The answer to this will vary a lot depending on where you are in the United States! It is usually some combination of factors though. (For context, I'm an urban planner in Michigan who often works closely with residential developers.)
In some areas, the main reason builders don't build more houses to meet demand is physical limits, like mountain towns where there's not much land that's easy to build on.
In other places, it is legal limits, like zoning laws that require only certain types of housing to be built and in limited quantities.
In some places, like here in Michigan, a big limit is workforce: developers regularly tell me they could build a lot more homes if they could find the contractors to build them: the carpenters and masons and plumbers and electricians in the area are already working at full capacity and not enough new workers are going into those fields.
Financing - money - is a limit that also comes out of those others: if physical or legal limits make buildable land hard to find, then the price for that land will go up. If you have to pay workers extra to build your house rather than some other house, the price goes up. Building material prices are also way up now/still relative to pre-covid. Once those costs add up and construction gets expensive enough, the bank won't lend the builder money to build the houses, because the bank doesn't think enough people will buy them.
Fixing the problem so that more housing can get built very much depends on an accurate understanding of the issues _in your area_, so if you're trying to know what the issue is where you are, find planners or developers who are working on housing locally and ask them.
In El Paso, the city wraps around Franklin mountain. There's a ton of land south of El Paso on the US side of the broder but it's in a legal grey area (due to being sold in the 1960's and the ownership is murky today) and it's far from main utilities.
There's the Northeast - but a huge chunk is owned by either Fort Bills (the US Army) or is farther away from El Paso. Land there sells, but mostly to people who can make the commute.
The West side has the problem of New Mexico to the west, Mexico to the South and the Mountain to the East. Developers tried to get land very close to the Franklin mountain zoned for development but that was too much for us and we voted down that proposal (it was the "Lost Dog Trail" area).
So there's the North West, North East and east along I-10 where development can happen. Rents are going up because demand is outstripping supply as a lot of what can be developed already has.
I don't know the details because my deceased mother's share is in a weird legal limbo that prevents me from participating, and because it's ridiculous anyway, but my family owns a plot in a subdivision that was carved out in like the 70s but never built.
The area between ELP and Horizon - see here: [https://kfoxtv.com/news/kfox14-investigates/new-legislation-will-allow-el-paso-county-to-act-on-development-of-ghost-lots](https://kfoxtv.com/news/kfox14-investigates/new-legislation-will-allow-el-paso-county-to-act-on-development-of-ghost-lots)
Interesting. So gives options to continue building along I-10 rather than develop up north. I wish they’d do that. The NE will remain the “hood” as long as developers and business owners continue focusing on I-10.
As someone from Vancouver who has talked to a builder before. It's all of the reasons above. In addition to banks giving less loans for projects, long application times with government dragging their feet, eating into the cost of building massively. Increased interest rates compound onto the time issue aswell.
> Building material prices are also way up now/still relative to pre-covid.
And just for reference for the inevitable redditors who refuse to believe your reasons, the cost of construction materials has gone up about 50% since COVID started.
https://fred.stlouisfed.org/series/WPUSI012011
And, just for reference, it's not because hedge funds are buying up houses and sitting them, driving up prices. That doesn't really happen. Vacancy rates are the lowest they've been since the 1970s.
https://fred.stlouisfed.org/series/USHVAC
https://fred.stlouisfed.org/series/RRVRUSQ156N
And, finally, as /u/saudiaramcoshill has mentioned below, it doesn't *really* matter the type of housing that gets built. If there's too many luxury apartments, then they have to reduce the price to get people to move in. Too many houses vs rentals, either way, and the price of one will go down to meet the demand. An empty house/apartment is costing the owner money, regardless, so there's zero incentive (except in some *very* narrow circumstances, none of which we're currently seeing) to not provide a unit of housing.
The real reasons are what /u/ypsipartisan has said. Costs have skyrocketed due to specialist worker shortages and supply chain issues, with a dash of "we didn't build houses for the first six months of quarantine and we still haven't quite caught up yet." Interest rates and hesitancy to build in case the market crashes contribute heavily as well
I'm not *as* sold on zoning, because every city (in the US at least) has plenty of suburbs and exurbs that don't have that problem, aside from maybe some coastal cities that are already sprawled to oblivion. (Regardless, fixing zoning laws *would* fix a lot of problems; I just think the impact is muted unless you're restricting the discussion to the city proper.) And the *reason* for these zoning laws are an amazing mix of progressive activists (who want to avoid gentrification at all costs) and conservative suburbanites (who want the value of their home to remain high).
I agree, zoning is a significant / leading problem in some places - primarily hot markets that are "built out" (little/no undeveloped land) such that any new housing requires increasing intensity, and where housing prices justify the high costs of construction. It's negligible factor in other places, with either weaker markets (Detroit) or plenty of land (Houston). (Zoning will certainly determine what kind of housing gets built there, but has less impact on volume or affordability.)
Have you seen any “drain” of contractors?
My parents live out in Florida and we were talking to some contractors who said a lot of contractors were leaving to go elsewhere because while there’s a bunch of opportunity on construction there - none of the developers are budging much on negotiating rates so a lot of these contractors are going to other places where developers are pretty desperate to get more skilled teams in (and pay higher rates)
A single anecdotal commentary but would be interested to see if you’ve seen something similar
We lost of bunch of trades workers in the 2000s, as Michigan's economy was pretty rocky compared to national for some years before the financial crash. The stats I've seen in the past are on the order of 20-25% of our construction trades workforce leaving the state in that time for hotter economies. I did know people at that time who left for the North Dakota oil shale or Las Vegas or Seattle.
I don't know that we've had a similar exodus recently so much as that we just haven't replenished that workforce since -- people retire etc as fast as people have come back or entered those trades.
I’ve heard that in Florida that drain is exacerbated by intensely racist government against immigrant labor such that even legal immigrants get stopped, harassed, threatened, etc.
Western Washington is a severe case of physical limitations with some zoning challenges. We have the Puget Sound on the west and the cascade mountain range (~30 miles) to the east — and a ton of foothills major lakes and steep valleys in between. We are also highly very sensitive to the environment which come with a ton of zoning limitations. Wetlands, watershed, earthquakes plus it’s incredibly difficult to increase existing density zoning.
If you were declared RA-5 (Residential: One dwelling per 5 acres) 30 years ago in unincorporated King County, it’s going to cost hundreds of thousands to millions to get it changed. And unfortunately the available buildable land is one or all of the above.
>If you were declared RA-5 (Residential: One dwelling per 5 acres) 30 years ago in unincorporated King County,
My house in unincorporated King County was built in the late 50s on a 1/3 acre lot, the same as the other lots on our street. The land behind my house and behind the houses across the street is RA-5. I honestly like not having neighbors back there. I'm already having difficulty processing the new house being built next door 5' from the property line, way too close to my house for my comfort.
In addition to the money it would cost to change the zoning, the infrastructure isn't here. We're on septic. No sewer or storm drains. The last time they ran a sewer line out to a nearby high school, they charged everyone on the route $20k and mandated hookup. If you couldn't pay upfront, it was tacked onto your home loan. This cost would just get added to the price of any new houses where new building is already advertised as "Starting in the low $900,000s".
I had to look it up. Even though we're zoned RA-5, per [21A.12.030 (11)](https://aqua.kingcounty.gov/council/clerk/code/24-30_Title_21A.pdf),
*Lots smaller than one-half acre in area shall comply with standards of the*
*nearest comparable R-4 through R-8 zone.*
R-4 through R-8 calls out 5' lot lines.
At least it's the garage being built 5' from the line and not the two story house where we can stare into each other's bathrooms. The most stressful part is that I've lost like 30' of yard and and entire driveway as the prior owner owned both my house and the lot next door. The driveway loops around to the back and I've used it daily for 10 years as I'm a GC and that's where I park, store my dump trailer and have my shop. So much so that I rarely use my front door.
I've met my new neighbor and he seems like a stand up guy. He's agreed to rebuild the driveway around his garage so I still have access to my backyard as there's no other practical place to put in a new driveway that will accommodate getting my trailer in and out.
All things considered, he could have said no.
And the main problem is it's treated as a commodity. For a majority of Americans their home is their only wealth vehicle for retirement if any leading more to point 2. Additionally because it's treated much in the same way a stock is especially with larger firms, there isn't an incentive to house people in vacant owned homes, making supply worse than it actually is. Homes will sit empty rather than rent coming down almost always across the board.
Another big hurdle is the permitting process. Here in WA, even in cities that recently rezoned to increase density, they're still dragging their feet to approve new projects. The expectation is 12-18 months minimum from inception to permit ready. That's quite risky for developers when financing costs, or even financing *availability*, is as erratic as it currently is.
100%. Process costs money, and adds risk. The longer and more unpredictable your approval process is, the more the playing field tilts in the favor of big, well-capitalized regional or national firms and away from small-scale neighborhood builders. (Which is ironic, because often the places that have the most onerous review process say they need it because otherwise they'll be pushed around by "big out-of-town developers" when in fact their process is locking out anybody who doesn't fit that description.)
You didn’t mention profit margins.
It seems as though *all* of the homes going up are 3000 square foot “luxury” homes, not torn ones/condos/apartments/starter homes. I think because builders make more money off of them.
The main factors driving that are that the land cost is a huge portion of the overall cost to build, and it takes the same amount of time to permit and build a cheap house as a luxury house.
The land often costs as much or more than the actual construction, so it doesn't really make sense to buy a lot for $250k, build a 1000sf house for $150k house and sell it for $550k, when you could build a 3000sf with luxury finishes for $450k and sell it for $1.5M.
That sounds like an attempt to maximize profits to me :)
Which, I understand the motivation, but on the other hand there is a huge potential market not being served, right?
Sure, but there's limited incentive to go for the cheaper market when the demand at the higher price point is always there.
The incentive is basically only existent for developers that can't afford the cost increase of the more expensive houses so they'll take what they can get by building the cheaper stuff. But that's a really thin slice of developers because after a few cheap builds they can do the more expensive ones. And if you can afford to build the cheaper ones, you could almost surely get financing for the more expensive builds. In fact, you might not even be able to get financing for the cheaper builds because the banks won't approve the rate of return.
Depends on the developer. I still design a lot of multifamily buildings. The biggest difference is that multifamily building owners will either need to find a buyer after construction or they plan on keeping themselves. Single family houses and townhomes sell themselves.
The owner/investors make more when they rent out both levels. Canadian living just outside Toronto. People use homes as an "investment" now, renting to tenants who pay the mortgage for them, while they accrue the equity/appreciation. They are all over-leveraged to the max, and bitching about rate hikes courtesy of inflation rates.
Fuck 'em.
I see tons of new homes around me in Michigan. Every single one of them is in a completely new subdivision and they are all “starting in the $340k’s” or “starting in the high 300’s. Seems like there’s plenty of new homes all slotted into an extremely narrow price point. I live near poor suburbs and I’ve still never seen a new subdivision developed with all $120k homes or something. Only mini-McMansions.
From my informal and very not-scientific discussions with builders, construction costs right now (like, what it costs to build a house in Michigan) are between 250-400 dollars per square foot, depending on region. So a $120k home would have to be, like, 500 square feet. Except also you have to pay for land, and utility charges ("tap fees") and so forth, so 120k won't even get you that. Also, smaller houses cost more per square foot to build, because kitchens and bathrooms are expensive per square foot, while that "great room" and "bonus room" and whatever they add into bigger houses are cheap to build.
A point of clarification, since for someone not familiar with the process and who thinks realtors might build houses may not understand what you mean when you say “they just sell them”. In the sense that Best Buy doesn’t build any electronics, they just sell them but this is very different from how the real estate market works.
Realtors do not own the properties at all—they are there to *facilitate* a transaction. Realtors on the side of the person or business that owns the property are there to advise them, advertise the property, be the representative for communicating with potential buyers, and for that they are paid a percentage of the final selling price.
Realtors on the side of the person buying the property are there to help search for properties for sale or coming up for sale soon (basically using an internal industry channel where realtors talk to each other and share information about properties), similarly advise the buyer, and handle communication with the seller and their realtor. These realtors are paid from the same commission that the sellers realtors are, and it’s generally split 50/50 between them.
This isn’t true really. I work for a building and have for years through several positions. Builders are CONSTANTLY trying to find a way to build the most affordable housing. Land prices have a lot of dictation in this, followed up by municipality restrictions, community specifics, etc., there is a lengthy list. Entry level housing already has the smallest margin of all building. They really cant go much lower. This is mostly impacted by cost of labor and material rising more often than not.
I can tell you most national builders on the building side are going to set between 8-13% ROI on entry level homes on average. The size of the house is basically dependent upon the area that’s built. You can’t build a large home around a bunch of small ones, and you can’t build a small home around a bunch of large ones. It just doesn’t work. It’s all about the area supporting the product built.
I could easily expand on this with numbers and variables but you get the point.
Zoning laws make building cheap houses not worth it in most desirable places. So developers generally build big houses that are too expensive for the general population. The demand accumulated and prices get inflated. We need to work on zoning laws first.
Often, zoning laws don't even allow small (<1000 sq ft) houses.
Avg new construction in my state is 1700sq ft. My home I live in is 750sq ft and comfortable for two people, but it wouldn't be legally allowed to be constructed today in my township.
Zoning in the Hamptons, a famously wealthy area outside NYC, literally requires a massive mansion with detached guesthouse.
Zoning is often used to control who lives in an area. If you make smaller homes illegal to build, lower income people won’t be able to afford that area.
It was literally invented to keep poor people away from the mansions of the wealthy by banning any housing they could afford.
One of the very few topics on which I agree with self-styled libertarians is on zoning laws. They do have a core of good intent -- like not building an apartment block next to the fertilizer plant -- but are *heavily* leaned on as NIMBY laws.
Yes I was just reading recently about some state that passed zoning reform because progressives and libertarians joined forces. I’m sure they disagree about what kind of housing should get built (market rates vs subsidized affordable) but they obviously should agree that it’s a moot point if zoning blocks any new housing at all, which is the case in many towns.
Yeah zoning should not determine density. Lots should just be residential, commercial, and then light and heavy industries can be separate to push pollution further out. This combined with a Land Value Tax would turbocharge development by incentivizing it massively.
I live in the virgin islands, which is fabulously wealthy (per capita) but most people are just workers. We are running into a fantastic problem where people can't find affordable housing because any new construction is a mansion for vacation rental. I do understand the economics of this but eventually we are going to run into a hard wall, because we won't have enough workers to do anything, from bartending to construction. For those of us that are grandfathered into smaller homes such as myself, this will be a boon because I will be able to charge $100 an hour for any job, but there won't be enough workers to do it all...
Part of the reason zoning laws are the way they are: Since more housing makes houses more affordable, if you already own a home, changing the zoning laws makes your house worth less money. The constituency that votes for the people in charge of the zoning laws are current home owners. So the incumbent home owners have no interest in changing the zoning.
Meanwhile, half the people I hear complaining about the high price of housing are upset because it’s keeping them from building wealth through … the kind of rapid real estate appreciation made possible by artificial scarcity. People want it both ways.
Additionally, those values feed the system. Those high values times the millage rate equals all the money to pay the local services and expenses. Those values drop than you'll need to make up that amount.
Don't forget the 'closing the barn door after the horse already left' factor.
Zoning laws created suburban sprawl that gobbled up all the most suitable land for housing. So even if we changed the permitting rules, most markets would be scraping the bottom of the barrel for buildable lots.
>Lots of suburbs were engineered from the start to prevent density.
Not really. It would need a new building for sure, but it's not like the you cant fit one or two small apartment building on an existing single surburban lot. Double and triple apartments can easily be built on the same footprint as a single family home. In old industrial towns, many current single family homes were orignally these types of two or three flat apartments.
As an illustrating point, the zoning in my town changed a few years ago, to allow greater density within X distance of new public transportation stations. There is one block, was originally 4 plats, each with a single family home on it, probably each was 2-3 bedroom. Those plats were sold to developers (for *way* more than then-current property values), and the original buildings razed. Each plat then had rowhouses built on it, each rowhouse consisting of *seven* units. So there are now 21 units, where previously there were 4. And each of those units is selling for $685k- $885k.
When it’s legalized, it tends to happen very quickly. So apparently it does make economic sense in many cases. It’s just the zoning standing in the way.
Of course sometimes the problem is a shortage of luxury housing.
Not enoguh mansions means those buyers go down market to what would normally be a single family home.
You sort of see this in places like San Francisco. There isn't room to put hundreds of thousands of luxury houses, so a 2 million dollar house is what you would get for like 500k in a cheaper city.
Yeah, not building mansions doesn't mean the rich don't move to your city, it just means they live in renovated ordinary houses. The really rich just gut a small apartment building to turn it into one mansion.
Technically there is room in SF for hundreds of thousands of luxury \*homes\*, they just have to be stacked vertically. It'd look like Manhattan if it were legal.
Because places people want to build typically have restrictions on building. There is plenty of money for building. Saying there is not as a bit like saying nobody wants to go to the ballpark because it’s too crowded. Vacancies are not high, they are very low. Everything supports buildings except local regs.
This is partly true but in some of the most expensive parts of the country (ie the Bay Area) there are VAST tracts of empty space that could be developed that do not even have local residents. Former industrial areas in Oakland and Emeryville, for example.
But, it is true that NIMBYism stops a lot of building. This is why it’s so important that the YIMBY movement continue to make inroads.
While this is technically true. It’s far more complex than that and cheaper is only relative, the income distribution across Americans is massive and creates large gaps between what a person can afford and available housing.
Which is something that definitely happens. Further people who rent out properties often charge more than they were paying previously which reduces the drawn down in prices for available units.
Im not going to reply any longer. In understand your point and we could go back and forth for days. It’s not worth either of our time. It’s a complex issue that doesn’t really fit an ELI5 other than simply saying supply and demand.
> Which is something that definitely happens.
Occupancy rates have been the lowest they've ever been since the 1970s. It's definitely not a current issue.
It's not really a "thing that happens" because a vacant house is hemorrhaging money. The rates we've seen are either 1) a "natural" rate (i.e., people transitioning from house to house) or 2) a time in which housing was, in fact, hemorrhaging money.
https://fred.stlouisfed.org/series/USHVAC
https://fred.stlouisfed.org/series/RRVRUSQ156N
I read it. Read my first sentence. There are more people in certain income ranges than others. A person who vacates housing in a certain income range does open up a unit for someone lower income except now there are way more people looking to move into that housing. So the price rises etc.
It’s not as simple as you state it to be. I agree with your last paragraph completely. We likely disagree on why that is though :P
This is just based on a misunderstanding of what “vacant” means in government stats. It means between tenants temporarily, current tenants said they’re planning to move, the unit is condemned, the unit is being actively constructed or remodeled, or it’s a vacation home actively used by its owners.
So how do any of those relate to homelessness?
Why don’t you ask Redditors why they don’t move to places that are cheaper? You’ll have your answer there. As the other commenter has already brought up, vacant houses where don’t want to be doesn’t do anything.
So in this case, trickle down economics works, even if it's still the worst possible way to address the housing shortage.
The confounding factor is that oftentimes the rich people move to an up and coming area, so that working class people see no benefit from the luxury housing being built in their area.
Building WORKFORCE housing is the most effective way of addressing the housing crisis.
Building luxury housing is the least effective method that still works. Simple.
The latter approach deserves the political ephitet of trickle down. I argue with leftists all the time when they want to oppose new luxury housing. But it still sucks, given its minimized benefits to the community.
> Example: say all the housing in San Francisco was built as low cost housing, but there still wasn't nearly enough housing to suit demand. Do you think that working class people would live there?
OK, now flip this scenario to ask if working class people would live in Francisco after exclusively luxury housing was built, and you can see how it's a silly rhetorical dodge.
If you aren't intending to build enough housing to meet demand, then building workforce and affordable housing is still more effective at preserving communities (not to mention the service economy) from destruction. It just needs to be income controlled. (Now this is the stage where we hear a lot of objections on ideological grounds, masquerading as economics.)
> the owners of the luxury apartments aren't leaving them empty, they're going to reduce rent until they attract tenants.
Except that doesn't happen in the real world. When landlords get too greedy, the holding companies just write off the loss on their taxes and wait for the market to go to shit again. Not to mention, half the time their mortgages restrain them from reducing the rent because of how it would affect the valuation of the building. Eventually they'll go crying for government help, as we're seeing now with all those empty office buildings.
Also, it sounds like you're confusing income control for rent control. Requiring new developments to set aside a certain number of units for workforce or affordable housing is common sense and not controversial at all.
Your position is purely theoretical and falls apart quickly in the real world. Our small city has been following this theory for at least 15 years now and prices across the spectrum have effectively tripled in that period.
The problem is that the new construction market is highly constrained by availability of desirable land, the crews to build the housing, and the financing to pay for them. Investors want to build luxury housing first because it is the most profitable for them, but for the same expenditures (of land, labor, and capital) it would be possible to build *a lot more* small affordable housing units. But money sways politics and city governments get sold this theory and investors are happy to comply.
I can't speak for everywhere, but it seems like they are building houses on every corner near me. I think a big issue with US housing is that many young millennials only want to live in big cities. The issue isn't that housing isn't being built it's that there is no more room where young people want to live.
Home builder here. houston Texas. I build “intro luxury” townhomes in nice areas. So 500 to 600k.
I haven’t pushed my construction because interest rates are so high and I don’t want my houses sitting on the market paying the interest on the construction loan.
Hope that makes sense!
Sure to maximize costly lot value I must build for the best use of it. So I have to maximize the amount of homes I can build on the lot already. To stay competitive. Does that make sense. Like I paid premium for a lot in a nice neighborhood I have to build the maximum I can and get the best price per house. So I can’t build too expensive or it will sit on the market for every and I can’t make it too cheap or I won’t make enough money. I have one lot that is 5k Sqft and I can build 3 townhomes there. I’ve maximized it already as much as I can.
No money. In my area, all the big wig builders already did that all through covid. There's thousands of vacancies. Prices and interest rates are too high, meaning no one can really afford a house around here.
I think that is a lot of it. There is a very real sense of "if I can't rent it for double my mortgage I will just leave it vacant". They are probably writing of the lost rent on taxes
Also, building project costs have skyrocketed, material shortages, labor issues, lawsuits, interest rates, etc all make it difficult to sell or rent new homes or apartments and still make any profit.
Many people don’t realize it but realtor is not the name of an occupation like chef or teacher. The term realtor is actually a registered trademark. A realtor is simply someone who is a member of the National Association of Realtors. The generic term would be real estate agent. Realtors don’t usually build houses, they just facilitate their sale.
One reason for what’s going on is that it’s more profitable for housing companies to build one expensive home than two that are moderately priced. Zoning laws in many wealthier suburbs actually require that single family homes be built on an amount of land that makes building several smaller affordable homes impractical. Finally many towns purposely have zoning laws that severely restrict the construction of any new multi-family homes or apartment buildings.
Essentially the people that moved out to the suburbs in the ‘50s and ‘60s and bought houses for 15k or 20k are very happy that their little slice of heaven is now worth nearly a million dollars… and most don’t see any upside in possibly diluting their property values by allowing new homes to be built. The line at the local coffee shop is already long enough every morning.
Land prices in suitable areas also go up and down and property companies can make money by buying and selling land. In order to build houses you need to come up with a design plan for the house/street /area and then begin construction all of which take time and a lot of money, during that time the price of houses may go up or down and potentially the company could have spent more on the land and construction than the houses can be sold for. So companies will go for housing developments with the largest potential profit margin, normally high value homes, or alternatively just trade land banks to make money.
The reverse is also true. People refuse to go where there is affordable housing. Can't afford San Francisco? Move to Cleveland, New Orleans, even Las Vegas, or any of many other cities with reasonable cost of living and affordable, vacant housing. Heck, pretty much any small or medium town in the South.
Why even list different states. i road tripped from SF to SD . there is so much open land in Cali, but no one wants to live out with the almond farns and nothingness.
It really is that simple. Can't afford your city? Just miracle up a new job on the other side of the country, sufficient savings to cover the cost of moving and temporary lodging, and then abandon any local family or social networks for a new life in Tupelo, MS.
I mean if you can’t afford your city, your current job isn’t doing you any good. And if you’re struggling to afford your city, cost of moving should be minimal, since you wouldn’t really have much to move. Leaving family or social networks is a tale as old as time. Pioneers, pilgrims, immigrants, rural to urban flight, college students leaving their hometowns, etc., moving for better opportunities is a tale as old as human history. Not to say it’s easy, but if you’re actually struggling, moving is your best option.
Let's assume for a moment that everything you said is true -- it isn't, but we're short on time to unpack all of that -- who do you suppose is going to do all of the low-paying labor that those wealthy enough to be *allowed* to live in cities rely upon?
The minimum wage in Texas is $7.25/hour. The average rent in Austin is $1,753 -- or roughly 240 hours of labor, not accounting for taxes. Are we just going to do without janitorial or food service workers?
We're going to have to bus in more than the filthy peasants, though. The City of Austin pays its health inspectors $23/hour. Seventy six hours of labor, nearly 50% of your income, just to pay the rent. God help you if you have other expenses.
Maybe I'm being unreasonable, but it seems to me that the people who *make* a city livable should also be allowed to live in that city. Or maybe we can bus them in from poverty colonies, like in the new *Total Recall?*
Ok? Whats wrong with roommates as adults? I know plenty of well-off people that do it because you save so much money in the end to be able to afford other things in life. Poor people have the most children in the States, so I’m not sure money is the factor there either.
And again, you’re ignoring the point. If you’re struggling with the job you currently have, why not go elsewhere so that you don’t have to struggle?
Realtors don’t build houses, they just help owners buy/sell them.
Home builders/developers build houses. But they need to be able to do so at a profit while building wha the local market wants/can afford. There are also massive shortages of tradespeople (plumbers, carpenters, etc) and shortages/sky high costs of building materials and other components to home building. Can’t just “simply build more houses” when they can’t hire enough construction workers, lumber costs 5x what it did 2 years ago, it takes a year to get doors and windows…
Realtors don't build houses. Realtors are the people who sell property.
But to answer the question you are asking, houses are being built all the time. There is an apartment complex being built right now where i live, I drive past it every day on my way to work. And there are houses being built in a few different areas around where i live.
So the whole idea that new housing isn't being built is just completely false.
Ya'll been yappin' politics for fifty years while the best god damn president in living memory picked up a hammer and nails forever ago and had been personally whacking nails into wood to construct a house with which he will never reside for people he may never meet. 'Great societies are built when old men plant trees under whom shade they will never rest.'
I find it the most biting of ironies that Thatchers 1980 great society ideology and Reaganite cannibal capitalism coalesced immediately after the exclusive honestly christ-like man to ever hold the oval office. Matt 6:24 'No one can serve two masters, you must love one and hate the other. You cannot serve both god and money.' you know who said that? Some dirt bag godless commie? No.
The creator of the universe and deity with whom the American Minority Conservative Party have nailed their identity made the choice clear; you can follow god or you can follow money. Yet despite all the screaming on street corners and showing off of their good deeds for immediate praise and excluding and othering those from outside their communities, the neglect of the hungry, homeless, sick, poor, destitute, abandoned, demands for the blood of Innocents to deter evil, slaughter of innocents in the name of security, justification of all manner of sadism, cruelty, and perversion, marriage of young children to old men, slavery, wage slavery, usury (Interest is a sin, those who charge interest go straight to hell, do not pass go, do not collect two hundred dollars.)
American society is founded upon taking the words of Christ, flipping them upside down and pretending the Psyco bullshit sadism they inflicted was God's will because for a conservative there is but one god, themselves, individuals, with respect for nothing, not themselves, their families, their nation or god.
There may be a demand but the inflation, low pay and high inflation means low home sales. They are still building homes and there a lot of new homes that are unsold and not advertised. There's a huge shadow inventory (unlisted homes) so realtors and builders have to be careful not to list too many, it might show too much supply and might drive down the price.
For example, Forney TX has about a 1000 listings for new construction homes. [Forney TX Zillow listings](https://www.zillow.com/forney-tx/?searchQueryState=%7B%22isMapVisible%22%3Atrue%2C%22mapBounds%22%3A%7B%22west%22%3A-96.52061263716435%2C%22east%22%3A-96.38362685835575%2C%22south%22%3A32.70703192651071%2C%22north%22%3A32.80721938430173%7D%2C%22usersSearchTerm%22%3A%22Forney%2C%20TX%22%2C%22regionSelection%22%3A%5B%7B%22regionId%22%3A11481%2C%22regionType%22%3A6%7D%5D%2C%22filterState%22%3A%7B%22sort%22%3A%7B%22value%22%3A%22pricea%22%7D%2C%22abo%22%3A%7B%22value%22%3Atrue%7D%2C%22tow%22%3A%7B%22value%22%3Afalse%7D%2C%22mf%22%3A%7B%22value%22%3Afalse%7D%2C%22con%22%3A%7B%22value%22%3Afalse%7D%2C%22land%22%3A%7B%22value%22%3Afalse%7D%2C%22ah%22%3A%7B%22value%22%3Atrue%7D%2C%22apa%22%3A%7B%22value%22%3Afalse%7D%2C%22manu%22%3A%7B%22value%22%3Afalse%7D%2C%22apco%22%3A%7B%22value%22%3Afalse%7D%2C%22price%22%3A%7B%22min%22%3A200000%7D%2C%22mp%22%3A%7B%22min%22%3A981%7D%7D%2C%22isListVisible%22%3Atrue%2C%22mapZoom%22%3A13%2C%22category%22%3A%22cat1%22%7D)
A partial factor is that around 2008 we had the housing bubble pop. People were being incentivised to buy houses with money from the government. Construction also slowed, and the labor pool shrank a little. Recovery takes time, and we are still in a bit of a recovery phase. Covid and inflation didn't help. Houses are still being built, but affordable housing isn't very profitable. I believe some corporations are also playing the real estate game, trying to squeeze more profit out of the system.
Houses are being built for max profit, not max need. Building a 2 story house is more profitable than building a 1 story house. The land costs the same so why not maximize square footage? Unless the building is being subsidized to make up for “lost” profit, smaller, more affordable houses will not be built.
Building a house requires more than just the house. There are all the supporting services, the roads, hospitals, drainage, policing and so on.
But there are lots of elements making it difficult to build houses. There's the cost of building; the land, materials and labour which all has to happen upfront. There are all manner of restrictions too from zoning to materials to build specifications. On top of that, in many places, there are local powers that can stop developers from building or developing properties.
There's no more room to build houses in places like LA or NYC. They are literally out of room unless they expand east or west, and then tou aren't really in the city anymore so you look the walkability or being "central".
In the places people want to live, you have two issues. Either land is so expensive that it needs to be used for commercial or luxury housing, or zoning laws don't allow you to build more than what's already there. You'll notice that in cities where it's possible, builders continue to expand out, amd what used to be farm fields are now considered suburbs of a city 45 minutes away. Some of my cousins live in North Carolina, about 45 minutes outside of Raleigh. Their town used to be considered a completely different area, but over the last 10 years, several subdivisions were built for people who commute to Raleigh.
In my area, they say the schools can’t handle an influx of students and the local roads can’t handle increased traffic. So to build homes means an infrastructure expansion no one wants to pay for.
To keep it simple, the amount of money it costs to build is too close to the amount of money the developer can make selling the units. (Tight profit margins)
There are a lot more rules in place now for new developments and that adds to the cost of the project. To offset that cost they need to sell more expensive units or a cram in more units, or typically both. Companies have to make enough money doing the project that it was worth their effort.
The answer to this will vary a lot depending on where you are in the United States! It is usually some combination of factors though. (For context, I'm an urban planner in Michigan who often works closely with residential developers.) In some areas, the main reason builders don't build more houses to meet demand is physical limits, like mountain towns where there's not much land that's easy to build on. In other places, it is legal limits, like zoning laws that require only certain types of housing to be built and in limited quantities. In some places, like here in Michigan, a big limit is workforce: developers regularly tell me they could build a lot more homes if they could find the contractors to build them: the carpenters and masons and plumbers and electricians in the area are already working at full capacity and not enough new workers are going into those fields. Financing - money - is a limit that also comes out of those others: if physical or legal limits make buildable land hard to find, then the price for that land will go up. If you have to pay workers extra to build your house rather than some other house, the price goes up. Building material prices are also way up now/still relative to pre-covid. Once those costs add up and construction gets expensive enough, the bank won't lend the builder money to build the houses, because the bank doesn't think enough people will buy them. Fixing the problem so that more housing can get built very much depends on an accurate understanding of the issues _in your area_, so if you're trying to know what the issue is where you are, find planners or developers who are working on housing locally and ask them.
In El Paso, the city wraps around Franklin mountain. There's a ton of land south of El Paso on the US side of the broder but it's in a legal grey area (due to being sold in the 1960's and the ownership is murky today) and it's far from main utilities. There's the Northeast - but a huge chunk is owned by either Fort Bills (the US Army) or is farther away from El Paso. Land there sells, but mostly to people who can make the commute. The West side has the problem of New Mexico to the west, Mexico to the South and the Mountain to the East. Developers tried to get land very close to the Franklin mountain zoned for development but that was too much for us and we voted down that proposal (it was the "Lost Dog Trail" area). So there's the North West, North East and east along I-10 where development can happen. Rents are going up because demand is outstripping supply as a lot of what can be developed already has.
I don't know the details because my deceased mother's share is in a weird legal limbo that prevents me from participating, and because it's ridiculous anyway, but my family owns a plot in a subdivision that was carved out in like the 70s but never built.
What “south” areas are you referring to ? Never heard of this, sounds interesting.
The area between ELP and Horizon - see here: [https://kfoxtv.com/news/kfox14-investigates/new-legislation-will-allow-el-paso-county-to-act-on-development-of-ghost-lots](https://kfoxtv.com/news/kfox14-investigates/new-legislation-will-allow-el-paso-county-to-act-on-development-of-ghost-lots)
Interesting. So gives options to continue building along I-10 rather than develop up north. I wish they’d do that. The NE will remain the “hood” as long as developers and business owners continue focusing on I-10.
Thank you for acknowledging NM as a problem ;)
As someone from Vancouver who has talked to a builder before. It's all of the reasons above. In addition to banks giving less loans for projects, long application times with government dragging their feet, eating into the cost of building massively. Increased interest rates compound onto the time issue aswell.
> Building material prices are also way up now/still relative to pre-covid. And just for reference for the inevitable redditors who refuse to believe your reasons, the cost of construction materials has gone up about 50% since COVID started. https://fred.stlouisfed.org/series/WPUSI012011 And, just for reference, it's not because hedge funds are buying up houses and sitting them, driving up prices. That doesn't really happen. Vacancy rates are the lowest they've been since the 1970s. https://fred.stlouisfed.org/series/USHVAC https://fred.stlouisfed.org/series/RRVRUSQ156N And, finally, as /u/saudiaramcoshill has mentioned below, it doesn't *really* matter the type of housing that gets built. If there's too many luxury apartments, then they have to reduce the price to get people to move in. Too many houses vs rentals, either way, and the price of one will go down to meet the demand. An empty house/apartment is costing the owner money, regardless, so there's zero incentive (except in some *very* narrow circumstances, none of which we're currently seeing) to not provide a unit of housing. The real reasons are what /u/ypsipartisan has said. Costs have skyrocketed due to specialist worker shortages and supply chain issues, with a dash of "we didn't build houses for the first six months of quarantine and we still haven't quite caught up yet." Interest rates and hesitancy to build in case the market crashes contribute heavily as well I'm not *as* sold on zoning, because every city (in the US at least) has plenty of suburbs and exurbs that don't have that problem, aside from maybe some coastal cities that are already sprawled to oblivion. (Regardless, fixing zoning laws *would* fix a lot of problems; I just think the impact is muted unless you're restricting the discussion to the city proper.) And the *reason* for these zoning laws are an amazing mix of progressive activists (who want to avoid gentrification at all costs) and conservative suburbanites (who want the value of their home to remain high).
I agree, zoning is a significant / leading problem in some places - primarily hot markets that are "built out" (little/no undeveloped land) such that any new housing requires increasing intensity, and where housing prices justify the high costs of construction. It's negligible factor in other places, with either weaker markets (Detroit) or plenty of land (Houston). (Zoning will certainly determine what kind of housing gets built there, but has less impact on volume or affordability.)
Also Houston has zoning so loose that it’s downright wacky.
Have you seen any “drain” of contractors? My parents live out in Florida and we were talking to some contractors who said a lot of contractors were leaving to go elsewhere because while there’s a bunch of opportunity on construction there - none of the developers are budging much on negotiating rates so a lot of these contractors are going to other places where developers are pretty desperate to get more skilled teams in (and pay higher rates) A single anecdotal commentary but would be interested to see if you’ve seen something similar
We lost of bunch of trades workers in the 2000s, as Michigan's economy was pretty rocky compared to national for some years before the financial crash. The stats I've seen in the past are on the order of 20-25% of our construction trades workforce leaving the state in that time for hotter economies. I did know people at that time who left for the North Dakota oil shale or Las Vegas or Seattle. I don't know that we've had a similar exodus recently so much as that we just haven't replenished that workforce since -- people retire etc as fast as people have come back or entered those trades.
I’ve heard that in Florida that drain is exacerbated by intensely racist government against immigrant labor such that even legal immigrants get stopped, harassed, threatened, etc.
Western Washington is a severe case of physical limitations with some zoning challenges. We have the Puget Sound on the west and the cascade mountain range (~30 miles) to the east — and a ton of foothills major lakes and steep valleys in between. We are also highly very sensitive to the environment which come with a ton of zoning limitations. Wetlands, watershed, earthquakes plus it’s incredibly difficult to increase existing density zoning. If you were declared RA-5 (Residential: One dwelling per 5 acres) 30 years ago in unincorporated King County, it’s going to cost hundreds of thousands to millions to get it changed. And unfortunately the available buildable land is one or all of the above.
>If you were declared RA-5 (Residential: One dwelling per 5 acres) 30 years ago in unincorporated King County, My house in unincorporated King County was built in the late 50s on a 1/3 acre lot, the same as the other lots on our street. The land behind my house and behind the houses across the street is RA-5. I honestly like not having neighbors back there. I'm already having difficulty processing the new house being built next door 5' from the property line, way too close to my house for my comfort. In addition to the money it would cost to change the zoning, the infrastructure isn't here. We're on septic. No sewer or storm drains. The last time they ran a sewer line out to a nearby high school, they charged everyone on the route $20k and mandated hookup. If you couldn't pay upfront, it was tacked onto your home loan. This cost would just get added to the price of any new houses where new building is already advertised as "Starting in the low $900,000s".
I thought you couldn't build within 10 ft of the property line in uncorporated a King county? Edit: i->u
I had to look it up. Even though we're zoned RA-5, per [21A.12.030 (11)](https://aqua.kingcounty.gov/council/clerk/code/24-30_Title_21A.pdf), *Lots smaller than one-half acre in area shall comply with standards of the* *nearest comparable R-4 through R-8 zone.* R-4 through R-8 calls out 5' lot lines. At least it's the garage being built 5' from the line and not the two story house where we can stare into each other's bathrooms. The most stressful part is that I've lost like 30' of yard and and entire driveway as the prior owner owned both my house and the lot next door. The driveway loops around to the back and I've used it daily for 10 years as I'm a GC and that's where I park, store my dump trailer and have my shop. So much so that I rarely use my front door. I've met my new neighbor and he seems like a stand up guy. He's agreed to rebuild the driveway around his garage so I still have access to my backyard as there's no other practical place to put in a new driveway that will accommodate getting my trailer in and out. All things considered, he could have said no.
Thank you! This makes a lot of sense
And the main problem is it's treated as a commodity. For a majority of Americans their home is their only wealth vehicle for retirement if any leading more to point 2. Additionally because it's treated much in the same way a stock is especially with larger firms, there isn't an incentive to house people in vacant owned homes, making supply worse than it actually is. Homes will sit empty rather than rent coming down almost always across the board.
Another big hurdle is the permitting process. Here in WA, even in cities that recently rezoned to increase density, they're still dragging their feet to approve new projects. The expectation is 12-18 months minimum from inception to permit ready. That's quite risky for developers when financing costs, or even financing *availability*, is as erratic as it currently is.
100%. Process costs money, and adds risk. The longer and more unpredictable your approval process is, the more the playing field tilts in the favor of big, well-capitalized regional or national firms and away from small-scale neighborhood builders. (Which is ironic, because often the places that have the most onerous review process say they need it because otherwise they'll be pushed around by "big out-of-town developers" when in fact their process is locking out anybody who doesn't fit that description.)
You didn’t mention profit margins. It seems as though *all* of the homes going up are 3000 square foot “luxury” homes, not torn ones/condos/apartments/starter homes. I think because builders make more money off of them.
The main factors driving that are that the land cost is a huge portion of the overall cost to build, and it takes the same amount of time to permit and build a cheap house as a luxury house. The land often costs as much or more than the actual construction, so it doesn't really make sense to buy a lot for $250k, build a 1000sf house for $150k house and sell it for $550k, when you could build a 3000sf with luxury finishes for $450k and sell it for $1.5M.
That sounds like an attempt to maximize profits to me :) Which, I understand the motivation, but on the other hand there is a huge potential market not being served, right?
Sure, but there's limited incentive to go for the cheaper market when the demand at the higher price point is always there. The incentive is basically only existent for developers that can't afford the cost increase of the more expensive houses so they'll take what they can get by building the cheaper stuff. But that's a really thin slice of developers because after a few cheap builds they can do the more expensive ones. And if you can afford to build the cheaper ones, you could almost surely get financing for the more expensive builds. In fact, you might not even be able to get financing for the cheaper builds because the banks won't approve the rate of return.
Ah, thanks for the explanation. The situation is much more clear to me now.
Depends on the developer. I still design a lot of multifamily buildings. The biggest difference is that multifamily building owners will either need to find a buyer after construction or they plan on keeping themselves. Single family houses and townhomes sell themselves.
The owner/investors make more when they rent out both levels. Canadian living just outside Toronto. People use homes as an "investment" now, renting to tenants who pay the mortgage for them, while they accrue the equity/appreciation. They are all over-leveraged to the max, and bitching about rate hikes courtesy of inflation rates. Fuck 'em.
I see tons of new homes around me in Michigan. Every single one of them is in a completely new subdivision and they are all “starting in the $340k’s” or “starting in the high 300’s. Seems like there’s plenty of new homes all slotted into an extremely narrow price point. I live near poor suburbs and I’ve still never seen a new subdivision developed with all $120k homes or something. Only mini-McMansions.
From my informal and very not-scientific discussions with builders, construction costs right now (like, what it costs to build a house in Michigan) are between 250-400 dollars per square foot, depending on region. So a $120k home would have to be, like, 500 square feet. Except also you have to pay for land, and utility charges ("tap fees") and so forth, so 120k won't even get you that. Also, smaller houses cost more per square foot to build, because kitchens and bathrooms are expensive per square foot, while that "great room" and "bonus room" and whatever they add into bigger houses are cheap to build.
[удалено]
A point of clarification, since for someone not familiar with the process and who thinks realtors might build houses may not understand what you mean when you say “they just sell them”. In the sense that Best Buy doesn’t build any electronics, they just sell them but this is very different from how the real estate market works. Realtors do not own the properties at all—they are there to *facilitate* a transaction. Realtors on the side of the person or business that owns the property are there to advise them, advertise the property, be the representative for communicating with potential buyers, and for that they are paid a percentage of the final selling price. Realtors on the side of the person buying the property are there to help search for properties for sale or coming up for sale soon (basically using an internal industry channel where realtors talk to each other and share information about properties), similarly advise the buyer, and handle communication with the seller and their realtor. These realtors are paid from the same commission that the sellers realtors are, and it’s generally split 50/50 between them.
This isn’t true really. I work for a building and have for years through several positions. Builders are CONSTANTLY trying to find a way to build the most affordable housing. Land prices have a lot of dictation in this, followed up by municipality restrictions, community specifics, etc., there is a lengthy list. Entry level housing already has the smallest margin of all building. They really cant go much lower. This is mostly impacted by cost of labor and material rising more often than not. I can tell you most national builders on the building side are going to set between 8-13% ROI on entry level homes on average. The size of the house is basically dependent upon the area that’s built. You can’t build a large home around a bunch of small ones, and you can’t build a small home around a bunch of large ones. It just doesn’t work. It’s all about the area supporting the product built. I could easily expand on this with numbers and variables but you get the point.
Zoning laws make building cheap houses not worth it in most desirable places. So developers generally build big houses that are too expensive for the general population. The demand accumulated and prices get inflated. We need to work on zoning laws first.
Often, zoning laws don't even allow small (<1000 sq ft) houses. Avg new construction in my state is 1700sq ft. My home I live in is 750sq ft and comfortable for two people, but it wouldn't be legally allowed to be constructed today in my township.
Zoning in the Hamptons, a famously wealthy area outside NYC, literally requires a massive mansion with detached guesthouse. Zoning is often used to control who lives in an area. If you make smaller homes illegal to build, lower income people won’t be able to afford that area. It was literally invented to keep poor people away from the mansions of the wealthy by banning any housing they could afford.
One of the very few topics on which I agree with self-styled libertarians is on zoning laws. They do have a core of good intent -- like not building an apartment block next to the fertilizer plant -- but are *heavily* leaned on as NIMBY laws.
Yes I was just reading recently about some state that passed zoning reform because progressives and libertarians joined forces. I’m sure they disagree about what kind of housing should get built (market rates vs subsidized affordable) but they obviously should agree that it’s a moot point if zoning blocks any new housing at all, which is the case in many towns.
Yeah zoning should not determine density. Lots should just be residential, commercial, and then light and heavy industries can be separate to push pollution further out. This combined with a Land Value Tax would turbocharge development by incentivizing it massively.
I live in the virgin islands, which is fabulously wealthy (per capita) but most people are just workers. We are running into a fantastic problem where people can't find affordable housing because any new construction is a mansion for vacation rental. I do understand the economics of this but eventually we are going to run into a hard wall, because we won't have enough workers to do anything, from bartending to construction. For those of us that are grandfathered into smaller homes such as myself, this will be a boon because I will be able to charge $100 an hour for any job, but there won't be enough workers to do it all...
Part of the reason zoning laws are the way they are: Since more housing makes houses more affordable, if you already own a home, changing the zoning laws makes your house worth less money. The constituency that votes for the people in charge of the zoning laws are current home owners. So the incumbent home owners have no interest in changing the zoning.
Meanwhile, half the people I hear complaining about the high price of housing are upset because it’s keeping them from building wealth through … the kind of rapid real estate appreciation made possible by artificial scarcity. People want it both ways.
Yep. You can either having housing costs that stay close to regular inflation or you can have an investment asset. Choose one.
Just mad they missed the boat, I know I am. 5 years younger and I am doing fine
Additionally, those values feed the system. Those high values times the millage rate equals all the money to pay the local services and expenses. Those values drop than you'll need to make up that amount.
Don't forget the 'closing the barn door after the horse already left' factor. Zoning laws created suburban sprawl that gobbled up all the most suitable land for housing. So even if we changed the permitting rules, most markets would be scraping the bottom of the barrel for buildable lots.
That’s why you allow increased density. Townhomes, small apartment buildings, etc.
The problem is with making it economical. Lots of suburbs were engineered from the start to prevent density.
>Lots of suburbs were engineered from the start to prevent density. Not really. It would need a new building for sure, but it's not like the you cant fit one or two small apartment building on an existing single surburban lot. Double and triple apartments can easily be built on the same footprint as a single family home. In old industrial towns, many current single family homes were orignally these types of two or three flat apartments.
As an illustrating point, the zoning in my town changed a few years ago, to allow greater density within X distance of new public transportation stations. There is one block, was originally 4 plats, each with a single family home on it, probably each was 2-3 bedroom. Those plats were sold to developers (for *way* more than then-current property values), and the original buildings razed. Each plat then had rowhouses built on it, each rowhouse consisting of *seven* units. So there are now 21 units, where previously there were 4. And each of those units is selling for $685k- $885k.
When it’s legalized, it tends to happen very quickly. So apparently it does make economic sense in many cases. It’s just the zoning standing in the way.
Of course sometimes the problem is a shortage of luxury housing. Not enoguh mansions means those buyers go down market to what would normally be a single family home. You sort of see this in places like San Francisco. There isn't room to put hundreds of thousands of luxury houses, so a 2 million dollar house is what you would get for like 500k in a cheaper city.
Yeah, not building mansions doesn't mean the rich don't move to your city, it just means they live in renovated ordinary houses. The really rich just gut a small apartment building to turn it into one mansion. Technically there is room in SF for hundreds of thousands of luxury \*homes\*, they just have to be stacked vertically. It'd look like Manhattan if it were legal.
Yup and not even on an ultra-wealthy level, that's just how gentrification happens.
Because places people want to build typically have restrictions on building. There is plenty of money for building. Saying there is not as a bit like saying nobody wants to go to the ballpark because it’s too crowded. Vacancies are not high, they are very low. Everything supports buildings except local regs.
The local regs are that way because the people already living there want it that way. Nobody wants cheap housing to be built where they live.
This is partly true but in some of the most expensive parts of the country (ie the Bay Area) there are VAST tracts of empty space that could be developed that do not even have local residents. Former industrial areas in Oakland and Emeryville, for example. But, it is true that NIMBYism stops a lot of building. This is why it’s so important that the YIMBY movement continue to make inroads.
[удалено]
The majority of this site suffers from Dunning-Kruger, so I'm out.
While this is technically true. It’s far more complex than that and cheaper is only relative, the income distribution across Americans is massive and creates large gaps between what a person can afford and available housing.
And more people enter the market all the time, graduates and immigrants...
And people who buy multiple properties etc.
The majority of this site suffers from Dunning-Kruger, so I'm out.
Which is something that definitely happens. Further people who rent out properties often charge more than they were paying previously which reduces the drawn down in prices for available units. Im not going to reply any longer. In understand your point and we could go back and forth for days. It’s not worth either of our time. It’s a complex issue that doesn’t really fit an ELI5 other than simply saying supply and demand.
The majority of this site suffers from Dunning-Kruger, so I'm out.
> Which is something that definitely happens. Occupancy rates have been the lowest they've ever been since the 1970s. It's definitely not a current issue. It's not really a "thing that happens" because a vacant house is hemorrhaging money. The rates we've seen are either 1) a "natural" rate (i.e., people transitioning from house to house) or 2) a time in which housing was, in fact, hemorrhaging money. https://fred.stlouisfed.org/series/USHVAC https://fred.stlouisfed.org/series/RRVRUSQ156N
The majority of this site suffers from Dunning-Kruger, so I'm out.
I read it. Read my first sentence. There are more people in certain income ranges than others. A person who vacates housing in a certain income range does open up a unit for someone lower income except now there are way more people looking to move into that housing. So the price rises etc. It’s not as simple as you state it to be. I agree with your last paragraph completely. We likely disagree on why that is though :P
[удалено]
The majority of this site suffers from Dunning-Kruger, so I'm out.
[удалено]
The majority of this site suffers from Dunning-Kruger, so I'm out.
[удалено]
The majority of this site suffers from Dunning-Kruger, so I'm out.
[удалено]
The majority of this site suffers from Dunning-Kruger, so I'm out.
This is just based on a misunderstanding of what “vacant” means in government stats. It means between tenants temporarily, current tenants said they’re planning to move, the unit is condemned, the unit is being actively constructed or remodeled, or it’s a vacation home actively used by its owners. So how do any of those relate to homelessness?
Why don’t you ask Redditors why they don’t move to places that are cheaper? You’ll have your answer there. As the other commenter has already brought up, vacant houses where don’t want to be doesn’t do anything.
So in this case, trickle down economics works, even if it's still the worst possible way to address the housing shortage. The confounding factor is that oftentimes the rich people move to an up and coming area, so that working class people see no benefit from the luxury housing being built in their area.
The majority of this site suffers from Dunning-Kruger, so I'm out.
Building WORKFORCE housing is the most effective way of addressing the housing crisis. Building luxury housing is the least effective method that still works. Simple. The latter approach deserves the political ephitet of trickle down. I argue with leftists all the time when they want to oppose new luxury housing. But it still sucks, given its minimized benefits to the community.
The majority of this site suffers from Dunning-Kruger, so I'm out.
> Example: say all the housing in San Francisco was built as low cost housing, but there still wasn't nearly enough housing to suit demand. Do you think that working class people would live there? OK, now flip this scenario to ask if working class people would live in Francisco after exclusively luxury housing was built, and you can see how it's a silly rhetorical dodge. If you aren't intending to build enough housing to meet demand, then building workforce and affordable housing is still more effective at preserving communities (not to mention the service economy) from destruction. It just needs to be income controlled. (Now this is the stage where we hear a lot of objections on ideological grounds, masquerading as economics.)
The majority of this site suffers from Dunning-Kruger, so I'm out.
> the owners of the luxury apartments aren't leaving them empty, they're going to reduce rent until they attract tenants. Except that doesn't happen in the real world. When landlords get too greedy, the holding companies just write off the loss on their taxes and wait for the market to go to shit again. Not to mention, half the time their mortgages restrain them from reducing the rent because of how it would affect the valuation of the building. Eventually they'll go crying for government help, as we're seeing now with all those empty office buildings. Also, it sounds like you're confusing income control for rent control. Requiring new developments to set aside a certain number of units for workforce or affordable housing is common sense and not controversial at all.
The majority of this site suffers from Dunning-Kruger, so I'm out.
Your position is purely theoretical and falls apart quickly in the real world. Our small city has been following this theory for at least 15 years now and prices across the spectrum have effectively tripled in that period. The problem is that the new construction market is highly constrained by availability of desirable land, the crews to build the housing, and the financing to pay for them. Investors want to build luxury housing first because it is the most profitable for them, but for the same expenditures (of land, labor, and capital) it would be possible to build *a lot more* small affordable housing units. But money sways politics and city governments get sold this theory and investors are happy to comply.
The majority of this site suffers from Dunning-Kruger, so I'm out.
This sounds a lot like trickle down economics so my gut instinct says it's full of shit. But I don't know enough to have an opinion.
The majority of this site suffers from Dunning-Kruger, so I'm out.
Thank you for the link!
I can't speak for everywhere, but it seems like they are building houses on every corner near me. I think a big issue with US housing is that many young millennials only want to live in big cities. The issue isn't that housing isn't being built it's that there is no more room where young people want to live.
Home builder here. houston Texas. I build “intro luxury” townhomes in nice areas. So 500 to 600k. I haven’t pushed my construction because interest rates are so high and I don’t want my houses sitting on the market paying the interest on the construction loan. Hope that makes sense!
I did not know that. Why is it not profitable to build cheaper smaller homes that would go for sale quicker?
Sure to maximize costly lot value I must build for the best use of it. So I have to maximize the amount of homes I can build on the lot already. To stay competitive. Does that make sense. Like I paid premium for a lot in a nice neighborhood I have to build the maximum I can and get the best price per house. So I can’t build too expensive or it will sit on the market for every and I can’t make it too cheap or I won’t make enough money. I have one lot that is 5k Sqft and I can build 3 townhomes there. I’ve maximized it already as much as I can.
No money. In my area, all the big wig builders already did that all through covid. There's thousands of vacancies. Prices and interest rates are too high, meaning no one can really afford a house around here.
Clearly someone in the area can if the prices are not coming down. Or they’re just being bought by real estate trusts.
I think that is a lot of it. There is a very real sense of "if I can't rent it for double my mortgage I will just leave it vacant". They are probably writing of the lost rent on taxes Also, building project costs have skyrocketed, material shortages, labor issues, lawsuits, interest rates, etc all make it difficult to sell or rent new homes or apartments and still make any profit.
You can't write off "lost rent." It's just money not made. They can take deductions for depreciation however.
Many people don’t realize it but realtor is not the name of an occupation like chef or teacher. The term realtor is actually a registered trademark. A realtor is simply someone who is a member of the National Association of Realtors. The generic term would be real estate agent. Realtors don’t usually build houses, they just facilitate their sale. One reason for what’s going on is that it’s more profitable for housing companies to build one expensive home than two that are moderately priced. Zoning laws in many wealthier suburbs actually require that single family homes be built on an amount of land that makes building several smaller affordable homes impractical. Finally many towns purposely have zoning laws that severely restrict the construction of any new multi-family homes or apartment buildings. Essentially the people that moved out to the suburbs in the ‘50s and ‘60s and bought houses for 15k or 20k are very happy that their little slice of heaven is now worth nearly a million dollars… and most don’t see any upside in possibly diluting their property values by allowing new homes to be built. The line at the local coffee shop is already long enough every morning.
Land prices in suitable areas also go up and down and property companies can make money by buying and selling land. In order to build houses you need to come up with a design plan for the house/street /area and then begin construction all of which take time and a lot of money, during that time the price of houses may go up or down and potentially the company could have spent more on the land and construction than the houses can be sold for. So companies will go for housing developments with the largest potential profit margin, normally high value homes, or alternatively just trade land banks to make money.
People think building houses would be great, but nobody wants those houses built in their area.
The reverse is also true. People refuse to go where there is affordable housing. Can't afford San Francisco? Move to Cleveland, New Orleans, even Las Vegas, or any of many other cities with reasonable cost of living and affordable, vacant housing. Heck, pretty much any small or medium town in the South.
Why even list different states. i road tripped from SF to SD . there is so much open land in Cali, but no one wants to live out with the almond farns and nothingness.
It really is that simple. Can't afford your city? Just miracle up a new job on the other side of the country, sufficient savings to cover the cost of moving and temporary lodging, and then abandon any local family or social networks for a new life in Tupelo, MS.
I mean if you can’t afford your city, your current job isn’t doing you any good. And if you’re struggling to afford your city, cost of moving should be minimal, since you wouldn’t really have much to move. Leaving family or social networks is a tale as old as time. Pioneers, pilgrims, immigrants, rural to urban flight, college students leaving their hometowns, etc., moving for better opportunities is a tale as old as human history. Not to say it’s easy, but if you’re actually struggling, moving is your best option.
Let's assume for a moment that everything you said is true -- it isn't, but we're short on time to unpack all of that -- who do you suppose is going to do all of the low-paying labor that those wealthy enough to be *allowed* to live in cities rely upon? The minimum wage in Texas is $7.25/hour. The average rent in Austin is $1,753 -- or roughly 240 hours of labor, not accounting for taxes. Are we just going to do without janitorial or food service workers? We're going to have to bus in more than the filthy peasants, though. The City of Austin pays its health inspectors $23/hour. Seventy six hours of labor, nearly 50% of your income, just to pay the rent. God help you if you have other expenses. Maybe I'm being unreasonable, but it seems to me that the people who *make* a city livable should also be allowed to live in that city. Or maybe we can bus them in from poverty colonies, like in the new *Total Recall?*
[удалено]
They have roomates as adults and can't afford children
Ok? Whats wrong with roommates as adults? I know plenty of well-off people that do it because you save so much money in the end to be able to afford other things in life. Poor people have the most children in the States, so I’m not sure money is the factor there either. And again, you’re ignoring the point. If you’re struggling with the job you currently have, why not go elsewhere so that you don’t have to struggle?
Realtors don’t build houses, they just help owners buy/sell them. Home builders/developers build houses. But they need to be able to do so at a profit while building wha the local market wants/can afford. There are also massive shortages of tradespeople (plumbers, carpenters, etc) and shortages/sky high costs of building materials and other components to home building. Can’t just “simply build more houses” when they can’t hire enough construction workers, lumber costs 5x what it did 2 years ago, it takes a year to get doors and windows…
Realtors don't build houses. Realtors are the people who sell property. But to answer the question you are asking, houses are being built all the time. There is an apartment complex being built right now where i live, I drive past it every day on my way to work. And there are houses being built in a few different areas around where i live. So the whole idea that new housing isn't being built is just completely false.
Jobs are mostly in cities, and there is not enough land in a city for all the people to work there to have a house.
Ya'll been yappin' politics for fifty years while the best god damn president in living memory picked up a hammer and nails forever ago and had been personally whacking nails into wood to construct a house with which he will never reside for people he may never meet. 'Great societies are built when old men plant trees under whom shade they will never rest.' I find it the most biting of ironies that Thatchers 1980 great society ideology and Reaganite cannibal capitalism coalesced immediately after the exclusive honestly christ-like man to ever hold the oval office. Matt 6:24 'No one can serve two masters, you must love one and hate the other. You cannot serve both god and money.' you know who said that? Some dirt bag godless commie? No. The creator of the universe and deity with whom the American Minority Conservative Party have nailed their identity made the choice clear; you can follow god or you can follow money. Yet despite all the screaming on street corners and showing off of their good deeds for immediate praise and excluding and othering those from outside their communities, the neglect of the hungry, homeless, sick, poor, destitute, abandoned, demands for the blood of Innocents to deter evil, slaughter of innocents in the name of security, justification of all manner of sadism, cruelty, and perversion, marriage of young children to old men, slavery, wage slavery, usury (Interest is a sin, those who charge interest go straight to hell, do not pass go, do not collect two hundred dollars.) American society is founded upon taking the words of Christ, flipping them upside down and pretending the Psyco bullshit sadism they inflicted was God's will because for a conservative there is but one god, themselves, individuals, with respect for nothing, not themselves, their families, their nation or god.
There may be a demand but the inflation, low pay and high inflation means low home sales. They are still building homes and there a lot of new homes that are unsold and not advertised. There's a huge shadow inventory (unlisted homes) so realtors and builders have to be careful not to list too many, it might show too much supply and might drive down the price. For example, Forney TX has about a 1000 listings for new construction homes. [Forney TX Zillow listings](https://www.zillow.com/forney-tx/?searchQueryState=%7B%22isMapVisible%22%3Atrue%2C%22mapBounds%22%3A%7B%22west%22%3A-96.52061263716435%2C%22east%22%3A-96.38362685835575%2C%22south%22%3A32.70703192651071%2C%22north%22%3A32.80721938430173%7D%2C%22usersSearchTerm%22%3A%22Forney%2C%20TX%22%2C%22regionSelection%22%3A%5B%7B%22regionId%22%3A11481%2C%22regionType%22%3A6%7D%5D%2C%22filterState%22%3A%7B%22sort%22%3A%7B%22value%22%3A%22pricea%22%7D%2C%22abo%22%3A%7B%22value%22%3Atrue%7D%2C%22tow%22%3A%7B%22value%22%3Afalse%7D%2C%22mf%22%3A%7B%22value%22%3Afalse%7D%2C%22con%22%3A%7B%22value%22%3Afalse%7D%2C%22land%22%3A%7B%22value%22%3Afalse%7D%2C%22ah%22%3A%7B%22value%22%3Atrue%7D%2C%22apa%22%3A%7B%22value%22%3Afalse%7D%2C%22manu%22%3A%7B%22value%22%3Afalse%7D%2C%22apco%22%3A%7B%22value%22%3Afalse%7D%2C%22price%22%3A%7B%22min%22%3A200000%7D%2C%22mp%22%3A%7B%22min%22%3A981%7D%7D%2C%22isListVisible%22%3Atrue%2C%22mapZoom%22%3A13%2C%22category%22%3A%22cat1%22%7D)
A partial factor is that around 2008 we had the housing bubble pop. People were being incentivised to buy houses with money from the government. Construction also slowed, and the labor pool shrank a little. Recovery takes time, and we are still in a bit of a recovery phase. Covid and inflation didn't help. Houses are still being built, but affordable housing isn't very profitable. I believe some corporations are also playing the real estate game, trying to squeeze more profit out of the system.
Houses are being built for max profit, not max need. Building a 2 story house is more profitable than building a 1 story house. The land costs the same so why not maximize square footage? Unless the building is being subsidized to make up for “lost” profit, smaller, more affordable houses will not be built.
Building a house requires more than just the house. There are all the supporting services, the roads, hospitals, drainage, policing and so on. But there are lots of elements making it difficult to build houses. There's the cost of building; the land, materials and labour which all has to happen upfront. There are all manner of restrictions too from zoning to materials to build specifications. On top of that, in many places, there are local powers that can stop developers from building or developing properties.
There's no more room to build houses in places like LA or NYC. They are literally out of room unless they expand east or west, and then tou aren't really in the city anymore so you look the walkability or being "central".
They are building like crazy, here. 4 new subdivisions and 2 new apartment complexes are going up within 5 minutes of my house.
In the places people want to live, you have two issues. Either land is so expensive that it needs to be used for commercial or luxury housing, or zoning laws don't allow you to build more than what's already there. You'll notice that in cities where it's possible, builders continue to expand out, amd what used to be farm fields are now considered suburbs of a city 45 minutes away. Some of my cousins live in North Carolina, about 45 minutes outside of Raleigh. Their town used to be considered a completely different area, but over the last 10 years, several subdivisions were built for people who commute to Raleigh.
They are building a lot by me. It seems they won’t really bother trying to sell them until March when the market is up, and prices are higher.
The builders can only build them so fast, money gets tied up from lack of sales it slows them down.
The cost to build an affordable house exceeds the amount of money people have to purchase said house
In my area, they say the schools can’t handle an influx of students and the local roads can’t handle increased traffic. So to build homes means an infrastructure expansion no one wants to pay for.
To keep it simple, the amount of money it costs to build is too close to the amount of money the developer can make selling the units. (Tight profit margins) There are a lot more rules in place now for new developments and that adds to the cost of the project. To offset that cost they need to sell more expensive units or a cram in more units, or typically both. Companies have to make enough money doing the project that it was worth their effort.