. The minimum price for finished new construction condos in my area (which is usually a 50th percentile market in the US) is about $350k.
People don't need single-family homes. People in other countries do just fine with multi-family dwellings: high-rise condos, apartments, etc. In cities which are steadily increasing in density, single-family homes are utterly wasteful, and completely unnecessary. You can only fit so many of them in a given area, whereas with a high-rise, you can fit hundreds of people into the area used by a small handful of single-family homes.
People need capsule living accommodations, a glucose drip, and not much more. The bonus is that you can buried in the coffin sized living quarters.
Need is a terrible way to characterize what people live in.
Of course they're wasteful, it's also why people don't live on large estates anymore. People in many territories live in high-rises due to a variety of other reasons, usually a local governing drive for higher density because it's obviously more efficient, but the thought of "what's the minimum I need to live in even if I can afford more" is not usually one of them.
I hate this "need" argument because it's nonsensical and just ends up being turned into whatever living accommodations the arguer thinks is best. Minimum living space is well studied and it's shockingly smaller than even most of the arguers making a need-based argument would be willing to admit.
Need is a terrible way to characterize what people live in.
Of course they're wasteful, it's also why people don't live on large estates anymore. People in many territories live in high-rises due to a variety of other reasons, usually a local governing drive for higher density because it's obviously more efficient, but the thought of "what's the minimum I need to live in even if I can afford more" is not usually one of them.
I hate this "need" argument because it's nonsensical and just ends up being turned into whatever living accommodations the arguer thinks is best. Minimum living space is well studied and it's shockingly smaller than even most of the arguers making a need-based argument would be willing to admit.
There are pros and cons to both options. High rises bring exploding population, lack of green areas and noise, congestion and different set of limitations and high prices.
But high home prices in a tech center can bring medium to long term system level benefits, too. They help distribute work options and wealth generation to other cities. If one builds monster high rises to house 20M people in urban SF it might still suck in young smart engineers two decades from today. But if instead you price them out, they might gravitate to other, cheaper cities and help those thrive. It is painful to be priced out of the city where ones job is, but with jobs plentiful it is also an opportunity to look elsewhere. One might end up happier in the end. My 2c.
But high home prices in a tech center can bring medium to long term system level benefits, too. They help distribute work options and wealth generation to other cities. If one builds monster high rises to house 20M people in urban SF it might still suck in young smart engineers two decades from today. But if instead you price them out, they might gravitate to other, cheaper cities and help those thrive. It is painful to be priced out of the city where ones job is, but with jobs plentiful it is also an opportunity to look elsewhere. One might end up happier in the end. My 2c.
High rises can actually extend green areas, presuming the city planning isn't completely dumb or bought out.
Unfortunately developers is live to fill every space in with small flats to sell more of them and with high rises likewise. As long as pricing holds up.
The thing that cannot be provided with single homes is services availability, since they cannot be built close at all. This necessitates big road infrastructure and pedestrian hostile design.
Unfortunately developers is live to fill every space in with small flats to sell more of them and with high rises likewise. As long as pricing holds up.
The thing that cannot be provided with single homes is services availability, since they cannot be built close at all. This necessitates big road infrastructure and pedestrian hostile design.
> High rises can actually extend green areas, presuming the city planning isn't completely dumb or bought out. Unfortunately developers is live to fill every space in with small flats to sell more of them and with high rises likewise.
Agreed on both points. And IMO, the second part quickly negates the advantages. What I have seen is that once you start on high rises sooner or later (usually during property price peaks) we have most green areas built over and what is left is either far far away or feels like an overcrowded zoo between concrete walls.
On pedestrian hostile design -- the small city I live in has sidewalks practically everywhere and while I do drive to the store from my condo I can walk to my work. And if I drive, the short, non-congested, <2 mile trip is still a pretty efficient commute. And my kids can still play outside with other kids with no playdates arranged weeks in advance.
Urban life can be pleasant and good for society, too; but small towns and suburbs are not an evil it is often portrayed to be.
Agreed on both points. And IMO, the second part quickly negates the advantages. What I have seen is that once you start on high rises sooner or later (usually during property price peaks) we have most green areas built over and what is left is either far far away or feels like an overcrowded zoo between concrete walls.
On pedestrian hostile design -- the small city I live in has sidewalks practically everywhere and while I do drive to the store from my condo I can walk to my work. And if I drive, the short, non-congested, <2 mile trip is still a pretty efficient commute. And my kids can still play outside with other kids with no playdates arranged weeks in advance.
Urban life can be pleasant and good for society, too; but small towns and suburbs are not an evil it is often portrayed to be.
Surburbs are what drive the need for everyone to have a car, which has an enormous impact on the environment and society. As a result, we have global warming, high pollution, insanely-long commute times, and massive sprawl.
Except a lot of people prefer single-family homes?
It doesn't matter what's efficient if it's what is in demand.
It doesn't matter what's efficient if it's what is in demand.
It does matter what's efficient because inefficiency in this matter is a burden to society.
I bet that you do something that's "a burden to society," broadly defined, and aren't willing to give that up.
But my somethings aren’t enforced on everyone else via zoning regulations in the Bay Area.
This entire thread is full of statements about the effects that the lack of housing supply is having on American families. I shouldn't need to bury the point of my comment by restating them needlessly.
Which is where public policy comes in, and it can come in at a very refined level.
For example: sulphur dioxide emissions. You can't just pump unlimited sulphur dioxide into the air, because that's a burden to society, but there's some level of emissions that's considered "safe", so you just issue permits to create those emissions and let those permits be traded on the open market. If your business requires pumping sulphur dioxide into the air, fine, but you have to pay the costs of doing that.
A similar approach can be made for anything, ranging from non-renewable resource consumption to CO2 emissions to the public costs of maintaining infrastructure. The beauty of this is that we don't have to act like commissars arguing about whether to restrict the availability of meat or single-family homes or pickup trucks or anything else. If it's more expensive for society to support a single-family home, the tax structures should reflect that fact, so if someone still really really wants a single-family home and they can afford it, at least we can rest assured that they're paying their fair share for all the resources and externalities involved.
For example: sulphur dioxide emissions. You can't just pump unlimited sulphur dioxide into the air, because that's a burden to society, but there's some level of emissions that's considered "safe", so you just issue permits to create those emissions and let those permits be traded on the open market. If your business requires pumping sulphur dioxide into the air, fine, but you have to pay the costs of doing that.
A similar approach can be made for anything, ranging from non-renewable resource consumption to CO2 emissions to the public costs of maintaining infrastructure. The beauty of this is that we don't have to act like commissars arguing about whether to restrict the availability of meat or single-family homes or pickup trucks or anything else. If it's more expensive for society to support a single-family home, the tax structures should reflect that fact, so if someone still really really wants a single-family home and they can afford it, at least we can rest assured that they're paying their fair share for all the resources and externalities involved.
I probably am less sanguine than you that public policy can in fact lead us to "rest assured that they're paying their fair share."
But certainly public policy can and should play a role here. The point is, just saying, "Well, your decisions impose a burden on everyone else" as though that were the end of the discussion proves too much. You have to lay out the costs and benefits.
But certainly public policy can and should play a role here. The point is, just saying, "Well, your decisions impose a burden on everyone else" as though that were the end of the discussion proves too much. You have to lay out the costs and benefits.
Or you can route the costs to the people who are incurring them and let them lay out the costs and benefits for themselves.
Housing projects for everybody!
Heh, 20 years ago $145/sqft got you a custom home w/ vaulted ceilings, imported granite from the Pyrenees Mountains, mud-set features and million dollar views. Todey it doesn't even get you a renovated shack in one of the "gentrifying" 'hoods. Don't know who to thank, the investment banksters or the 'sharing' economy. Perhaps, when the scalea tip past a certain point Glass-Steagal protections will be reimplemented. Preferably, before outright revolt.The Great Recovery is neither for most people in the US(& the world).
In coverage I've followed, what houses that are being constructed are largely being targeted to the luxury market with the entry market being under or unserved. That sort of fits with higher square footage costs.
That’s not because people suddenly don’t want houses. It’s because costs have inflated up and wages are lower and less secure.
There’s a lot of noise here about how houses are fundamentally wasteful, we should all be living in apartments, etc. Thats all reflective of a young audience dealing with reality.
Houses are no more or less practical than they were in 1978. The difference is that on average, each household today is poorer than the last two generations in real terms.
There’s a lot of noise here about how houses are fundamentally wasteful, we should all be living in apartments, etc. Thats all reflective of a young audience dealing with reality.
Houses are no more or less practical than they were in 1978. The difference is that on average, each household today is poorer than the last two generations in real terms.
Jobs and affordable real estate are in a teasingly inverse relationship. There is plenty of cheap real estate if you don't mind less than ideal areas with few jobs. That can work out for retirees but they wind up being ghost towns.
Booming cities are at times like a monkey's paw wish - you can get great pay, prestigious work, plenty of variety in services and there are many jobs but everything is inflated.
I agree with you completely. The allocation of resources to the luxury market is almost completely been up to the collective decision making of developers building the houses.
Even in places that are appropriate for single family homes, like suburban areas far from the housing crises in San Francisco and San Jose, it is getting harder and harder to find new-ish single family homes. And there is zero new construction of such homes. If you prefer that kind of lifestyle (1X00 sq.ft. with a lawn), you’re stuck with housing stock built in the 1980s and earlier.
Everywhere I see new construction, even out in the exurbs, it’s 3-story apartments and ugly row homes squished together on postage stamp-sized lots.
Everywhere I see new construction, even out in the exurbs, it’s 3-story apartments and ugly row homes squished together on postage stamp-sized lots.
If you prefer that kind of lifestyle (1X00 sq.ft. with a lawn), you’re stuck with housing stock built in the 1980s and earlier.
The problem around the Redmond, WA area is that if you want the lifestyle you describe, despite lots of new houses going up you will still have to have something built in the 80s. Because everything being built is 3200 sq. ft. or more. Now, I understand why, because you get more money from a $1.3MM house than you do a $800K one. But if you don't want some monstrosity with a postage stamp lot (because the house took it all), good luck finding one in Redmond. They're building houses, but nothing I'd personally want to buy.
The problem around the Redmond, WA area is that if you want the lifestyle you describe, despite lots of new houses going up you will still have to have something built in the 80s. Because everything being built is 3200 sq. ft. or more. Now, I understand why, because you get more money from a $1.3MM house than you do a $800K one. But if you don't want some monstrosity with a postage stamp lot (because the house took it all), good luck finding one in Redmond. They're building houses, but nothing I'd personally want to buy.
However, all those people moving into the 3200 sq ft homes have to move from somewhere. That opens up smaller homes, large apartments, etc.
Wellll, except about a mile south of us someone is snapping up the 1200 sq. ft. houses and dropping 3500 sq. ft. warehouses on them. It was kind of sad when I saw the kids playing on the sidewalk, because you could cut the front yard with scissors in about ten minutes, and I imagine the backyard isn't much bigger.
But I take your point. Our little rambler is a hidden gem that will be worth millions when the trend swings the other way. :-)
But I take your point. Our little rambler is a hidden gem that will be worth millions when the trend swings the other way. :-)
Yea I noticed that back when I lived outside of the Bay Area. At some point in the 90’s, single family home developers went out of their minds and started building these ridiculous Borg cube homes right out to the lot lines. Awful.
Condo's in the redmond/kirkland area are absurdly expensive, 350k for around 8-900 sqft
Condominiums each get their own set of permits. Most importantly, just like a single family house, they each have to be issued a Certificate of Occupancy.
This depends on the market. This is definitely not the case in NYC
Huh? The NYS Attorney General approves all condos separate from the local building permitting process.
I'm not following what your point is. If I'm reading the first table in [1] correctly, 20+ unit condo (and maybe apartment?) complex new construction starts have been declining annually while single-family home construction has been increasing. This seems to support the parent comment's argument that growth indicators are out of alignment with what markets actually need.
[1] https://www.census.gov/construction/nrc/pdf/quarterly_starts...
[1] https://www.census.gov/construction/nrc/pdf/quarterly_starts...
I was replying to the assertion that it's not comparable to look at permits as an accurate measurement of new construction since a building in the city holds many families, versus one family per building in the 'burbs. In reality it's pretty straightforward to use certificates of occupancy as a measurement because it [nearly always] measures housing units instead of clusters of housing units. Apartments (not condos) are sometimes an exception.
Ah, I see. Thanks for clarifying. In that case I agree.
Where are they going to find the space to build single-family homes?
Realistically, there's no way the rate of construction of single family homes in a finite amount of area is going to stay fixed or keep increasing over time.
The alternative is create an overload of urban sprawl, which expands the "metro area", and also increases commute times.
Realistically, there's no way the rate of construction of single family homes in a finite amount of area is going to stay fixed or keep increasing over time.
The alternative is create an overload of urban sprawl, which expands the "metro area", and also increases commute times.
I agree, I think you would see a lot more renovations vs. new homes. Where I live in Chicago (not the trendiest part of town), the cheapest single family fixer-uppers are $350-450K. Not many people queuing up to drop at least $1 million on new homes here.
I find it sort of odd that they feel that keeping an existing house longer is a bad thing. The house I live in now was built in the 1850's, and I lived for a while in a house from the 1780s. The main drawback is you have to get used to there being no level surfaces or right angles.
Isn't the main drawback that there is a lot of maintenance needed on old houses? I worked many hours on a fixer upper built around 1900 by an amateur homebuilder. It's incredibly frustrating that every single change you want to make to windows, doors, or anything is complicated by non-right angles. It increased the time required for basic repairs by 2-fold, so much re-doing needed to get even a mediocre fit, never mind a great fit.
I've lived in houses built in the 40s and 90s. I would take the former any day of the week. I'm not generally a "they don't build them like they used to kind of person", but my experience with houses is that older homes were built to last while newer ones are just built to sell.
Of course, there's probably some survivorship bias there. All the shitty homes from the 40s are gone now.
Of course, there's probably some survivorship bias there. All the shitty homes from the 40s are gone now.
There's a lot of maintenance needed on _any_ house.
It's great to keep old houses but unless the population stops growing you need to build new ones for people to live in. Well, they can keep living with their parents but most people want to move out.
Sure, but what the article is suggesting is that older houses should be torn down and replaced, by another single family home. So it doesn't really add to the housing stock to do that.
It's interesting to see the pre-built / manufactured home business is only finally starting to pick up sales again after imploding post year 2000.
We used to see 350k manufactured home units sold per year in the US throughout the 1990s. That fell to ~50,000 for '09-'12. Now back up to 100k units again.
There used to be a stigma about these types of homes in regards to quality. I was surprised at how relatively nice they are now, looking at the Clayton Homes site (a subsidiary of Berkshire Hathaway). I would think these types of inexpensive housing units are a critical element to relieving the US housing shortage again.
https://www.bloombergquint.com/business/2018/08/16/cheap-and...
We used to see 350k manufactured home units sold per year in the US throughout the 1990s. That fell to ~50,000 for '09-'12. Now back up to 100k units again.
There used to be a stigma about these types of homes in regards to quality. I was surprised at how relatively nice they are now, looking at the Clayton Homes site (a subsidiary of Berkshire Hathaway). I would think these types of inexpensive housing units are a critical element to relieving the US housing shortage again.
https://www.bloombergquint.com/business/2018/08/16/cheap-and...
There is a middle ground too, prefab homes, where the walls, floors, etc, are all built off-site in a factory, and then shipped to your location in sections. It allows for faster building (can go from foundation to roof on and siding up in 2 days) and in theory, much cheaper costs.. Currently, most roof trusses are already built this way, but all walls, flooring, etc, electrical, plumbing, etc, are all custom done on site, meaning much higher costs. However, the hi-end companies I was looking at when I last looked were much more focused on the speed, then the cost efficiencies.
This was my experience as well when I thought, "Gosh, $200/sq ft seems too high for a home. I bet someone could do well building them off-site, shipping them to me, and bolting them together on-site." As it turns out, $200/sq ft appears to be the _minimum_ of prefabs these days. Cost savings is not the benefit from what I could tell. Reduced waste, sure, but not reduced cost.
I think a lot of areas still have regulations in place that prevent manufactured homes from being built/installed in a neighborhood.
I grew up in a region where these were incredibly common. Most of my friends grew up on one of these (doublewides, as they were called). They were actually very nice, the build quality was decent, it was incredibly spacious for the price, and they could be installed pretty fast. For about $60-70k in '95 dollars (105-120k today) a family could live in a brand new 2200 sq. ft. house on 2.5 acres of land.
I grew up in a region where these were incredibly common. Most of my friends grew up on one of these (doublewides, as they were called). They were actually very nice, the build quality was decent, it was incredibly spacious for the price, and they could be installed pretty fast. For about $60-70k in '95 dollars (105-120k today) a family could live in a brand new 2200 sq. ft. house on 2.5 acres of land.
I'm in an isolated market, but I recently priced out a new build of a single family home. Bids between contractors fluctuated by over $200,000 for the same sets of plans on the same lot. Their excuse was high demand for sub-contractors that would work on the project that was paying the highest.
- done well
- done on time
- done within budget
Pick two.
- done well
- done on time
- done within budget
Pick two.
For the customer, number 2 would be the best to skip, but it is the worst for the developer as they cannot really sell an unbuilt house easily, while they get to pay the debt or such leverage plus construction company.
They also cannot do 3 as the budgets are super tight already.
They also cannot do 3 as the budgets are super tight already.
I just built a home. There's a lot of out of control factors that make it harder to build. "Historic districts" are basically ways to add extra red tape for the NIMBYs. HOAs are now more common and also add red tape for NIMBYs. Environmental changes for energy efficiency aren't always funded by banks.
One of the things we need is to abolish things like HOAs and historic districts; and then reform lending so it will fund environmentally-friendly building codes.
One of the things we need is to abolish things like HOAs and historic districts; and then reform lending so it will fund environmentally-friendly building codes.
Building codes themselves are driven by industry and manufacturers. This has been a huge driver for the increase in size of house, compare a 1960s era bathroom against modern code and you will find the increase in minimum sizes dramatic.
It seems like these charts are for single family homes only? So a new apartment building wouldn’t be included? If so, that would seem to tell part of the story?
> People can also shift from single-family to multi-family residences. However the share of households in single-unit structures is 61.5 percent — virtually unchanged from 60.3 percent in 2000, which indicates that no such shift has occurred.
Why would he not show the trend up untill 2008 on the graph "Permits per 1,000 new residents in previous 12 months"? That seems shady graphing.
This related blog post is an interesting read:
Building Affordable Housing: Where Has the Entry Level House Gone?
http://urbankchoze.blogspot.com/2016/08/building-affordable-...
Building Affordable Housing: Where Has the Entry Level House Gone?
http://urbankchoze.blogspot.com/2016/08/building-affordable-...
This kind of highlights a huge issue with being poor: lack of mobility.
If people with modest budgets could afford to pack up and move to Columbia, Missouri, then the cost burden of housing could be mitigated somewhat. We'd probably see housing prices stabilize across the country. As it stands, only wealthy people can afford to migrate across the country, usually in pursuit of even more wealth. This just adds to the problem because it results in more dollars chasing a supply of existing houses that isn't expanding rapidly enough.
Probably, the only way to reverse this trend now is to raise property taxes on single family homes in desirable locations such that it becomes uneconomical to maintain them as such. Then these massive tracts of suburbia can be bought up by developers who are incentivized to build high-density housing. Of course, a serious proposal of this sort is likely to get you killed.
If people with modest budgets could afford to pack up and move to Columbia, Missouri, then the cost burden of housing could be mitigated somewhat. We'd probably see housing prices stabilize across the country. As it stands, only wealthy people can afford to migrate across the country, usually in pursuit of even more wealth. This just adds to the problem because it results in more dollars chasing a supply of existing houses that isn't expanding rapidly enough.
Probably, the only way to reverse this trend now is to raise property taxes on single family homes in desirable locations such that it becomes uneconomical to maintain them as such. Then these massive tracts of suburbia can be bought up by developers who are incentivized to build high-density housing. Of course, a serious proposal of this sort is likely to get you killed.
> If people with modest budgets could afford to pack up and move to Columbia, Missouri, then the cost burden of housing could be mitigated somewhat. We'd probably see housing prices stabilize across the country.
I'm not sure if it's an issue with modest budgets or if it's an issue with job availability. Lots of people can pack up and move to Columbia, Missouri. But the jobs that exist here don't exist there.
If anything, being extremely poor helps with mobility. If you're living off disability, there's a pretty decent payoff to buying a Greyhound ticket to an area with cheaper rent, because you get the same disability check no matter where you live. Homeless people are similarly extremely mobile. It's the whole middle-class, have-to-work-for-a-living-and-my-job-is-right-here lifestyle that inhibits mobility.
> Probably, the only way to reverse this trend now is to raise property taxes on single family homes in desirable locations such that it becomes uneconomical to maintain them as such. Then these massive tracts of suburbia can be bought up by developers who are incentivized to build high-density housing. Of course, a serious proposal of this sort is likely to get you killed.
This kind of happens implicitly with a Land Value Tax, except there might be ways of implementing an LVT that wouldn't immediately displace single family homeowners.
Also, you don't need "massive tracts of suburbia" to build high-density housing; the whole point of high-density housing is that it doesn't take as much land. You can just leave most of suburbia alone.
I'm not sure if it's an issue with modest budgets or if it's an issue with job availability. Lots of people can pack up and move to Columbia, Missouri. But the jobs that exist here don't exist there.
If anything, being extremely poor helps with mobility. If you're living off disability, there's a pretty decent payoff to buying a Greyhound ticket to an area with cheaper rent, because you get the same disability check no matter where you live. Homeless people are similarly extremely mobile. It's the whole middle-class, have-to-work-for-a-living-and-my-job-is-right-here lifestyle that inhibits mobility.
> Probably, the only way to reverse this trend now is to raise property taxes on single family homes in desirable locations such that it becomes uneconomical to maintain them as such. Then these massive tracts of suburbia can be bought up by developers who are incentivized to build high-density housing. Of course, a serious proposal of this sort is likely to get you killed.
This kind of happens implicitly with a Land Value Tax, except there might be ways of implementing an LVT that wouldn't immediately displace single family homeowners.
Also, you don't need "massive tracts of suburbia" to build high-density housing; the whole point of high-density housing is that it doesn't take as much land. You can just leave most of suburbia alone.
I relocated when I was poor, single, and in college. Literally the only reason I was able to do so was because I knew a person in the town I was moving to. Without a social network, it would have been impossible for me to relocate without also becoming homeless.
People with money can find apartments or stay in hotels. People in my situation needed money for a place to stay before they could get a job.
People with money can find apartments or stay in hotels. People in my situation needed money for a place to stay before they could get a job.
Heh, not to be the guy posting urbankchoze links all day but the author has thoughts on this as well actually[0].
The whole article is a good read but the thing that feels most pertinent is the idea of dynamic zoning; instead of zoning an area for single family residential you'd essentially zone areas such that new construction rules would be:
- allowed_height = max(2, ceil(avg_area_height * 1.5))
- allowed_occupancy = ceil(avg_area_occupancy * 1.5)
And then without the need for zoning exemptions and political zoning fights, you let neighborhoods up zone themselves organically based on demand. Average building two stories? You can build a three story low rise. Average height three stories? You can build a five story replacement.
I think lowering the barriers to higher density in-fill would effectively accomplish what you're aiming for while side stepping some of the political issues you've foreseen with raising taxes on people until they're forced to leave their homes.
[0]: http://urbankchoze.blogspot.com/2014/05/how-to-make-urban-ho...
The whole article is a good read but the thing that feels most pertinent is the idea of dynamic zoning; instead of zoning an area for single family residential you'd essentially zone areas such that new construction rules would be:
- allowed_height = max(2, ceil(avg_area_height * 1.5))
- allowed_occupancy = ceil(avg_area_occupancy * 1.5)
And then without the need for zoning exemptions and political zoning fights, you let neighborhoods up zone themselves organically based on demand. Average building two stories? You can build a three story low rise. Average height three stories? You can build a five story replacement.
I think lowering the barriers to higher density in-fill would effectively accomplish what you're aiming for while side stepping some of the political issues you've foreseen with raising taxes on people until they're forced to leave their homes.
[0]: http://urbankchoze.blogspot.com/2014/05/how-to-make-urban-ho...
Here's an unexplored possibility: What if the places with room to build single-family homes are too far away from where people work? If the commute is too long, people might prefer to stay where they are.
It’s disappointing to see Zillow ignore the wage pressures that are reducing housing demand nationwide. Permits are decreasing per growth capita because that segment can no longer afford houses.
If housing demand was going down then housing prices would be going down. That's not what we see except in certain markets such as Detroit.
> If housing demand was going down then housing prices would be going down.
Assuming supply (in the economic sense) was constant; if supply was dropping, then prices could go up even with demand dropping.
Assuming supply (in the economic sense) was constant; if supply was dropping, then prices could go up even with demand dropping.
I don't know if you're expert, but I'm curious: What's the push/pull balance between destruction/abandonment of old homes vs. construction of new homes vs. constant habitation of the existing homes? I guess I'm asking is the effective amount of houses on the market stable, decreasing, or increasing? Also, relative to number of people looking for homes, what's the situation?
There are a lot of assumptions coded into this, not the least of which being “mortgage lenders only approve applicants with sufficient wages”, which has repeatedly been proven false over the years. Our housing market is not as rational as your statement implies.
Huh? The only thing I'm assuming is that sellers try to get the highest price possible and buyers try to get the lowest. If the existence of loans made buyers stop caring about the price of homes then it would be relevant but everybody I've seen homebuying still cares deeply about the price despite paying for it by loan.
Is the subset of people interested _at all_ in homebuying growing, stagnant, or shrinking?
I assert that homebuyers in the newest growth segment that can produce homebuyers (born in 1990 or later) are a steadily decreasing population, something Zillow fails at all to consider as a possible cause, even as NYT and WaPo publish articles showing that same generation as destitute compared to their parents at that age.
(FHA loans require two yesrs of continuous employment and of average wage earned throughout that time. Working for Instacart and Uber, as many of them do, will not likely qualify as either employment or sufficient average wage.)
I assert that homebuyers in the newest growth segment that can produce homebuyers (born in 1990 or later) are a steadily decreasing population, something Zillow fails at all to consider as a possible cause, even as NYT and WaPo publish articles showing that same generation as destitute compared to their parents at that age.
(FHA loans require two yesrs of continuous employment and of average wage earned throughout that time. Working for Instacart and Uber, as many of them do, will not likely qualify as either employment or sufficient average wage.)
That would seem possible on its face but if it were true I'd expect that having fewer people trying to buy homes would cause home prices to fall. And they very much have not been falling. The absolute number of houses in the US isn't shrinking so if prices are rising the number of people looking for houses is increasing or they're each willing to pay more money for the best houses or something like that.
Would your expectations hold true if the absolute number of people buying an additional home each year is increasing? Is it?
Inventory is up as well in many locations: https://www.calculatedriskblog.com/2018/08/lawler-few-hot-ma...
Signs are pointing toward a correction in the home price insanity, hopefully this will make things more affordable for everyone.
Signs are pointing toward a correction in the home price insanity, hopefully this will make things more affordable for everyone.
I admit that I don’t have a deep understanding of the real estate market; however, from what I’ve heard the (temporary) reduction of prices in 2008 was largely a unique situation. The reinflation of prices since then would suggest that gov’t doesn’t want to see prices go down significantly (for a variety of reasons) and so it is more likely that prices will simply plateau (and be made more affordable long term by inflating away home values without impact dollar amount to purchase). Thoughts?
I could buy that devaluation via inflation is coming, and maybe even that the government prefer it, but I’m skeptical that they have the ability to actually do that. Rather it’s more like the fed pushes its buttons and prays.
It's already happening, but the Fed isn't doing it. Here's what's happening:
1) Trump put tariffs on Chinese imports
2) The Chinese retaliated by devaluing their currency, to negate the effect of the tariffs
3) This had the net effect of strengthening the US dollar
That's why home prices are flat-ish in 2018.
1) Trump put tariffs on Chinese imports
2) The Chinese retaliated by devaluing their currency, to negate the effect of the tariffs
3) This had the net effect of strengthening the US dollar
That's why home prices are flat-ish in 2018.
How does a strong dollar affect home prices in the US? The exchange rate only matter when importing something, and you aren't importing anything when you buy a house in the US denominated in USD.
Besides, the RMB hasn't been devalued (as in the standard definition, which is creating a new currency and dropping a few zeros). It has risen from 6.29 RMB to 1 USD in April to 6.86 today, but that is +10% and the tariffs are +25%. But a year ago the RMB was 6.68, so the year-over-year increase is +2.6%.
Of the four assertions, only #1 is correct.
Besides, the RMB hasn't been devalued (as in the standard definition, which is creating a new currency and dropping a few zeros). It has risen from 6.29 RMB to 1 USD in April to 6.86 today, but that is +10% and the tariffs are +25%. But a year ago the RMB was 6.68, so the year-over-year increase is +2.6%.
Of the four assertions, only #1 is correct.
Labor prices must be set in USD. So during a strong dollar, the cost of labor relative becomes the dominant factor in the price of new houses, since material goods can be imported. This makes it difficult/impossible to reduce the cost of a new house by just building smaller houses, since the marginal cost in terms of labor is lower, i.e., installing 30 outlets in a house costs much less than twice the cost of installing 15; only the material costs are doubled.
This is ignoring the fact that a strong dollar makes real estate in the US a much, much more attractive investment. Not only do you get a decent appreciation in real value if you own in a desirable areas, but you also enjoy the relative appreciation in value relative to the currency you buy goods in. Chinese investors holding real estate in the coastal USA have done quite well in the past decade.
This is ignoring the fact that a strong dollar makes real estate in the US a much, much more attractive investment. Not only do you get a decent appreciation in real value if you own in a desirable areas, but you also enjoy the relative appreciation in value relative to the currency you buy goods in. Chinese investors holding real estate in the coastal USA have done quite well in the past decade.
I would like the author to show me on a map where they plan to fit an additional 173,000 single family homes in Washington D.C...
They’re referring to the entire metro area there.
national arboretum is around 400 acres. Rock Creek Park almost 2000 acres.
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tl;dr: homebuildling activity is still depressed from its 2008 high.
No mention of stricter mortgage requirements resulting from '08 crash? Lower demand = lower supply.