Housing can not be a viable asset class, or it will continue to rise in prices. Step 1 is Land Value Taxes. Step 2 is remove/greatly reduce zoning, allow construction and streamline the process. If you allow density, building up, and incentivize it, then it will be built. Developers spend tens of thousands of dollars in permits and interest payments before they can put a shovel in the ground. Being a landlord isn't really an issue, morally, ethically, or with regards to people buying houses. The issue is when there are limited number of units, and people turn them into investments.
I’ve been part of housing-related online discussions for a decade now, and everything reads like a wish-list.
- Majority of people own their homes. So it’s in their best interest for the housing prices at the very least not go down.
- Less, but still, some amount of people are buying houses with sky high prices. After a huge purchase, they will also do their best to ensure prices don’t go down.
- Another good chunk of people are waiting out to inherit homes from their parents.
All these people, in one way or another, will protect asset prices (e.g. voting for certain people to ensure nothing gets built). The only ways I can see it being resolved is:
- China-style benevolent dictatoresque commitment to surgical detachment of housing prices from the general economy (they’re trying, a lot of people are unhappy, but some progress is visible)
- Population collapse, to reduce the demand. But looking at Japan, metro areas will keep skyrocketing, because people will flock to the main cities even more
Any of the options will make a lot of people unhappy. A huge political no-go zone.
All the talks about allowing construction and streamlining the process have been circulated for a decade+ at this point. But incentives for people aren’t there. “I got mine, don’t care about you” is the general attitude of majority of people.
I've always wondered if UBI can replace the category of "viable asset class" that homes are now, wherein UBI offers upward mobility now AND generational wealthy in the future - the same way owning a house does. Wouldn't that be a valid populist play, an actual policy rooted in pragmatic, and all-around a winning strategy?
UBI is also another topic that has been discussed intensively for the past couple of decades. I don’t see it being implemented almost for the same reasons as cheap housing. On top of it, we experienced UBI-lite during pandemic, and saw the inflationary result. “But it wasn’t perfect UBI” argument won’t really fly either in the current political world.
People are generally selfish and will want the best for themselves and their loved ones.
>"On top of it, we experienced UBI-lite during pandemic, and saw the inflationary result."
I sympathize with this take because it's the one I had, until I saw the data. On top of genuinely appealing to the fact it wasn't perfect UBI - which doesn't make it an invalid take just because you pre-emptively pointed it out - our inflation during COVID-era relief was overwhelmingly from abuse of PPP loan applications and payouts, disaster relief funds - and a healthy chunk to the federal subsidizing of state/local governments [1]:
"Congress has obligated approximately $5 trillion in response to the COVID pandemic although significant portions of this money remain unspent. For reference, in fiscal 2020, the total state spending for all 50 states was $2.28 trillion, or less than half of the pandemic relief spending. Of the obligated relief funds, approximately $1.8 trillion went to individuals and families through $844 billion in stimulus check payments and $666 billion in enhanced unemployment compensation.
Additionally, businesses received approximately $1.7 trillion, much of which came from the $835 billion Paycheck Protection Program (PPP) and $349 billion Economic Injury Disaster Loan (EIDL) Program. State and local governments received $745 billion, the health care industry received approximately $482 billion, and other remaining industries received approximately $288 billion."
The issue is not investment at all, we want more investment into housing.
But you are absolutely correct you cannot both want housing to be a good investment (increase in value faster than inflation) and an affordable (drop in price lower than inflation).
Don’t subsidize demand. Allow more supply. Private homeowners, big developers, all of the above. Build.
And stop allowing people who view their house(s) as an investment from being able to veto any and all building. While that incentive is present, there will be massive hurdles to being able to build the amount of housing that is necessary.
To be more specific, I dont think owning a sfh to rent out should be good. But building an apartment complex should be a good investment. Unrestrict building, and tax underutilized land.
I think the problem with getting this done in the US is the lack of public transit and the dysfunction in public schools.
If you could avoid a $700 car payment and still get to school/job/grocery store on time, a lot of Americans would.
But if you can't, and you are paying $700 anyways, why not at least use the fact that you're paying $700/month to travel anywhere and get a bigger parcel of land all to yourself? There's a big incentive to have single-family homes for rent as long as that math is true.
And if you can live in a dense area and get around OK, but paying $700/month saves you from $800/month in private school payments, then the math might still make renting SFH better even if the transit is there.
Investment certainly feels like a problem. The amount of completely empty homes in my area (coastal ca) is disgusting. There are entire real estate brokers that specialize specifically in investment - these people aren’t even pretending that their clients will use the house, they may never even step foot in it.
Meanwhile economic stratification continues and the other side finds it increasingly difficult to make the down payment.
The issue is that housing should not be an investment but due to rising labor and materials costs and also more restrictive code, they are now an investment.
Housing - more generally real estate property - can absolutely be a legitimate asset class, sustaining speculation and global investment; that is how we get capital invested in building out housing infrastructure.
But you shouldn’t have to make a leveraged loan-backed investment in a single asset class in order to afford shelter.
The problem isn’t ’housing is an investment’, it’s that people are long not on ‘housing’ but on their own single specific house. That’s a horrendously undiversified portfolio.
By applying a tax to a _thing_ that someone owns, you are saying 'actually, this thing you have is mine, and if you don't pay me for the privilege of having it, I will take it away from you'.
Property tax pays for maintaining the utilities and services connected to the property. If you buy land that is completely unconnected from public services, you will find that the corresponding property taxes are extremely low.
Maybe I'm beating a dead horse, but who pays for the roads to houses in the suburbs and why is it the people living in apartments that don't use many roads?
I'm not saying taxes are bad. I'm saying specifically that taxing property itself is bad. If someone 'owns' a thing, why would they pay rent to some landlord (the state)?
I acknowledge that I'm indulging in equivocation by saying 'assessing taxes from property is essentially paying rent to the state'. I assert that the equivocation is valid because the outcomes of not paying rent and not paying property taxes is the same: you get evicted.
In the UK, a leaseholders get screwed if they forget to renew their lease before the 80 year mark.
The cost to develop the land needs to justify the development. If I spent $500k to build a house on the land, I would like to be able to use that house for as long as the house exists (or I sell it to re-coop the investment).
Many people are really bad at saving properly, but they will pay their mortgage. Landownership enables at least some old people to have a cushion in retirement.
You're mixing a house as personal property with the much broader claim of private property on land.
It is possible to protect those two uses you mentioned, and other reasonable uses of land, without at the same time spending state resources in enforcing perpetual, absolute, hereditary, exclusive titles on plots of land.
This is just wrong. Western economies have largely been hollowed out from productive output in favor of hoarding land and property because there is inelastic demand and increasing prices has become a political goal.
It should be super expensive to own more than one house. This by the way is what China did where Xi Jinping famous said "houses are for living, not for speculation" [1] as he quietly popped the real estate bubble a decade ago.
Increasing house prices are just enriching the already rich and stealing from the next generation. Nothing more. Houses should depreciate in value. They should not be an asset class.
Why is immigration always absent from these discussions on HN? the US has absorbed millions of people through immigration (both legal and illegal) which puts pressure on housing supply which drives up prices since supply is relatively inelastic. Enforcement of immigration policy would increase housing supply without needing to build more capacity in the short term and would lower prices.
We shouldn't allow people to hoard housing and land. That’s the core problem here. It should be super expensive to own more than one property. I refer people to the Housing Theory of Everything [1].
I disagree with the Ultra-YIMBYs who believe in removing all zoning and regulation. If you do that, you get Houston. Because that's what Houston is. What we need is to prioritize living over investment returns in housing. Part of this (IMHO) is to have expansive social housing like Vienna to compete private land use "honest". Also, we should really not allow rich enclaves. There should be social housing in every ZIP code.
I've posted it already, but at least in my country (Netherlands) it seems like the problem isn't the lack of housing, but lack of marriages. If people ages 30-60 married each other at the rate they used to in 60's, then there would be no housing crisis.
The statistic that doesn't compute for me is how is it possible that we're having a housing crisis while at the same time we have historically low average number of people per house.
>we have historically low average number of people per house.
I'd like to see the actual statistics method used to calculate that. Saying it's marriages alone just doesn't past the smell test for me. Just because people aren't married doesn't mean they don't live together and the number of unmarried people living together is higher than ever. What makes far more sense is the number of children people have has fallen off a cliff which drastically drops the number of live at home adult children.
It's basically this graph. In 60's almost nobody was living alone (less than 400k people). In 2024 about 3,3 million people live alone. When you look at the infographic, ages 30-60 add up to like 1,2 million people.
Here we have an estimation that the country is missing like 400k houses. So if two-thirds of those 1,2 million married each other and started living together, they would nicely plug the housing crisis by freeing 400k houses.
Either way, we have a huge societal change that lots of people live alone, which did not use to be the case.
> In 60's almost nobody was living alone (less than 400k people).
In the US, back in the 1960s you could own a home, a car, and support a family all on a single income. If we got back to that home ownership would skyrocket.
Is that true, though? When my parents got married in the 60's in the Netherlands, they had to move in with my grandparents because there was no housing available and eligibility was restricted. It took a few years and a 2nd child before they were eligible to rent an apartment. Perhaps that does not show up in the statistics?
There was a youtube video sometime ago that argued about how life has vastly improved in every single aspect (with numbers about how 'stuff' has gotten universally more affordable), only housing has gotten more expensive relative to income and how that proves we have a better quality of life because of that.
It got me thinking that maybe the home ownership, or having a place you can call yours, disproportionately affects people's sense of content and wellbeing. Also, doesn't help that laws and government policy heavily favor home owners (perhaps because home owners vote at a lot higher rate than renters)
Health care, housing, and education are the big three drivers of mandatory expenses in most peoples' lives. It's undeniably a little cool that luxuries got cheap, but it's severely un-cool that necessities got expensive. I'm glad to see a focus on pushing statistics to do a better job of reflecting that, but yeah, this is all downstream of structural incentives so fixes are only going to happen through legislative choices that will make people angry and until then the problems will continue to get worse.
> undeniably a little cool that luxuries got cheap, but it's severely un-cool that necessities got expensive
Well said. Being told that 'you should be happy without owning' to a party that can't afford to own by another party who is actively scooping up the same resource can feel extremely invalidating.
My personal take is that a lot of support for contemporary political extremism in many countries comes from the fact that a significant portion of population is pissed off and see no realistic chance of the 'settle down and thrive' life, not because they are racist/prejudiced or whatever (although labeling them as such only makes things more extreme)
> Being told that 'you should be happy without owning' to a party that can't afford to own by another party who is actively scooping up the same resource can feel extremely invalidating.
It's not really coming from those though? At the same time that housing costs have ballooned, we've also had a significant migration back to cities. When a larger % of the population are living in high density locations you are going to naturally have a larger % not owning homes. Owning your own home does not align with the density required for a city to function.
At the least, narrowing down the topic to 'Why do people rent instead of own a condo?' is a much more meaningful topic over 'Why do people rent instead of own a SFH?' since a condo is a more viable option in locations where most of the renters are.
> Owning your own home does not align with the density required for a city to function
Much of Europe would like a word. I grew up in a block of flats where everybody owned. 16 apartments, around 60 people, lived on the footprint of a typical American house. All our parents were homeowners, together they owned the building. Two buildings actually and the land they stood on.
So a total of 32 apartments, 120 people, a small parking lot, and a bit of green lawn owned by the people who lived there and self-governed through a sort of HOA. Little communities like this were extremely common in the city.
Nowadays with my generation homeownership is becoming a little more rare. Still people own apartments in these self-governed buildings, but many have become priced out. Too much demand not enough build.
Why does being in a city “naturally” mean less home ownership? More demand and higher prices yes, but you also should be earning more and dense housing projects should be trivial to justify. It’s legislation all the way down, politicians protect the interests of the wealthy who want to rent seek regardless of location. Look at how mamdani got a common sense luxury home tax in NYC, before that ultra wealthy owned multiple homes just because they could.
Because multi-family buildings (required for higher density) come with more complicated ownership models. Owner occupied triple deckers in Boston, for example, often come with their own condo associations because there needs to be some way to handle the shared maintenance and expenses.
That's for a three unit building. Now scale that to a twenty or one hundred unit building. At some point, it makes sense for a single entity to handle the common maintenance through outright ownership and rent. Individual families have the flexibility to leave if things suck without being financially tied to the building long-term and subject to changes in housing prices. Yes, moving as a renter is expensive. It's still lower cost and friction than moving as an owner.
Source: rented for years in cities. Now happily a homeowner in the hinterlands of Vermont.
A counterpoint is that a huge number of suburban Americans already have experience with a condo association through being in an HOA.
Rural homeowners and people with single family homes in streetcar suburbs or cities don't, but most new developments already have an organization with dues for shared maintenance.
Pulling from fuzzy memories here, but to my knowledge the legal framework for the bastardized entity known as Homeowners Associations here in the US originated from the exact thing your describe; multiple person ownership in parts of a single building.
One thing soviet commies did right was housing builds. Build factory for city blocks, then just pop them up, constantly, keeping the line busy.
It should really be city that is building the new housing (even if in the end it gets subcontracted, at least the top level have vested interest in keeping the quality and cost in check). Maybe even offer some rent-to-own programs where part of rent gets put into savings that can be used to either buy it after few years of use or be withdrawn when moving so renter have nice lil bit of money to put forward for buying new apartment/home.
Then the city can actually plan for it, rather than hope housing developer that bought the land does something good for city and not just their own pocket.
There's no need for the city to build it, they have zoning plans, and they can easily zone "that corn field over here" into an aera of commie-style apartment buildings (5+ floors, commercial on ground floors, apartments above, garages underground), and assign some percentage of space for green areas.
I live in one of those used-to-be-commie countries, and we somehow manage to keep cornfields in prime locations, and in many areas, the most the local government allows you to build is a two-apartment two-story house, but none of the non-built land is actually buildable, so you need to demolish something else first. Here and there someone is able to build something with maybe 6-8 apartments (probably with an envelope switching hands), but that's it.
It's as if some rich people connected to the government managed to get a lot of realestate in the 1990s when communism fell, and now they don't want prices to drop. But hey, we're building office buildings without any issues and making airbnb even easier instead... so yeah... the situation is pretty bad.
Most people don't see that as viable because American cities don't have the public transit needed to make that viable, and equally important, don't have condos built that are the size of a family home. And there's a big push among suburban parents to judge their kids for living in cities, even if they're not as dangerous as the parents think.
If we modeled Spain, we could have more condos. That would require good, safe transit, condos with green space and multiple rooms at a SFH price point, and a cultural change among the older generation to view cities as having less crime.
This seems like an interesting theory, but when I look at the two ways it may be actuated it seems to fall apart.
Either there is explicit collusion where they meet and discuss how to do these things, or there is implicit collusion where they all act in their own best interests and the results is the same. Neither of these mechanism seems particularly likely to me.
I would be happy to hear some thoughtful explanation of how other people approach this issue
I agree that your two examples don't stand up to scrutiny.
There is historic precedent for blaming immigrants (as an example, or just others, if you like) for one's woes. So on one hand you have well-known "playbooks" that don't require some secret meeting of a cabal.
That aside though, even if actors don't collude, if they're each throwing a lot of things at the wall, they may well all arrive at the same things that seem to "have stuck". It's as though there are universal fears and even prejudices among populations of people.
Hi, this is a well known phenomenon in politics that is much discussed in political science and sociology, and goes by many names (strategic polarization, racial capitalism, split labor market theory, etc, and depending upon how you frame it, it encompasses all politics going back to Plato’s Republic). There are many examples where elites have stoked division amongst the poor (usually along ethnic or religious differences, but any difference can be utilized).
The most famous examples in America were the divisions created between poor white and poor black Americans during Reconstruction and the Jim Crow era to prevent them from forming class solidarity, and then later, the Southern strategy that enabled Nixon and the Republican Party to regain power during and after the Civil Rights era.
If you are unfamiliar with this topic, you can look at wiki articles and blogs like these, and then go deeper by reading academic papers and books on the subject.
This is seriously the basis of the manual of populism as mass control tool: identify something attacking their group identity, hang it before their eyes, and they will follow you blindly in every other aspect. Many books have been written about this and nowadays we can see their implementation at work about everywhere.
You can spin many things to sound as racism if you want them to.
My small eu country has in the recent years started importing workers from asian countries, and people are against that... of course it's branded as 'racism' in the media.
The reality is, that some businesses have been having troubles with finding workers to do hard work for minimum wage (which is easily solvable by paying people more and creating better working conditions, but hey, think of the profits), and importing foreign workers means that wages can stay down. We're talking about AI and how we'll all lose jobs,and at the same time, importing new people, and that doesn't compute for many, especially those underpaid who can't negotiate for better options because the government approved new foreign workers in their field.
Then you have the more on-topic problem of importing thousands of "outsiders" into a relatively small city (~300k pop), without building any housing, neither for them, nor for locals, who want to move out their 30+yo "kids" out of their childhood bedrooms, nor for others living a bit further away who'd like to live closer to work. Sure, you can fit 8 "poor foreigners" into a 2-bedroom apartment with 4 bunk beds for 200/month each, and it'll be cheap for them, but for a young couple wating a child, 1600eur for such an apartment is around 1/2 of their combined income, so nope, no apartment and no kids for them, since they have nowehre to put them, and "we need foreigners, because our people are not having enough kids".
Then the third problem is integration... and the government does nothing about it, no language courses, no nothing... the laws say that businesses must use our native language, but in some areas, you can interact even with waiters or shop clercs (so, first line of interaction with customers) who can't speak a word of it.
But hey, it's easier to say "racist people hate foreigners", than to solve the issues.
Your small EU country probably has a replacement rate of something like 1.5 which means you're heading towards extinction. This puts a crimp on labor and increases wages, and it leaves openings in higher paying jobs which people want. You end up with no one to do naturally lower paying non-specalized labor.
Modern standards of not having 100 people die in a house fire have changed the dynamics of where immigrants live when they moved to a country. New York City, for example, just shoved people nut to butt in the smallest most unsafe places they could make. We don't do that in first world countries now, so something has to give.
I like your take. Do you feel it also a lack of interest in genuine evaluation of hard options?
Not all policy is easy to understand, but I feel (anecdote) that lots of folks don’t want to understand what isn’t an obvious benefit to them, especially if benefits accrue over a longer period.
> Well said. Being told that 'you should be happy without owning' to a party that can't afford to own by another party who is actively scooping up the same resource can feel extremely invalidating.
That's been a long standing element of capitalist propaganda: attempt to distract and invalidate people's real, legitimate complaints about their situations by noting that not even the Kings of old had color TVs and refrigerators.
Who cares if your housing situation is insecure, getting healthcare is challenging, and politically you're dis-empowered? Look at the boob tube and rejoice at your good fortune!
> Health care, housing, and education are the big three drivers of mandatory expenses in most peoples' lives.
BLS says housing, transportation, and food are the top 3. Insurance/pensions is #4, but that also includes car and homeowners insurance and retirement contributions.
Over the past 50 years, both transportation and food got cheaper. Moreover, clothing actually used to be one of the top categories, but that’s fallen off completely.
I've never owned a car since I live in NYC (I'm in my 40s), so the only transportation numbers I'm vaguely familiar with are with the subway. The MTA budget has gone way up over the past 50 years [1] and the cost to build the subway in NYC is hovering in the $2 billion/mile range. This is largely political and bureaucratic, as in Japan and Europe it's about $200 million - $400 million/mile. [2]
So clearly something is going wrong with the way we deal with our mass transit as well if Paris can do things for a fraction of NYC.
I should have said "mandatory expense inflation", yes. There are still some difficult problems the economy is making progress on, but the correct attitude towards those is "keep up the good work" and to focus our attention back on the parts which are robbing us of progress as fast as we make it, where costs soar in excess of wage increases: health care, housing, and education.
It might be that a lot of the cost doesn't show up in the data because it comes out of your paycheck before it's "yours," in the form of your employer's contribution to health insurance premiums. (Anecdotally this is true for me - "my" portion of premiums would not be in the top three, but the total premiums are #2 after housing (for a while when I had roommates they were #1, which is ridiculous).)
I don't know about the first half of those 50 years, but over the second half (2001-today), transportation - or at least cars - got significantly more expensive. Disappearance of cheap new cars + massive supply reduction of used cars + repair costs of old cars + gas prices.
Inflation has been high enough that it messes with our perception of things, but I believe the data shows otherwise (at least in the US).
- Disappearance of cheap new cars: You can get entry level Chevys, Kias, and Hyundais for < $25k, which is about $14k in 2001 dollars and many more of those cars will last until 200,000 miles and have safety features only available on luxury cars in 2001.
- Massive supply reduction of used cars: I actually don't have good data on this, but it seems like there's pipeline is still borked from COVID era irregularities. That said, cars these days have much better quality and last longer. A car with more than 100,000 miles in the 90s was near the end of its life. That's a typical listing Facebook marketplace these days.
- Repair costs of old cars: Repairs can be expensive, but again, cars today are much more reliable than they were in the 90s or earlier. Even simple things like recommended oil change frequency changing from 3k miles to 10k miles for most models makes a huge difference in total cost of ownership.
- Gas prices: Gas prices have certainly spiked recently (gee, I wonder why), but the cost of gas in real dollars has been higher several times in the past 25 years (see the second chart here: https://www.macrotrends.net/4453/us-gasoline-prices) It peaked in 2008 over $6 per gallon in 2026 dollars.
> You can get entry level Chevys, Kias, and Hyundais for < $25k, which is about $14k in 2001 dollars
For comparison, an entry level car in 2001 was <$9k. That's <$18k in today's dollars.
The extra safety features is part of why transportation has become less affordable, yes.
> I actually don't have good data on this, but it seems like there's pipeline is still borked from COVID era irregularities.
That, plus Obama-era Cash for Cars, plus engines becoming so complicated and expensive to fix that 10+ year old broken cars are scrapped rather than repaired at much higher rates.
You used to be able to buy a car for literally less than $1000 that would last you a few good years with minimal maintenance.
> Repair costs of old cars: Repairs can be expensive, but again, cars today are much more reliable than they were in the 90s or earlier.
Not 5x more reliable, as in requiring 5x fewer engine renovations over 15 years now that it costs 5x more to do so.
luxeries also haven't gotten cheap, really - their manufacturing has been outsourced into places which often don't pay decent wages - so it's just out of sight/out of mind.
We're currently living in a time where some of the issues are being hidden by the nature of a global market - it's friggin impossible to make any good analysis with a global market, it has just too many influences and ways to hide criteria...
> Health care, housing, and education are the big three drivers of mandatory expenses in most peoples' lives.
Definitely true for my household. The mortgage, college for the kids, and health insurance for a family takes up a huge amount. Not to mention the housing expenses like HVAC fixes, trash collection, sewer, utilities, etc.
* assuming you don’t live in a state with a Medicaid work requirement/disqualified by earning “too much” as working poor, and lucky enough/have dependents to win a Section 8 voucher from the lottery after waiting for months to years
In Europe its only housing, and still proportionally cheaper than what US has, often in higher quality for older homes (bricks / concrete vs cheap creaky wooden houses).
The idea of saving massive amounts for my kids potential university studies is ridiculous to me. Same for any health issue. I mean any health issue as long as I can work, and then social state takes over (that is not ideal but at point nothing is).
This is also how happiness can be defined - lack of (much shorter list of) constant worries and pressures to deliver, sustain etc.
In the US, bricks and concrete are unsafe, not "higher quality". Much of the US has severe earthquakes which collapsed the European-style masonry buildings they used to build. There are many old photos of what happened to cities that were built with brick/concrete after major earthquakes. The main alternatives are steel and wood, same as in Japan.
My home is rated to survive earthquakes stronger than any in recorded European history without structural damage.
Concrete houses suck and Europeans need to get off their high house about them. I own a concrete brick house in Europe and I’d strongly prefer a wooden American one. It’s hard to insulate, hard to alter, uglier, has a terrible embodied carbon footprint, has too much thermal mass, and alterations that would make it more livable (like having eaves) are illegal.
You are mostly right and the structural incentives are more related at root to unsustainable national debt than any legislative choice (unless that's what you were referring to)
I don’t follow your logic. The recent legislative choice by the current administration is continued tax breaks, corporate tax holidays, and capricious tariffs. There is no serious discussion about the debt.
Trump increased the national debt by $7.8 trillion in his first term (rising from ~$19.9 trillion at inauguration to ~$27.75 trillion when he left office), 39% increase (more than WW2, the Manhattan project and the Moon landing combined)
Each and every US citizen will be required to pay $22,400 for the (ahem) accomplishments of Trump's first term.
So far in his second term, Trump has added $3.2 trillion so far, if you calculate by the end of his second term it will be about $8.8 trillion.
Each and every US citizen will be required to pay $25,000 for his accomplishments now.
For comparison: you owe $9,200 for Barack Obama's last term, and $20,300 for Joe Biden's term. Oh and Clinton was by far the cheapest president since WW2, increasing the debt by a measly $600 during his 2nd term.
Nothing to do with poisoning the non-AI parts of the economy to drive investment in AI? Its not like this bubble was gonna blow itself.
It's clear that there's plenty of money to go around. It's just that none of it is being spent on things that improve people's lives, mostly due to corruption.
Or we just wait for automation and robotics to make building housing much cheaper and the free market system to fix things - which 5 years ago I assumed was too far out, but with all the advances in the sector, seems like we might get significantly cheaper building costs within the next 10 years or so.
The local business producing single-wides seems to be doing fairly well and has been in business for over 60 years, so I am not sure it is accurate to say that there is no profit. The market is small, though. If you can afford a small new house you can also afford a large used house and most people are going to choose the larger house every time. In aggregate, there isn't a whole lot of incentive for someone to build a small house.
Huh? I have a 650sqft house, it costs 430K in a small town. I looked at building a new place, it would cost roughly the same to hire a building team to make it - not to mention years of waiting on development. The land is fairly affordable if I buy a little bit out of town. It's the cost of building that is stopping me.
If it's costing $650+ per sqft to build, it sounds like there may be some externalities about the site(s) that might be relevant here?
For scale, in much of the country it is possible to build a new home for well under $200/sf. New detached homes retail for <$175/sf, which includes the builder's profit.
If I look at the value of the place where I'm living, a bit more than 2/3rds of it is attributable to land instead of structure. This ratio will change depending on whether you have a multistory structure on a small plot of land, or a SFH with a yard on a larger plot, but land/value ratios > 50% are typical.
I guess it depends on how you look at the numbers.
My current place would sell for say $1.4M or so.
The lot itself is worth around $600-700k if it was empty.
A similarly sized home would cost well over $1m to construct to similar quality levels - normalizing a bit for modern construction techniques and all that.
So about $2.4m to build new, or $1.4m to buy a fairly similar 25 year old home next door. New construction here costs more than the older structures on the land in most cases. This ignores permitting and financing costs which throws a light wrench into those calculations, likely making it a bit more expensive on the build side.
That is using numbers I would pay a custom builder for, but even if you add in 20-30% profit for the builder the math isn't super great for the new build end of things.
Houses depreciate. Markets can do funny things (remember the COVID days when a used car could sell for more than the same new car?), but generally the remaining value of a standing structure is going to be a fair bit less than the cost to build the same thing new. It is likely that the parent also sees >50% land value on the current property now that the house has been lived in and is showing some wear and tear, but key here is that to rebuild the building from scratch it would cost as much as the land plus current building is worth just to build the same structure again.
1- Costs of operating an larger house are higher than a smaller house
2- Yearly maintenance of a new house is cheaper than an older house (older the house, the greater this gets)
3- Easier to keep a smaller house tidy
4- Mobility/lifestyle issues.
5- Indifference towards resale value
Not everyone wants a giant house, and plenty of people like a small one. It's not the size that matters, it's how you use it.
I don't think anyone is talking about giant houses. Last time I priced a new 1,500 sq ft home they wanted over $800,000. That was an instant nope from me. Another commenter pointed out that their 650 sq ft home would be $400,000 to build new. These are already beyond most people's affordability even before considering the cost of the land.
So when we talk about small and affordable we're talking more like 100 sq ft. Large compared to that is what most would call a modest home.
Okay, if you just want to have a conversation with yourself I can see myself out as you addressed literally none of what I said and went off on some affordability tangent about housing in general.
Housing prices are too high for most people to afford. That wasn't what the sentence I responded to was asking about.
It does address what you said: Nobody is talking about giant houses. In context, "large" houses are still quite small. It remains that very few people want a 100 sq ft home even if it is technically cheaper to own and easier to take care of. If you won't give your comments any thought before posting them I'll happy keep making fun of them.
Community is IMO easier in apartments, the higher density means there’s a bigger pool of folks you might click with.
Community gathering spots are more prevalent as well: pools, playgrounds, green spaces, etc are common amenities. Especially if you get a dog, you will meet lots of people.
Of course it depends on which complex you live in. If I move I will miss my apartment and its community. I won’t miss my window aircon though, central air would be awesome.
And then after 3 years in the apartment the landlord (or a new owner, if the place you call "home" is merely a line on some out-of-state investment leech's spreadsheets) decides to "adjust" the rent and price you out and you are, with little to no warning, forced to move and very likely abandon many of those connections.
> You can have these things without owning a house.
Yes this is feasible, but respecting it as a design problem, renting is more transient than ownership and tilts the floor away from deep communal relationships.
Comparing the neighborhood I grew up in with the one I now live in is night and day. My mom has had the same next door neighbors for 44 years. Up and down the street there are many similarly familiar persons.
By comparison, from my own front door, I can only physically see two houses that are owner occupied. There are good neighbors (and friends!) in the rental houses as well, but investing in those relationships pays off with lower certainty because circumstance is very likely to uproot them at any given moment.
You can own and appartment and live in it. For some reason ownership every discussion with USAmericans seems to come with the premise that home ownership implies houses. The vast majority of home owners I know personally own a flat.
> 10,000 years old, since agriculture made migratory hunter-gatherer societies obsolete.
This isn't really how the transition to agriculture worked. Historically agricultural elites captured lands with conscripted armies and forced people to farm. There are plenty of examples where central authority collapsed and the archeological evidence shows us that people largely stopped farming.
I’m not sure you’re disagreeing with me: Those who owned the land and didn’t have to migrate / soldier around or work someone else’s land to survive were doing well for themselves!
The people farming didn't really own the land, in many cases they were captured or corralled in place and forced to farm. The were also forced to dig canals and occasionally do the soldiering. All of the early Mesopotamian city states use corvée labor. Being an early farmer was super shitty, and no one did it by choice.
When archaeological evidence shows that people largely stopped farming, it usually means that those people largely stopped existing. Or at least living in that area. Apart from a few rare exceptions, agriculture is the only viable way to support substantial populations.
Farming came first, and with it came larger communities and higher population density. That led to surplus, which enabled elites and other forms of existence beyond basic subsistence. And that lifestyle mostly spread organically. Not because the agricultural elites didn't try to conquer hunter-gatherer societies, but because there were so few hunter-gatherers to conquer. Conquered lands were mostly farmed by descendants of farmers from neighboring regions, because they formed the majority of the population.
> When archaeological evidence shows that people largely stopped farming, it usually means that those people largely stopped existing
No, there are signs of habitation. If you look at the evidence from the alluvial plain around ancient Babylon and similar cities from the early history of cities in the region you see people returning to fishing, hunting, and sort of opportunistic planting on river banks. These cities had a tenuous grasp, and people would often just leave, or the city would collapse and people would stop doing intensive agriculture. People would abandon irrigation channels which they had been forced to dig and simply just go fishing. James C. Scott's Against the Grain covers the archeology nicely.
That's what I meant by "largely stopped existing". With the decline of agriculture, there was a major decline in food production and therefore a major decline in population.
Again, you don't see a major decline in population in many cases based on the archeology. Insofar as we can tell people would spread out a bit away from the cities. In the fertile crescent early city states attempted to corral people in to controlled zones of production. Absent coercion, people didn't die they just moved.
If you are basing your claims on Against the Grain, Scott focuses on early centralized states, which emerged thousands of years after agriculture and towns.
Such states were by definition exceptional. Most of them were in regions, where rainfall alone was insufficient, and agriculture dependend on irrigation. Such a dependence on centralized infrastructure favored state formation, but it also made the communities fragile. Local population collapses were common everywhere, but the fragility made them worse. When the irrigation infrastructure failed, harvests failed, the town failed, and the survivors dispersed.
But agriculture spread long before states. Where the local conditions were favorable, agricultural communities naturally had a surplus of labor. If there was unclaimed land available, landless men and women would occasionally split from the community and start a new one. That was the primary mechanism of the spread of agriculture.
His book, and Graeber and Wengrow's The Dawn of Everything as well as some miscellaneous books on Mesopotamia. The Dawn of Everything does a great job challenging some popular ideas around state formation as well.
This seems reasonable without negating the previous comment.
With no army to protect the farm, there can be no farm. A return to hunting and gathering would occur as an effect of warfare, regardless of whether or not the farmers have any choice. But hunting and gathering is still obsolete, whereupon agriculture is possible.
Obsolescence does not by definition imply permanence.
There was an interesting video by Ben Felix that makes a case that home ownership doesn't significantly (or at all) increase happiness - https://www.youtube.com/watch?v=0G_OSohLC_A
That being said housing has gotten worse for both buying as well as renting. I think there is a case to be made that having a place you feel comfortable/home in (whether rented or owned) affects people's wellbeing disproportionately.
In the end, home ownership is more based around the kind of life you want to live than costs/benefits of the house as an asset. As a Canadian I see that many of my friends would choose to pay a lot more each month on the principle of a mortgage than they would ever save in a registered account.
> home ownership doesn't significantly (or at all) increase happiness
N=1 but for me it didn't. I'm probably repeating myself on this site but 70 years ago a home was a box that kept you out of the weather. Now it's an investment that you have to treat as a going concern. Many industries - contractors, window salesman, landscapers, HGTV, realtors, mortgage brokers, driveway pavers, deck builders, HOAs, etc. - have substantial swaths pushing this neo-feudalist "your home is your castle bro they aren't making more land" narrative so that people are socially pressured into dumping their life savings into a non-fungible asset then spending even more on ridiculous things like building pergolas and updating a 10-year-old bathroom to purportedly improve its value. Everybody's become a property speculator and wants to "get on the ladder".
The upshot is that I spent a lot of time and money on a bunch of stuff I didn't care about for my house because I was concerned with getting my money out of it when I sold. Conversely I chose not to pursue several interesting projects that I liked because they might have been dealbreakers to potential buyers. The whole thing is depressing. It's centered around building/projecting wealth and getting one over on the next guy more than it is on having a place to live. Corporate homeowners have nothing to do with this.
One issue is that if you plan to have an expanding family your home needs to retain its resale value to allow you to sell it and move into a larger home to suit your family needs.
Life is much harder when you don't have a roof over your head or when that roof can be taken away from your or take more from your salary than you were anticipating. I don't think people understand the psychological safety of knowing you will not pay a single dime more on a loan for your home for 30 years. It completely erases that worry from your head.
I couldn’t agree more. I’ve lived in the city my whole life and have seen rents rise. That’s been extremely frustrating for me because I’ve been at the mercy of market trends and have worried about what would happen if, at some point, I didn’t earn as much anymore, or if rents rose so much that they became too expensive even for me. What would I do then? The worry that, despite a relatively good income, I might be at risk of poverty in old age because I have to hand over a good portion of my take-home pay to a landlord month after month is very frustrating in the long run.
A year ago, my partner and I bought a small house a short distance (40 minutes by car) from the city, and I moved into a much smaller, cheaper, and less central apartment in the city. I still spend a large part of my time in the city, but I’m also at the house regularly, especially on weekends. I’ve been much more relaxed ever since, because I know that I can give the city’s rental market the middle finger at any time and retreat to our house.
This seems like FUD. Anecdotally, even with property taxes, insurance, and all the rest of it, my 1,000 sq-ft 40s constructed house is 60% the cost of what my girlfriend was previously paying to rent a 1bd apartment on the outskirts of our town. And that is with a "first time homebuyer" $0-down mortgage I got through a local credit union.
> disproportionately affects people's sense of content and wellbeing
It's probably not just homeownership, but the cost of real estate as a whole. And not even just residential. Isn't the often-lamented "loss of third places" at least in part due to those places not being able to pay rent unless they heavily monetize?
I've also heard the theory that the arts often take off in an area when real estate prices drop and it suddenly becomes possible to build cheap art studios and such. No proof or anything, just something I've heard random people talk about online, but it makes some sense.
Making the concept a little more abstract can help: if you have personal access to capital because you've got collateral, that has numerous beneficial effects, as some of the other commenters here have pointed out. This effect might be less strong in the US because we have relatively well run capital markets that you can invest in. This would be a book length post to dive into all of the details of it but the net effect is plain to see. It's one of those things that looks a little irrational but in practical terms it's a proven benefit.
> It got me thinking that maybe the home ownership, or having a place you can call yours […]
Do a search for "the housing theory of everything".
It has been an idea growing in popularity over the last few years, especially in the Anglo-sphere where housing/shelter costs seem to be worse than other places. (One hypothesis I've seen for this is because of Common law, which can give NIMBYs more power to challenge (new) things.)
When it comes to housing I think the key thing is stability.
Certainly many would prefer to own if that’s a possibility, but easily the worst part of renting for most I think is the need to move periodically, whether that be to keep housing costs within budget, because their landlord decided they’d like to give the condo to their niece, or because the their apartment complex changed hands and the new corporate giant owner is doing a terrible job at managing it.
At least, that’s why I hated renting. If I could stay the same place for 10+ years without getting priced out, without being kicked out for the landlord’s personal use, and without corporate enshittification (which often takes place alongside rent hikes), I doubt I would’ve purchased.
Owning isn’t a perfect bed of roses but at least my costs stay somewhat pinned and I don’t need to move unless I personally decide to. It’s such a weight off my shoulders that I won’t need to go through the stressful ordeal of apartment hunting every year around renewal time just to have options in hand in case things don’t work out.
I love to see metrics that evolve over time. Land is a finite resources, as such it inevitably trends up as the best and easiest locations are consumed. So I think the correlation here has to be understood from that baseline.
Land is finite but not meaningfully so at this point. If my early morning napkin math is right, we could give every person on earth about 6.4 acres of land.
Land where people want to live is scarce. Obviously a variety of factors but one of them is that land is bifurcating the way income is. Small amounts are growing in value rapidly and the rest is declining (or growing more slowly). Urban property is skyrocketing, rural property in coal country is struggling.
Land as a finite resource only affects first tier real estate market markets. You can see this vividly in China where there's a housing glut on aggregate, but not in first tier cities.
That's too simplistic. The best (and maybe even easiest) locations and local population evolve over time as well. Land can be developed in different ways, allowing for different density. Different people buy property for different reasons, which affects its value.
It's very likely. It's place we rest, do some of the fun part of life and a place to call our "own" in world where increasingly nothing is.
On top of that having that high mortgage or even rent hanging over your head, making sure you can't really downgrade work to something more fun but maybe less paid can be stressful too. Especially in the firing season where you might be let go and take months to find new job.
And housing taking higher and higher part of the income is also effectively getting us poorer or at least stagnate.
The articles with similar claim I have seen attributed disproportional value to, basically, stupid crap: better phone, more entertainment (streaming movies), cloth I buy once in a while, cheaper gym nearby, some or other luxury I would miss for roughly 3 months and then forgot.
And that leads us to "only housing has gotten more expensive relative to income" - precarity does matter. If I am one sickness or two paychecks from not being able to pay rent, it causes a lot more actual real material insecurity then "having slower phone while everybody else has equally slow phone".
Likewise, if you have trouble to find a job, fear of loosing it makes you work 12 hours a day in a job you hate, it affects you a lot more then whether you can stream movies.
Policy doesn't "favor" favor homeowners. It screws everything else because it can.
You wanna add a deck to your home. You pay the people the government says you need to pay a grand or two and you're GTG (by which I mean, good to spend further money actually doing the project). Landlord wants to add decks to his triple decker so that he can make the place nicer (more $) while also hitting the egress requirements bird with the same stone and it's an instant 4-5 figure bunch of bullshit where half a dozen worthless interests who add nearly no value in the base case exercise their enshrined in law right to sink their teeth into what should be a petty project.
And it's not just some slum lords triple decker, it's a 10-unit condo, it's those new luxury apartments and on and on and on and on. Everything about owning property, improving property, etc, etc, is ungodly expensive and exclusionary because there's a mile long list of jerks with their hand undeservingly in the pot.
Don't get me started on the financialization that underpins all this, it's just as tileted too.
Policy "favors" homeowners by somewhat exempting them from the worst of this because the buck stops with them. When they get screwed there's nobody else to pass it on to, so they push back.
Singapore is surveyed as either the happiest or second-happiest country in Asia (IIRC), with at one point a >95% homeownership rate due to government policy (although I believe that's now closer to 90%, in part due to foreign immigration?). It seems self-evident that having a home is somewhere on the order of 1000000x more important than being able to buy lots of cheap junk that barely matters.
Finland is consistently ranked as the happiest country in the world and has a home ownership rate comparable to the US. Denmark ranks 3rd and has a slightly lower home ownership rate than the US. Oh, and Singapore ranks 36th[1], while the US is 23rd[2].
I'm curious what people are quibbling with here? Romania has the world's highest rate of home ownership at 96% and only ranks as 34th in happiness. Or maybe Kazakhstan but I can't verify the data on that, and it's right beside Romania in happiness. Switzerland has the world's 4th lowest rate of home ownership and ranks 10th happiest. It seems like from a data perspective there is no empirical support for the idea that home ownership directly correlates to societal happiness.
Right, my point is that you can't boil happiness down to a single causal factor and if you could the evidence doesn't support home ownership being that factor.
I'm sharing Gallop survey data about happiness, it's the "happiness" data everyone uses, and what OP was referring to as well. I'd challenge the idea that GDP per capita correlates to happiness. Mississippi has a higher GDP per capita than France and I'm not sure that tells us anything about who is happier.
> probably wrong on all points here by your own data
again, it's not my data its the data OP referenced initially, I just linked to it.
In some ways I actually liked the moving every few years aspect of renting. Every move made me really re-evaluate all the junk I had and if it was really worth it to hold on to. Do I really want to have to move this thing I didn't even really use to yet another place? I got to live in a lot of different places, have some different lifestyles, have some different roommates, and live a pretty different kind of life every now and then.
Living in the same place now for years makes it too easy to just hold on to junk, it makes it too easy to just fall into the same routine.
There's some pros and cons each way. It really depends on what you're wanting in life at the moment.
True, although I've also moved houses and turned everything over. Having lived at the current place for a while I find it's important to, every five years or so, turn everything over and re-evaluate it. Even if my domicile isn't changing I'm still changing as a person.
What's the point of being able to spend less on cheap junk if the surplus is eaten up and outspent by important things that inflated during that timespan?
And you don't even have a choice. If junk was expensive and houses were cheap, you could scale your junk consumption. You can't scale your house consumption.
You can to a degree. You can buy/rent a way too small house/apartment for your large family (what many immigrants do). You can also get roommates. If worse comes to worst, you can move another hour or two away from the big city.
I feel like these are much worse than the alternate reality where I simply have to spend more on or lose access to consumables, if I had to choose one or the other. For people that use the same smartphone for 10 years, never shop for clothes, never go out to eat, etc., it seems unfair that we'd construct a dichotomy (assuming it's even a valid one) and choose the one that worsens the resources that everyone needs rather than the more fungible one.
Which is an extremely important point to make when the claim is "you don't even have a choice" and "you can't scale".
There is a choice. We would just prefer nobody had to make that choice. We consider it a failure of the modern society that this choice is on the table. But housing consumption can be scaled, and that it can has important economic implications (such as, social housing can be made cheaper by making units smaller. It literally wouldn't be possible to pull it off if housing consumption was perfectly inelastic.)
> If worse comes to worst, you can move another hour or two away from the big city.
It is rarely the case that someone who can't afford housing in their current location can afford to move away from their support networks to a place with no jobs. Places with significantly cheaper rent almost invariably give you significantly less income, if you can even get a job without connections (which are important in general, but especially important in rural areas where everyone knows each other). That can work out for you if you have substantial savings or a comfy remote tech job, but if you have those you probably don't need to move in the first place.
Your other points are valid ways to technically scale housing down but, I think, bring with them a significant decrease in quality of life that far outweighs what is gained by being able to afford 500 big macs and 10 pairs of shoes.
You misunderstand. Keep your job. Move away. Drive to work 3 hours one way everyday. Have no life except work, commute, sleep and family.
And yes, it will drive your QoL to the ground, I'm fully aware of that. I'm just saying it's neither impossible nor infeasible nor unheard of. It's "merely" undesirable. Extremely undesirable. But possible.
That's why I said "worse come to worst". Where I'm from, it's not that uncommon to drive 3 hours to work, and as a result have no social life outside closest family. People do it because the alternative is homelessness.
I would argue that a reply to "you can't scale your house consumption" doesn't need to say how much the situation sux or what amount of gadgets will or will not unsux it.
Many forms of media and social pressure point to owning your own home as a measure of personal success. It probably is. If it wasn't, rich people wouldn't buy so many. Plus it's harder to kick you out of a place you own than a place you rent.
Additionally, buying a house is probably the easiest way to build some kind of generational wealth. It's easy to see this as yet another way the older generation is pulling up the ladder behind them.
No, Levit said that in 1948, when Americans were vastly better-connected (socially) than today, "Godless Communism" was their #1 fear, and everybody was aware of communism's easy appeal to those who felt dispossessed.
I'd read the quote as a clever way to say "let me sell millions of cheap houses to Americans, and you'll never have to worry about the commies".
Yes, exactly. The idea was that people could be content with our system if people's material conditions were good. We seem to have lost this insight and continued for the next 50-60 years to degrade the quality of life.
The catch here is that homeownership rate is the highest in history now except 2000s speculative subprime bubble when a lot of purely investment properties were bought at 103% mortgage by people who could not afford the risk.
In almost every place in the world, at almost any point in history, the propaganda will always tell you that you've never had it better than you have it now.
But once you start digging and thinking, you start realizing that it's not true.
I understand that most hackers reading the above sentence are already raging, but were you actually there to know that things were worse in the past, or has it been hammered so strongly into you that you're now greatly offended at suggestions that it isn't true?
There are a lot of factors. Some things are worse than the past. However other things are better. There is no universal correct weighting of these different factors.
In general I think that nobody would be willing to go far back in time. You don't need YouTube, but would you want to live without it? How about electric lights? Safe drinking water? Flush toilets?
> Not sure how that translates at all into "stuff" being more affordable...
I'm pretty sure "stuff" in this context is mostly manufactured goods, and those have fallen in absolute price. Examples abound in the tech sector: even adjusted for inflation, a MacBook Neo is the cheapest Mac ever released, and so on...
Manufactured goods, food, and clothing. Note that we tend to think of these things as not being a big deal, but that’s colored by the fact they’re so cheap. In 1970, a wall mount AC was about $400, when the median family income was under $10,000. Lots of people simply could not afford one. Today, a wall mount AC is still $400, while the median family income is over $80,000. People dismiss the fact that an AC unit has gotten 90% cheaper in real terms. But you wouldn’t do that if everyone in your family was huddled around a single AC unit in one room during a southern summer, as was very common in the 1970s.
Yes, but not enough to change whether you want AC or not: https://www.extremeweatherwatch.com/cities/washington-dc/yea.... In DC in 1970 you had 98 days above 85 degrees. The year before was 80 and the year after was 71. Last year was 72 and the year before was 93. There are more warm days, but you wanted an AC in the DC area back in the 1970s too.
> and we didn't put as many of the jobs in places where you absolutely needed an AC
I don’t think that’s true. The south and mid atlantic was always a huge share of the population. And the midwest was a bigger share than today, while the temperate west coast was a smaller share. You need AC in Chicago too: https://www.extremeweatherwatch.com/cities/chicago/yearly-da.... Even in the 1970s in Chicago you had 30-60 days over 85 every year.
What are the fastest growing metro areas in the US these days? DFW, Austin, Houston, Phoenix, Orlando, Atlanta, Raleigh, Tampa, Nashville. Which ones are in the cooler parts of the country?
I agree overall its not like half the population moved to the Sun Belt, but a pretty large amount of the population growth in the US has been focused on the hotter parts of the country.
You're pointing to days over 85 as days you need AC. To me that's pretty warm, but not unbearable. Days where it never goes below 80F for a week or more at a time, or places with extreme humidity mixed with such high temperatures, now that's a place where you need AC.
To your point about high humidity exacerbating heat, I think it’s relevant to consider wet bulb globe temperatures (WBGT) instead of air temperature. It’s more objective than heat index or the ad hoc “feels like” metrics. Above 30-35C WBGT, humans start dying without intervention.
In the United States at least, days with high WBGT have increased and more places experience them. I hear the same is true also in Europe.
They are increasing in Europe, yes, and unlike the American southwest, any sort of artificial cooling is pretty uncommon in most of Europe.
On the flip side, the cost of cooling is steadily falling due to government incentives to replace oil-fired boilers with heat pumps, and the rapid growth of solar driving down daytime market prices for electricity.
Durable goods have deflated compared to wages while health care, housing, and education soared. If you are given the job of spinning this (or take it upon yourself in a bid for access), focusing on the former to the exclusion of the latter is how you do it. "Think of the iPhones! Never mind that rent in a mid-rate city is 1 iPhone and 2 big screen TVs every month!"
It’s true there’s a spin in that direction. But I think there’s also a tendency to take things for granted in the other direction because they have become so cheap. Food and clothing used to make up significant line items for ordinary people. I remember in the 1990s seeing ads for discount cereal (“it comes in a bag on the bottom shelf but it’s just as good as the branded stuff!”). When was the last time you saw a commercial like that?
A lot of the durable goods that became very cheap were a huge quality of life improvement that we simply take for granted. In 1970, which was when boomers were about the same age as Gen Z is today, only a third of americans had air conditioning. Today it’s almost 90%—basically only the people in very temperate climates don’t have it.
The food also became qualitatively different over the same period. We're not eating the same meat, bread, fruits, cheese etc. that our grandparents did at our age.
Durable goods became much less durable, too. Furniture is the biggest one I'd say - they're just not built to last anymore. Whether it's planned obsolescence or just extreme cost cutting, we aren't comparing apples to apples here.
> A lot of the durable goods that became very cheap were a huge quality of life improvement that we simply take for granted.
Like the previous poster mentioned, I'm not sure that's really such a quality of life improvement.
First of all, food. I don't know where you shop, but the cost has definitely doubled, even tripled.
Second of all, the idea that it's some "good" that these things are "cheap" relative to wages - before they may have been expensive, but they were also investments. It doesn't really matter that much, because you can save to obtain them, and don't need to worry about re-obtaining them. Being in a situation where durable goods are cheap, but cost of living is high, means that you are disproportionately struggling - you can't save anything, any good that these products provide is outweighed by it being too expensive to live...
I find it hard to trust economic narratives when so many metrics cited upon further inspection do not really measure what they are implied to measure.
Or maybe we measure what is easiest to measure, not what is best.
I see this everywhere, though. Jobs data is really job openings not actual hires. Unemployment data is really paperwork filing not people out of work or retiring early. And now home ownership is really "count everyone in the home if the owner resides there".
> "count everyone in the home if the owner resides there"
It’s even worse than that, it’s not counting people at all. It’s number of houses with at least one owner living there divided by total number of houses.
Looking at the statistics that are used to measure growth and performance at a population level are such a great window into how they themselves are opinionated stances.
The two measures are both great measures of house ownership that measure different things. The article frames the second one as better, and if you are looking to see the ownership proportion of people (for example as they note to look at the numbers of young people who live with parents) thats great. If however you care about the housing development decisions that will incentivise owner occupancy you might care more about the standard owner occupancy per household.
I often see this with respect to GDP/GDP per capita vs mean income and other economic measures, but its great to see a non economic measure like this compared in this way.
> If however you care about the housing development decisions that will incentivise owner occupancy
Genuine question: who, precisely, cares about "incentivising owner occupancy" as a policy goal? What interest does that serve and why should the government prioritize maximizing that metric?
Basically right now we measure "what fraction of homes are occupied by an owner" and not "what fraction of people live in their own home?". It seems bleedingly obvious that the latter is the number we should be maximizing, if either. And in particular it seems to me that a lot of argument about the former is actually using it as a proxy for the latter anyway.
No one cares about the poor homes who don't have local owners!
If you live in a place which is used only for vacation homes, or worse, only as investment objects, you know the value of owner occupancy.
Non-occupants contribute very little to the actual value of a place - they don't work here, they don't buy here. But they capture much of the value of other people trying to make the place a pleasant place to live, though rising real estate values.
This depends heavily on the industry of the area. Go to a college town and you will find owner occupancy is not that big of a deal. Go to a luxury resort town and they literally make their money from non-residents transiently moving through.
I don't think you can get any of these situations non-organically. But schools and worker dormitories have a lot in common. More than most seem to admit to.
It's very easy to see that owner-occupancy is an incoherent metric.
Stipulate that owning a home is good.
As the number of homes goes up, owner-occupancy necessarily goes down (you can only occupy one home at a time). Homeownership might rise or fall while this is going on. But that doesn't matter; the number of homes going up is good, so the fact that the metric falls when it rises tells you that either (1) the metric is "evil", rising when bad things happen and falling when good things happen; or (2) the metric is incoherent and doesn't carry information about whether things are going well.
Here's a hypothetical: if everyone owns a home, no one rents homes anymore, right? I mean why would you?
So why would anyone buy a second home in that scenario? Maybe as a studio or whatever, perhaps. But as homes become less useful as a rental investment, the number of non owner-occupied homes seems like it will decrease too?
The theory behind it is that 1) economic growth generally accrues to land values so distributing land ownership is one way to distribute wealth and 2) people generally treat the things they own better than the things they rent or consume.
Incentivizing ownership is more closely aligned with objective (1) while owner-occupancy is more closely aligned with objective (2).
These don't work in the presence of capital's outsized returns though, which allows people who (for whatever reason) have access to more capital to recursively seize more of the growth in land values from objective (1) and therefore price out objective (2).
> distributing land ownership is one way to distribute wealth
Right, so you want to know how many people own homes, not how many homes are "occupied" by an owner[1], which is at best a proxy, right? Sounds like you're agreeing with me but just getting the sides of the argument mixed up?
[1] As the article points out, a single person can in fact "occupy" more than one home!
It's also a pretty dubious metric for wealth equality anyhow. If 100% of people owned their own home, then some fraction owning additional ones that no one lived in wouldn't really matter; the value of them would surely not be as high in a world where there was no renting or homelessness, and even if it was, I'd still take that over the alternative where every home is occupied by an owner but there's still not enough to go around for everyone.
> Genuine question: who, precisely, cares about "incentivising owner occupancy" as a policy goal? What interest does that serve and why should the government prioritize maximizing that metric?
Culturally, in many countries it helps with household formation (coupling, starting families), which, in an age of low birth rates, can be useful.
A key difference is illustrated in TFA.
To maximize fraction of people owning a home, you dislike people renting or living with a homeowner. A spouse that marries a homeowner, for example. It would be "better" if they broke up and owned their own separate homes. Or perhaps they could buy two homes, one for each. Or they could by two homes and rent a third to actually live in - same metric value.
To maximize fraction of homes with their owner living inside, you focus on the ownership _and_ the lifestyle choice. A family living together is the best use of land in this case. A family renting a side room to a college kid is still the best use of land. If every home were lived in by its owner, you could still have 90% of your population renting and not building generational wealth.
> A key difference is illustrated in TFA. To maximize fraction of people owning a home, you dislike people renting or living with a homeowner. A spouse that marries a homeowner, for example. It would be "better" if they broke up and owned their own separate homes. Or perhaps they could buy two homes, one for each. Or they could by two homes and rent a third to actually live in - same metric value.
Or they could... both own the home? Independent of the rest of your argument, this is a pretty weird hypothetical case to illustrate your point. Joint property ownership is way more common than any of the "alternatives" you're suggesting, so it's hard to take what you're saying seriously when you've dismissed the obvious way that this would work for the overwhelming majority of married homeowners.
Yes, we're not talking about reality, we're talking about the measures of it. A metric would fall down on corner cases, so identifying the corner cases is how you determine if a metric is a good one.
"% people owning homes" is maximized by joint ownership, as well, but the corner cases are interesting: It is lower with big families living together or when anyone rents.
On the other hand, the "% homes lived in by owner" metric falls down in a much more realistic way: When there are fewer homes and they are lived in by owners, you can still have 90% of your people renting apartments while this metric hits 100%
More importantly, nobody cares about the people where renting is their ideal condition (at least for now - in different situations different ways of living are ideal). There should be nothing wrong with renting. Owning your own should be a worse choice if you will live there for less than 5-10 years. Owning a home should be only slightly better if you will live there for more than 10 years - not enough better to make up the hassles of owning.
If you rent make sure you vote. Make sure you have an informed vote, all too often cities will put rules on rental units that make renting worse for you. (bad tenants and bad landlords exist - good tenants and good landlords need protection from the former). Likewise while rent obeys supply and demand, when property taxes go up that factors into supply and will make rent go up indirectly - is it worth it? (I cannot answer the later question - the more important consideration is make sure the taxes are similar for rental and owned units otherwise you are a renter are harmed)
I didn't vote when I rented in San Francisco for a few years because I had no intention to stay, and thought it immoral to disenfranchise the locals. Actually in my opinion you shouldn't be able to vote until you've lived somewhere for at least 5-10 years. Certainly even if you can, you shouldn't if you know you're only there temporarily.
I don't see why you think owning should only be slightly better after 10 years; if you don't want to deal with maintenance directly, you could always hire a management company as if you were the landlord and renter, but there's a benefit to you and everyone around you when you are invested in your home and community.
Risk is why owning needs 10 years. If the economy collapses you value goes down, by 10 years it will likely either have recovered, or at least not be done much. If the economy goes down and you lose your job in the process you have to sell to that down market and lose money.
Management companies have a terrible reputation. While you can use them, it is likely they will be much more costly than doing things yourself. Real estate investors tend to hire their own people for management even though this seems like the perfect thing for them to outsource because they have been burned so often. If they work for you great, but beware.
Even if you find a good management company, if the roof it 23 years old (expected lifespan 25 years) you should expect the big bill to replace the roof - over 10 years this works out since there will likely be one such big bill but not many. However if you live there less than 10 years these big bills will hit you.
You might want to maximize owner occupancy because you care about the poor homes who don't have local owners - as an owner living in the home might be better incentivized to take care of it and provide decent living conditions, for example.
Allowing people access fairly illiquid and predictable housing allows and incentivizes them to prioritize things on longer timelines which is good for society.
You are the second reply that seems to have misunderstood what the article is about. The point is that the current metric is not a measure of how many people own homes, even though everyone thinks it is.
I think that single family homes as a speculative asset needs to be done away with. If all this energy and investment went to purchasing, say, agricultural land, then more "little" people could own that and protect against institutional investors. Small landlords were only good because they kept institutional investors away, but now that they can't purchase more homes, the small real estate investor's money would be better used to hedge against market capture in the next thing up the hierarchy of needs, i.e. food. If we keep walking this back, then eventually we can prevent assholes from speculating on basic needs.
Actually I don't think this metric goes far enough. In my opinion a homeowner should "own" their home. I.e should have majority equity in his or her home. An owner who pays 3% down is basically a risk bearer for the bank. The bank really owns the majority and is renting out the "owner". I don't think my opinion is fringe. It does measure the risks of not being able to make rent and getting evicted.
That's not a useful metric, because the mortgage interest deduction means that it's almost always financially optimal to take out a mortgage even if you have the assets to pay cash.
Point taken. But surely there must be a way to account for that. Can we assume if the net asset value of the individual is greater than the value of the house by some percentage? Then they are owners instead of renters.
Yes. Unfortunately, the Minneapolis Fed would get a whole lotta push-back if they suggested any such metric. That risk bearing & interest-rent is a near-perfect way for the 0.01% to milk the "could afford a house" demographic.
This isn’t “putting people first,” it’s baking in the cultural assumption that adults live separately from kin. Consider the examples:
> Housing unit 1. A couple owns their home. The woman’s parents live with them.
> Housing unit 2. A couple owns their home. Their son, a recent college graduate, lives with them.
> Housing unit 3. A man owns his home. A friend lives with him.
> Housing unit 4. A couple owns their home. Their two young children live with them.
> Housing unit 5. Three roommates rent their home. The owner lives elsewhere.
> As illustrated in Figure 1, these five housing units are home to 14 adults. Because four of these five housing units have their respective owners as residents, the owner-occupancy rate—the measure traditionally viewed as the homeownership rate—on the cul-de-sac is 80 percent. However, because only seven of the 14 adults are actually owners of the homes they live in, the HPOP is much lower, at 50 percent.
I think 1, 2, and 4 should all count as “owning their home.” The new measure is also a recipe for confounding attempts to compare the metrics over time, as demographic change brings in cultures that embrace multi-generational living. So what seems to be a drop in homeownership rate could instead reflect a growing and aging sub-population where the cultural preference is for parents to live with adult children instead of separately.
"Housing unit 3. A man owns his home. A friend lives with him."
I own my home. If I let a friend stay with me for unstated terms(friendship, charity, money, sex, whatever) then I no longer should be counted as owning my home?
1,2,and 4 all have owners and non-owners. Are you suggesting that the parents of the adult children and the adult child should also be marked as owners?
How does the multi generational preference living theory work given the correlation to rent to income ratio? Is multi generational living preference a cause or a symptom?
Also the whole thing is just weird to me. The woman's parents, the kid just out of the college and the two young children aren't going to be paying the mortgage, upkeep and property taxes.
Once those stop getting paid, none of those people are housed. This is tracking things that don't matter.
Perhaps this measure is useful to something but I find it directionally annoying as I don't think "higher is better" as it would be with the more traditional metric.
Here's an example from the page
- a couple and the wife's parents
- a couple and their college grad son
In this example the two couples (4 people) are counted as home owners and the 3 others (wife's parents, the son) as non owners - so the ownership rate is 4/7 = 57%.
On the traditional metric that scenario would be 100% because roughly each family owns its home which is good.
Now look at what would have to happen for the new rate to move to 100 - the wife's parents and the son would need
to move out and buy separate homes. In other words the metric "punishes" living with family even if that's what you want to do.
I find the traditional metric is more useful. If I am a renter that indicates the desire to have a separate place - so it makes more sense to "ding" the ownership metric.
Yeah, I'm leaning towards this new metric could actually be harmful (assuming the government goal is to increase it).
It makes sense for some families to cohabitate. Family with infants cohabitating with grandparents providing some care. Elderly parents being cared for my their middle-aged "kids". Etc.
i think it would be best just to do a survey asking what housing situation they are in and if that's what they want. do you really think that every single renter wants to be a renter?
Of course not, but many do - it generally doesn't make sense to buy if you won't stay for a longer period of time (used to be ~7 years, not sure if that's shifted) due to closing costs, interest on loans, etc.
Another similarly flawed measure is household income (https://en.wikipedia.org/wiki/Household_income_in_the_United...), which is used frequently as a measure of socio-economic class. Under this measure, a single adult making $90k and a household of two adults and two children making $90k combined are treated equally, which has always struck me as quite stupid.
If both parents work they're also easily spending roughly 30+ grand a year on daycare alone. The DCFSA can help, but its tapped out at 7500 atm, which is cute, but unrealistic. A real daycare following all the best standards is not cheap, its like a second mortgage. I can see a major difference in my daughter coming back from daycare, I mean she knows things I don't think I knew when I was her age...
> If both parents work they're also easily spending roughly 30+ grand a year on daycare alone.
Depends on how old the kids are, because at least in most cases, daycare costs are for a very short period of time compared to the the overall life of the child. And the average in most states is wildly all over the place.
We absolutely should be focused on free childcare, or ideally ways that parents don't need childcare to begin with, but I don't think that has a lot to do with household income. Hell, at that point, why as well talk about transportation costs, as it's different in a single household vs a two parent two kid household, and different still depending on where you live.
Everything in the study makes perfect sense. However one thing that's not discussed is change in culture and expectations. For example the United States is probably the only country where there's a general expectation that grandparents parents and adult children all live in separate homes... and most other countries multi-generation living is the norm. And perhaps some of those norms are starting to float into the United states. On the other hand no doubt the fact that people are not able to live to the traditional American norm is contributing to malaise. Still it feels a little simplistic to characterize everyone's goal is having their own home.
Maybe a way to handle this better would be to look at the size of the home because if a home can easily fit multiple generations it feels like a very different situation. Also it's somewhat arbitrary who happens to be the owner on the deed not to mention key questions like whether or not the home is truly owned outright versus largely in debt to a mortgage
Right now adult Americans can freely chose to live with their parents, and overwhelmingly chose not to.
The article links ownership to costs. Attributing diminishing ownership as "norm float" needs some justification. I suspect multi-generational norms seen elsewhere are rooted in poverty and a lack of opportunity.
Suppose I told you I am losing weight because I cannot afford food, I don't think you should speculate I chose to go on a diet.
I think you have some valid criticisms, but we have to take baby steps here.
As you mentioned, multi-generation homes are not the norm in the US. If there is a change in that norm, it's worth investigating why that's happening, before we conclude that we need to adjust metrics around it.
Purely anecdotal, but every multi-generation home in my (American) family is the result of disability or student loan debt - multiple generations live together, but that doesn't mean they want to.
Also remember that this new metric is meant to be more informative on wealth, generally. Those other generations living in the home don't typically share in the wealth the home confers, not until someone dies at least.
There is not much difference between the US and Europe in that. In the Nordic countries, children move out earlier, while multi-generational households are more common in Southern Europe.
I’m happy to see our metrics being improved because much of the economic policy seems to have been based around what was good for boomers.
Not what was good for young people who, for the most part, can’t afford to live in houses and these days are getting ripped off with overly expensive apartments too, so they never have a chance to buy a house and build equity.
TL;DR: Instead of measuring the percentage of homes that are owned by people who live there, they want to measure the percentage of adults who own a home.
Feels like an apples and oranges situation. The two numbers each have their own value but they’re measuring different things.
One is calculated based on the number of houses, the other is a measured based on the population of adults or households. Both measures have always existed. Trying to replace one with the other doesn’t seem right because they both have value for different reasons.
Renting isn't 'good' though in many metrics. Ownership is, and that's what the push should be for, rather than promoting basically a monthly subscription to have a roof over your head.
It's not that simple. Owning a home is not just a better version of renting. It's a whole different thing with pros and cons.
Your mortgage is the lowest amount you'll pay. On top of that you have to manage the upkeep of the house, which costs both time and money. Lots of people go through phases in their lives where they move around and owning just doesn't make sense for a few 1 to 2 year stretches.
On the other hand, rent is the highest amount you'll pay. You generally don't have to worry about upkeep, and you're free to move. The commitment is lower and that has real value for certain people at certain stages of their lives.
I rented for 6 years in different areas until I figured out what I liked, and then I bought a house. Those 6 years weren't just wasted years. Those were very valuable years where renting really made the most sense.
> Your mortgage is the lowest amount you'll pay.
> rent is the highest amount you'll pay.
I don't like these 2 statements because they are only true at a starting point. If someone gets a mortgage today for $2k/month, 10 years from now it'll still be $2k/month, or even less if rates drop and they refinance. Rents OTOH will continue to rise with inflation. I had a $2k/month mortgage at my last house and the house next door rented for $4500/month.
> On top of that you have to manage the upkeep of the house, which costs both time and money.
Well guess who has to pay for that in a house that is rented? It's the renter!
Just the same as when you rent a car, the cost for maintenance is included in your rental fee.
You're just as free to move if you own a house: Just sell it, or rent it out. Any inconvenience from doing that is easily worth the money you save by not giving it away in paying rent.
> Well guess who has to pay for that in a house that is rented? It's the renter!
On average, over time, in a free market, yes. But not necessarily in any specific case. The rent is a cap during the lease period, no matter what the landlord has to pay for maintenance.
If you live there for 30 years - and don't cash-out-refinance - in 30 years your subscription costs go much lower.
However if you rent for less than the mortgage you can invest the difference into something that will grow in value more than the house (which SHOULD track inflation) and in turn end up about the same in the end.
In what world is rent lower than mortgage? Part of the reason my fiancé and I bought a house is because it was cheaper than renting. Not just long-term, but our monthly payment is actually noticeably lower.
Of course, we did need to pay a down payment. But if you amortize that over a 30 year mortgage period, we’re still better off buying than renting.
If houses are capital, renting can never be just as good without de-incentivizing renting via legislation, which in reality will result in a massive rental shortfall, since nobody is going to maintain rental property when they could just invest their money in another asset.
Personally, I like the asset diversification that investing 40% of my income allows. Buying a house at this point in my life would mean a very significant portion of my net worth would be concentrated in one asset, and I'd have less cash flow every month to boot.
I don't feel my rental situation in either insecure or unstable. I recently moved (my choice) but previously I lived in the same rental complex for almost a decade. I took advantage of COVID to move to a larger apartment there for cheaper rent, which was a massive advantage I had over friends who owned homes at the time.
I hope this number drops below 50%. Well below 50%. Maybe then we can finally vote down the NIMBY regulations and NIMBY politicians. And start rapidly expanding our housing supply. Given our current political system, it seems high homeownership rates are the root cause of the housing affordability crisis
Housing can not be a viable asset class, or it will continue to rise in prices. Step 1 is Land Value Taxes. Step 2 is remove/greatly reduce zoning, allow construction and streamline the process. If you allow density, building up, and incentivize it, then it will be built. Developers spend tens of thousands of dollars in permits and interest payments before they can put a shovel in the ground. Being a landlord isn't really an issue, morally, ethically, or with regards to people buying houses. The issue is when there are limited number of units, and people turn them into investments.
I’ve been part of housing-related online discussions for a decade now, and everything reads like a wish-list.
- Majority of people own their homes. So it’s in their best interest for the housing prices at the very least not go down.
- Less, but still, some amount of people are buying houses with sky high prices. After a huge purchase, they will also do their best to ensure prices don’t go down.
- Another good chunk of people are waiting out to inherit homes from their parents.
All these people, in one way or another, will protect asset prices (e.g. voting for certain people to ensure nothing gets built). The only ways I can see it being resolved is:
- China-style benevolent dictatoresque commitment to surgical detachment of housing prices from the general economy (they’re trying, a lot of people are unhappy, but some progress is visible)
- Population collapse, to reduce the demand. But looking at Japan, metro areas will keep skyrocketing, because people will flock to the main cities even more
Any of the options will make a lot of people unhappy. A huge political no-go zone.
All the talks about allowing construction and streamlining the process have been circulated for a decade+ at this point. But incentives for people aren’t there. “I got mine, don’t care about you” is the general attitude of majority of people.
I've always wondered if UBI can replace the category of "viable asset class" that homes are now, wherein UBI offers upward mobility now AND generational wealthy in the future - the same way owning a house does. Wouldn't that be a valid populist play, an actual policy rooted in pragmatic, and all-around a winning strategy?
UBI is also another topic that has been discussed intensively for the past couple of decades. I don’t see it being implemented almost for the same reasons as cheap housing. On top of it, we experienced UBI-lite during pandemic, and saw the inflationary result. “But it wasn’t perfect UBI” argument won’t really fly either in the current political world.
People are generally selfish and will want the best for themselves and their loved ones.
>"On top of it, we experienced UBI-lite during pandemic, and saw the inflationary result."
I sympathize with this take because it's the one I had, until I saw the data. On top of genuinely appealing to the fact it wasn't perfect UBI - which doesn't make it an invalid take just because you pre-emptively pointed it out - our inflation during COVID-era relief was overwhelmingly from abuse of PPP loan applications and payouts, disaster relief funds - and a healthy chunk to the federal subsidizing of state/local governments [1]:
"Congress has obligated approximately $5 trillion in response to the COVID pandemic although significant portions of this money remain unspent. For reference, in fiscal 2020, the total state spending for all 50 states was $2.28 trillion, or less than half of the pandemic relief spending. Of the obligated relief funds, approximately $1.8 trillion went to individuals and families through $844 billion in stimulus check payments and $666 billion in enhanced unemployment compensation.
Additionally, businesses received approximately $1.7 trillion, much of which came from the $835 billion Paycheck Protection Program (PPP) and $349 billion Economic Injury Disaster Loan (EIDL) Program. State and local governments received $745 billion, the health care industry received approximately $482 billion, and other remaining industries received approximately $288 billion."
1 - https://www.taf.org/covid-19-relief-funds-two-years-later-wh...
The issue is not investment at all, we want more investment into housing.
But you are absolutely correct you cannot both want housing to be a good investment (increase in value faster than inflation) and an affordable (drop in price lower than inflation).
Don’t subsidize demand. Allow more supply. Private homeowners, big developers, all of the above. Build.
And stop allowing people who view their house(s) as an investment from being able to veto any and all building. While that incentive is present, there will be massive hurdles to being able to build the amount of housing that is necessary.
To be more specific, I dont think owning a sfh to rent out should be good. But building an apartment complex should be a good investment. Unrestrict building, and tax underutilized land.
I think the problem with getting this done in the US is the lack of public transit and the dysfunction in public schools.
If you could avoid a $700 car payment and still get to school/job/grocery store on time, a lot of Americans would.
But if you can't, and you are paying $700 anyways, why not at least use the fact that you're paying $700/month to travel anywhere and get a bigger parcel of land all to yourself? There's a big incentive to have single-family homes for rent as long as that math is true.
And if you can live in a dense area and get around OK, but paying $700/month saves you from $800/month in private school payments, then the math might still make renting SFH better even if the transit is there.
Investment certainly feels like a problem. The amount of completely empty homes in my area (coastal ca) is disgusting. There are entire real estate brokers that specialize specifically in investment - these people aren’t even pretending that their clients will use the house, they may never even step foot in it.
Meanwhile economic stratification continues and the other side finds it increasingly difficult to make the down payment.
The issue is that housing should not be an investment but due to rising labor and materials costs and also more restrictive code, they are now an investment.
Housing - more generally real estate property - can absolutely be a legitimate asset class, sustaining speculation and global investment; that is how we get capital invested in building out housing infrastructure.
But you shouldn’t have to make a leveraged loan-backed investment in a single asset class in order to afford shelter.
The problem isn’t ’housing is an investment’, it’s that people are long not on ‘housing’ but on their own single specific house. That’s a horrendously undiversified portfolio.
Get rid of property tax or somebody below a certain income.
I really don't feel great how people in high density housing subsidize home ownership costs for the people in the burbs.
Property tax is theft.
By applying a tax to a _thing_ that someone owns, you are saying 'actually, this thing you have is mine, and if you don't pay me for the privilege of having it, I will take it away from you'.
Property tax pays for maintaining the utilities and services connected to the property. If you buy land that is completely unconnected from public services, you will find that the corresponding property taxes are extremely low.
I've had annual property taxes as low as $1/acre.
Maybe I'm beating a dead horse, but who pays for the roads to houses in the suburbs and why is it the people living in apartments that don't use many roads?
I'm not saying taxes are bad. I'm saying specifically that taxing property itself is bad. If someone 'owns' a thing, why would they pay rent to some landlord (the state)?
I acknowledge that I'm indulging in equivocation by saying 'assessing taxes from property is essentially paying rent to the state'. I assert that the equivocation is valid because the outcomes of not paying rent and not paying property taxes is the same: you get evicted.
Land ownership is theft. Why should people have a right in perpetuity to the land that we all share?
In the UK, a leaseholders get screwed if they forget to renew their lease before the 80 year mark.
The cost to develop the land needs to justify the development. If I spent $500k to build a house on the land, I would like to be able to use that house for as long as the house exists (or I sell it to re-coop the investment).
Many people are really bad at saving properly, but they will pay their mortgage. Landownership enables at least some old people to have a cushion in retirement.
You're mixing a house as personal property with the much broader claim of private property on land.
It is possible to protect those two uses you mentioned, and other reasonable uses of land, without at the same time spending state resources in enforcing perpetual, absolute, hereditary, exclusive titles on plots of land.
We may live in the same country or planet but that does not mean we inherently have any share of the land.
This is just wrong. Western economies have largely been hollowed out from productive output in favor of hoarding land and property because there is inelastic demand and increasing prices has become a political goal.
It should be super expensive to own more than one house. This by the way is what China did where Xi Jinping famous said "houses are for living, not for speculation" [1] as he quietly popped the real estate bubble a decade ago.
Increasing house prices are just enriching the already rich and stealing from the next generation. Nothing more. Houses should depreciate in value. They should not be an asset class.
[1]: https://en.wikipedia.org/wiki/Houses_are_for_living,_not_for...
Why is immigration always absent from these discussions on HN? the US has absorbed millions of people through immigration (both legal and illegal) which puts pressure on housing supply which drives up prices since supply is relatively inelastic. Enforcement of immigration policy would increase housing supply without needing to build more capacity in the short term and would lower prices.
It was pointed out to me recently that immigration crackdown has maybe already started to affect housing prices in DFW since H1B crackdown. https://www.bloomberg.com/features/2026-dallas-h1b-housing-m...
We need immigration because there’s a construction worker shortage. No immigrants = even more expensive to build new homes
We shouldn't allow people to hoard housing and land. That’s the core problem here. It should be super expensive to own more than one property. I refer people to the Housing Theory of Everything [1].
I disagree with the Ultra-YIMBYs who believe in removing all zoning and regulation. If you do that, you get Houston. Because that's what Houston is. What we need is to prioritize living over investment returns in housing. Part of this (IMHO) is to have expansive social housing like Vienna to compete private land use "honest". Also, we should really not allow rich enclaves. There should be social housing in every ZIP code.
[1]: https://worksinprogress.co/issue/the-housing-theory-of-every...
I've posted it already, but at least in my country (Netherlands) it seems like the problem isn't the lack of housing, but lack of marriages. If people ages 30-60 married each other at the rate they used to in 60's, then there would be no housing crisis.
The statistic that doesn't compute for me is how is it possible that we're having a housing crisis while at the same time we have historically low average number of people per house.
>we have historically low average number of people per house.
I'd like to see the actual statistics method used to calculate that. Saying it's marriages alone just doesn't past the smell test for me. Just because people aren't married doesn't mean they don't live together and the number of unmarried people living together is higher than ever. What makes far more sense is the number of children people have has fallen off a cliff which drastically drops the number of live at home adult children.
https://www.cbs.nl/nl-nl/nieuws/2024/36/1-op-de-5-mensen-woo...
It's basically this graph. In 60's almost nobody was living alone (less than 400k people). In 2024 about 3,3 million people live alone. When you look at the infographic, ages 30-60 add up to like 1,2 million people.
https://www.volkshuisvestingnederland.nl/onderwerpen/aanpak-...
Here we have an estimation that the country is missing like 400k houses. So if two-thirds of those 1,2 million married each other and started living together, they would nicely plug the housing crisis by freeing 400k houses.
Either way, we have a huge societal change that lots of people live alone, which did not use to be the case.
> In 60's almost nobody was living alone (less than 400k people).
In the US, back in the 1960s you could own a home, a car, and support a family all on a single income. If we got back to that home ownership would skyrocket.
Is that true, though? When my parents got married in the 60's in the Netherlands, they had to move in with my grandparents because there was no housing available and eligibility was restricted. It took a few years and a 2nd child before they were eligible to rent an apartment. Perhaps that does not show up in the statistics?
There was a youtube video sometime ago that argued about how life has vastly improved in every single aspect (with numbers about how 'stuff' has gotten universally more affordable), only housing has gotten more expensive relative to income and how that proves we have a better quality of life because of that.
It got me thinking that maybe the home ownership, or having a place you can call yours, disproportionately affects people's sense of content and wellbeing. Also, doesn't help that laws and government policy heavily favor home owners (perhaps because home owners vote at a lot higher rate than renters)
Health care, housing, and education are the big three drivers of mandatory expenses in most peoples' lives. It's undeniably a little cool that luxuries got cheap, but it's severely un-cool that necessities got expensive. I'm glad to see a focus on pushing statistics to do a better job of reflecting that, but yeah, this is all downstream of structural incentives so fixes are only going to happen through legislative choices that will make people angry and until then the problems will continue to get worse.
> undeniably a little cool that luxuries got cheap, but it's severely un-cool that necessities got expensive
Well said. Being told that 'you should be happy without owning' to a party that can't afford to own by another party who is actively scooping up the same resource can feel extremely invalidating.
My personal take is that a lot of support for contemporary political extremism in many countries comes from the fact that a significant portion of population is pissed off and see no realistic chance of the 'settle down and thrive' life, not because they are racist/prejudiced or whatever (although labeling them as such only makes things more extreme)
> Being told that 'you should be happy without owning' to a party that can't afford to own by another party who is actively scooping up the same resource can feel extremely invalidating.
It's not really coming from those though? At the same time that housing costs have ballooned, we've also had a significant migration back to cities. When a larger % of the population are living in high density locations you are going to naturally have a larger % not owning homes. Owning your own home does not align with the density required for a city to function.
At the least, narrowing down the topic to 'Why do people rent instead of own a condo?' is a much more meaningful topic over 'Why do people rent instead of own a SFH?' since a condo is a more viable option in locations where most of the renters are.
> Owning your own home does not align with the density required for a city to function
Much of Europe would like a word. I grew up in a block of flats where everybody owned. 16 apartments, around 60 people, lived on the footprint of a typical American house. All our parents were homeowners, together they owned the building. Two buildings actually and the land they stood on.
So a total of 32 apartments, 120 people, a small parking lot, and a bit of green lawn owned by the people who lived there and self-governed through a sort of HOA. Little communities like this were extremely common in the city.
Nowadays with my generation homeownership is becoming a little more rare. Still people own apartments in these self-governed buildings, but many have become priced out. Too much demand not enough build.
Why does being in a city “naturally” mean less home ownership? More demand and higher prices yes, but you also should be earning more and dense housing projects should be trivial to justify. It’s legislation all the way down, politicians protect the interests of the wealthy who want to rent seek regardless of location. Look at how mamdani got a common sense luxury home tax in NYC, before that ultra wealthy owned multiple homes just because they could.
Because multi-family buildings (required for higher density) come with more complicated ownership models. Owner occupied triple deckers in Boston, for example, often come with their own condo associations because there needs to be some way to handle the shared maintenance and expenses.
That's for a three unit building. Now scale that to a twenty or one hundred unit building. At some point, it makes sense for a single entity to handle the common maintenance through outright ownership and rent. Individual families have the flexibility to leave if things suck without being financially tied to the building long-term and subject to changes in housing prices. Yes, moving as a renter is expensive. It's still lower cost and friction than moving as an owner.
Source: rented for years in cities. Now happily a homeowner in the hinterlands of Vermont.
A counterpoint is that a huge number of suburban Americans already have experience with a condo association through being in an HOA.
Rural homeowners and people with single family homes in streetcar suburbs or cities don't, but most new developments already have an organization with dues for shared maintenance.
Pulling from fuzzy memories here, but to my knowledge the legal framework for the bastardized entity known as Homeowners Associations here in the US originated from the exact thing your describe; multiple person ownership in parts of a single building.
One thing soviet commies did right was housing builds. Build factory for city blocks, then just pop them up, constantly, keeping the line busy.
It should really be city that is building the new housing (even if in the end it gets subcontracted, at least the top level have vested interest in keeping the quality and cost in check). Maybe even offer some rent-to-own programs where part of rent gets put into savings that can be used to either buy it after few years of use or be withdrawn when moving so renter have nice lil bit of money to put forward for buying new apartment/home.
Then the city can actually plan for it, rather than hope housing developer that bought the land does something good for city and not just their own pocket.
There's no need for the city to build it, they have zoning plans, and they can easily zone "that corn field over here" into an aera of commie-style apartment buildings (5+ floors, commercial on ground floors, apartments above, garages underground), and assign some percentage of space for green areas.
I live in one of those used-to-be-commie countries, and we somehow manage to keep cornfields in prime locations, and in many areas, the most the local government allows you to build is a two-apartment two-story house, but none of the non-built land is actually buildable, so you need to demolish something else first. Here and there someone is able to build something with maybe 6-8 apartments (probably with an envelope switching hands), but that's it.
It's as if some rich people connected to the government managed to get a lot of realestate in the 1990s when communism fell, and now they don't want prices to drop. But hey, we're building office buildings without any issues and making airbnb even easier instead... so yeah... the situation is pretty bad.
Most people don't see that as viable because American cities don't have the public transit needed to make that viable, and equally important, don't have condos built that are the size of a family home. And there's a big push among suburban parents to judge their kids for living in cities, even if they're not as dangerous as the parents think.
If we modeled Spain, we could have more condos. That would require good, safe transit, condos with green space and multiple rooms at a SFH price point, and a cultural change among the older generation to view cities as having less crime.
Housing costs have boomed and are still booming in rural areas and regions where the population is decreasing and all young workers are moving away.
"…not because they are racist/prejudiced or whatever…"
Perhaps wealthy actors (or those representing them) are attempting to distract the aggrieved—focus their anger toward some non-wealthy group.
This seems like an interesting theory, but when I look at the two ways it may be actuated it seems to fall apart.
Either there is explicit collusion where they meet and discuss how to do these things, or there is implicit collusion where they all act in their own best interests and the results is the same. Neither of these mechanism seems particularly likely to me.
I would be happy to hear some thoughtful explanation of how other people approach this issue
I agree that your two examples don't stand up to scrutiny.
There is historic precedent for blaming immigrants (as an example, or just others, if you like) for one's woes. So on one hand you have well-known "playbooks" that don't require some secret meeting of a cabal.
That aside though, even if actors don't collude, if they're each throwing a lot of things at the wall, they may well all arrive at the same things that seem to "have stuck". It's as though there are universal fears and even prejudices among populations of people.
Hi, this is a well known phenomenon in politics that is much discussed in political science and sociology, and goes by many names (strategic polarization, racial capitalism, split labor market theory, etc, and depending upon how you frame it, it encompasses all politics going back to Plato’s Republic). There are many examples where elites have stoked division amongst the poor (usually along ethnic or religious differences, but any difference can be utilized).
The most famous examples in America were the divisions created between poor white and poor black Americans during Reconstruction and the Jim Crow era to prevent them from forming class solidarity, and then later, the Southern strategy that enabled Nixon and the Republican Party to regain power during and after the Civil Rights era.
If you are unfamiliar with this topic, you can look at wiki articles and blogs like these, and then go deeper by reading academic papers and books on the subject.
https://en.wikipedia.org/wiki/Split_labor_market_theory https://en.wikipedia.org/wiki/Black_Reconstruction_in_Americ... https://en.wikipedia.org/wiki/Southern_strategy https://belonging.berkeley.edu/new-southern-strategy
This is seriously the basis of the manual of populism as mass control tool: identify something attacking their group identity, hang it before their eyes, and they will follow you blindly in every other aspect. Many books have been written about this and nowadays we can see their implementation at work about everywhere.
You can spin many things to sound as racism if you want them to.
My small eu country has in the recent years started importing workers from asian countries, and people are against that... of course it's branded as 'racism' in the media.
The reality is, that some businesses have been having troubles with finding workers to do hard work for minimum wage (which is easily solvable by paying people more and creating better working conditions, but hey, think of the profits), and importing foreign workers means that wages can stay down. We're talking about AI and how we'll all lose jobs,and at the same time, importing new people, and that doesn't compute for many, especially those underpaid who can't negotiate for better options because the government approved new foreign workers in their field.
Then you have the more on-topic problem of importing thousands of "outsiders" into a relatively small city (~300k pop), without building any housing, neither for them, nor for locals, who want to move out their 30+yo "kids" out of their childhood bedrooms, nor for others living a bit further away who'd like to live closer to work. Sure, you can fit 8 "poor foreigners" into a 2-bedroom apartment with 4 bunk beds for 200/month each, and it'll be cheap for them, but for a young couple wating a child, 1600eur for such an apartment is around 1/2 of their combined income, so nope, no apartment and no kids for them, since they have nowehre to put them, and "we need foreigners, because our people are not having enough kids".
Then the third problem is integration... and the government does nothing about it, no language courses, no nothing... the laws say that businesses must use our native language, but in some areas, you can interact even with waiters or shop clercs (so, first line of interaction with customers) who can't speak a word of it.
But hey, it's easier to say "racist people hate foreigners", than to solve the issues.
Because the issues are nearly unsolvable.
Your small EU country probably has a replacement rate of something like 1.5 which means you're heading towards extinction. This puts a crimp on labor and increases wages, and it leaves openings in higher paying jobs which people want. You end up with no one to do naturally lower paying non-specalized labor.
Modern standards of not having 100 people die in a house fire have changed the dynamics of where immigrants live when they moved to a country. New York City, for example, just shoved people nut to butt in the smallest most unsafe places they could make. We don't do that in first world countries now, so something has to give.
I like your take. Do you feel it also a lack of interest in genuine evaluation of hard options?
Not all policy is easy to understand, but I feel (anecdote) that lots of folks don’t want to understand what isn’t an obvious benefit to them, especially if benefits accrue over a longer period.
> Well said. Being told that 'you should be happy without owning' to a party that can't afford to own by another party who is actively scooping up the same resource can feel extremely invalidating.
That's been a long standing element of capitalist propaganda: attempt to distract and invalidate people's real, legitimate complaints about their situations by noting that not even the Kings of old had color TVs and refrigerators.
Who cares if your housing situation is insecure, getting healthcare is challenging, and politically you're dis-empowered? Look at the boob tube and rejoice at your good fortune!
> Health care, housing, and education are the big three drivers of mandatory expenses in most peoples' lives.
BLS says housing, transportation, and food are the top 3. Insurance/pensions is #4, but that also includes car and homeowners insurance and retirement contributions.
Over the past 50 years, both transportation and food got cheaper. Moreover, clothing actually used to be one of the top categories, but that’s fallen off completely.
I've never owned a car since I live in NYC (I'm in my 40s), so the only transportation numbers I'm vaguely familiar with are with the subway. The MTA budget has gone way up over the past 50 years [1] and the cost to build the subway in NYC is hovering in the $2 billion/mile range. This is largely political and bureaucratic, as in Japan and Europe it's about $200 million - $400 million/mile. [2]
So clearly something is going wrong with the way we deal with our mass transit as well if Paris can do things for a fraction of NYC.
[1] https://nypost.com/2017/06/25/it-took-50-years-for-the-mta-t... [2] https://www.city-journal.org/article/why-cant-new-york-contr...
I should have said "mandatory expense inflation", yes. There are still some difficult problems the economy is making progress on, but the correct attitude towards those is "keep up the good work" and to focus our attention back on the parts which are robbing us of progress as fast as we make it, where costs soar in excess of wage increases: health care, housing, and education.
Transportation has got cheaper? That seems at odds with what I'm seeing (although I was only 12 years old 50 years ago).
I have a hard time believing healthcare expenses is not in the top three.
It might be that a lot of the cost doesn't show up in the data because it comes out of your paycheck before it's "yours," in the form of your employer's contribution to health insurance premiums. (Anecdotally this is true for me - "my" portion of premiums would not be in the top three, but the total premiums are #2 after housing (for a while when I had roommates they were #1, which is ridiculous).)
(BLS gets this data from surveys: https://www.bls.gov/opub/hom/cex/home.htm )
I don't know about the first half of those 50 years, but over the second half (2001-today), transportation - or at least cars - got significantly more expensive. Disappearance of cheap new cars + massive supply reduction of used cars + repair costs of old cars + gas prices.
Inflation has been high enough that it messes with our perception of things, but I believe the data shows otherwise (at least in the US).
- Disappearance of cheap new cars: You can get entry level Chevys, Kias, and Hyundais for < $25k, which is about $14k in 2001 dollars and many more of those cars will last until 200,000 miles and have safety features only available on luxury cars in 2001.
- Massive supply reduction of used cars: I actually don't have good data on this, but it seems like there's pipeline is still borked from COVID era irregularities. That said, cars these days have much better quality and last longer. A car with more than 100,000 miles in the 90s was near the end of its life. That's a typical listing Facebook marketplace these days.
- Repair costs of old cars: Repairs can be expensive, but again, cars today are much more reliable than they were in the 90s or earlier. Even simple things like recommended oil change frequency changing from 3k miles to 10k miles for most models makes a huge difference in total cost of ownership.
- Gas prices: Gas prices have certainly spiked recently (gee, I wonder why), but the cost of gas in real dollars has been higher several times in the past 25 years (see the second chart here: https://www.macrotrends.net/4453/us-gasoline-prices) It peaked in 2008 over $6 per gallon in 2026 dollars.
> You can get entry level Chevys, Kias, and Hyundais for < $25k, which is about $14k in 2001 dollars
For comparison, an entry level car in 2001 was <$9k. That's <$18k in today's dollars.
The extra safety features is part of why transportation has become less affordable, yes.
> I actually don't have good data on this, but it seems like there's pipeline is still borked from COVID era irregularities.
That, plus Obama-era Cash for Cars, plus engines becoming so complicated and expensive to fix that 10+ year old broken cars are scrapped rather than repaired at much higher rates.
You used to be able to buy a car for literally less than $1000 that would last you a few good years with minimal maintenance.
> Repair costs of old cars: Repairs can be expensive, but again, cars today are much more reliable than they were in the 90s or earlier.
Not 5x more reliable, as in requiring 5x fewer engine renovations over 15 years now that it costs 5x more to do so.
The numbers are just bullshit. The current inflation numbers tell us the price of health insurance is falling for example.
When reality seems to be in conflict with logic, the next step is to question assumptions.
Is the cost of health insurance falling because people are settling for worse plans?
I would wager they are non insured and going to the emergency room when desperate. As another poster linked healthcare costs have grown exponentially.
https://www.aei.org/carpe-diem/chart-of-the-day-or-century-8...
It's a bit like when the inflation basket subs ground beef for steak, and then says food is getting cheaper.
Where are you seeing inflation numbers showing health insurance falling?
luxeries also haven't gotten cheap, really - their manufacturing has been outsourced into places which often don't pay decent wages - so it's just out of sight/out of mind.
We're currently living in a time where some of the issues are being hidden by the nature of a global market - it's friggin impossible to make any good analysis with a global market, it has just too many influences and ways to hide criteria...
> Health care, housing, and education are the big three drivers of mandatory expenses in most peoples' lives.
Definitely true for my household. The mortgage, college for the kids, and health insurance for a family takes up a huge amount. Not to mention the housing expenses like HVAC fixes, trash collection, sewer, utilities, etc.
> I'm glad to see a focus on pushing statistics to do a better job of reflecting that
“You have lies, damned lies, and then you have statistics”
> Health care, housing, and education are the big three drivers of mandatory expenses in most peoples' lives
In every developed country two of those are basic human rights, and you get them free even if you’ve never worked simply because you don’t want to.
Every developed country except one, that is.
All of those are free to the poor in the US with our very generous welfare to the bottom and top percentiles.
* assuming you don’t live in a state with a Medicaid work requirement/disqualified by earning “too much” as working poor, and lucky enough/have dependents to win a Section 8 voucher from the lottery after waiting for months to years
I agree the working class gets screwed over as usual.
What a shame it’s not for everyone
> Health care, housing, and education
In Europe its only housing, and still proportionally cheaper than what US has, often in higher quality for older homes (bricks / concrete vs cheap creaky wooden houses).
The idea of saving massive amounts for my kids potential university studies is ridiculous to me. Same for any health issue. I mean any health issue as long as I can work, and then social state takes over (that is not ideal but at point nothing is).
This is also how happiness can be defined - lack of (much shorter list of) constant worries and pressures to deliver, sustain etc.
In the US, bricks and concrete are unsafe, not "higher quality". Much of the US has severe earthquakes which collapsed the European-style masonry buildings they used to build. There are many old photos of what happened to cities that were built with brick/concrete after major earthquakes. The main alternatives are steel and wood, same as in Japan.
My home is rated to survive earthquakes stronger than any in recorded European history without structural damage.
Concrete houses suck and Europeans need to get off their high house about them. I own a concrete brick house in Europe and I’d strongly prefer a wooden American one. It’s hard to insulate, hard to alter, uglier, has a terrible embodied carbon footprint, has too much thermal mass, and alterations that would make it more livable (like having eaves) are illegal.
>this is all downstream of structural incentives
You are mostly right and the structural incentives are more related at root to unsustainable national debt than any legislative choice (unless that's what you were referring to)
I don’t follow your logic. The recent legislative choice by the current administration is continued tax breaks, corporate tax holidays, and capricious tariffs. There is no serious discussion about the debt.
Nobody spends like republicans.
Trump increased the national debt by $7.8 trillion in his first term (rising from ~$19.9 trillion at inauguration to ~$27.75 trillion when he left office), 39% increase (more than WW2, the Manhattan project and the Moon landing combined)
Each and every US citizen will be required to pay $22,400 for the (ahem) accomplishments of Trump's first term.
So far in his second term, Trump has added $3.2 trillion so far, if you calculate by the end of his second term it will be about $8.8 trillion.
Each and every US citizen will be required to pay $25,000 for his accomplishments now.
For comparison: you owe $9,200 for Barack Obama's last term, and $20,300 for Joe Biden's term. Oh and Clinton was by far the cheapest president since WW2, increasing the debt by a measly $600 during his 2nd term.
I don't see how. National debt is just a form of money-printing. And it has to equal private savings.
Not necessarily local savings though. Savings from other countries works just fine.
Nothing to do with poisoning the non-AI parts of the economy to drive investment in AI? Its not like this bubble was gonna blow itself.
It's clear that there's plenty of money to go around. It's just that none of it is being spent on things that improve people's lives, mostly due to corruption.
These problems have existed since well before AI.
Sure, it's only the most recent example of how lopsided economies like ours cyclically shoot themselves in the foot.
Or we just wait for automation and robotics to make building housing much cheaper and the free market system to fix things - which 5 years ago I assumed was too far out, but with all the advances in the sector, seems like we might get significantly cheaper building costs within the next 10 years or so.
The cost of housing mostly isn't in the building. If it was, we'd just build smaller and have houses. But you can't because the land costs too much.
"If it was, we'd just build smaller and have houses."
Someone needs to tell the big developers. They keep turning out McMansions (and somehow selling them?).
There's no profit in building smaller.
The local business producing single-wides seems to be doing fairly well and has been in business for over 60 years, so I am not sure it is accurate to say that there is no profit. The market is small, though. If you can afford a small new house you can also afford a large used house and most people are going to choose the larger house every time. In aggregate, there isn't a whole lot of incentive for someone to build a small house.
Huh? I have a 650sqft house, it costs 430K in a small town. I looked at building a new place, it would cost roughly the same to hire a building team to make it - not to mention years of waiting on development. The land is fairly affordable if I buy a little bit out of town. It's the cost of building that is stopping me.
If it's costing $650+ per sqft to build, it sounds like there may be some externalities about the site(s) that might be relevant here?
For scale, in much of the country it is possible to build a new home for well under $200/sf. New detached homes retail for <$175/sf, which includes the builder's profit.
If I look at the value of the place where I'm living, a bit more than 2/3rds of it is attributable to land instead of structure. This ratio will change depending on whether you have a multistory structure on a small plot of land, or a SFH with a yard on a larger plot, but land/value ratios > 50% are typical.
I guess it depends on how you look at the numbers.
My current place would sell for say $1.4M or so.
The lot itself is worth around $600-700k if it was empty.
A similarly sized home would cost well over $1m to construct to similar quality levels - normalizing a bit for modern construction techniques and all that.
So about $2.4m to build new, or $1.4m to buy a fairly similar 25 year old home next door. New construction here costs more than the older structures on the land in most cases. This ignores permitting and financing costs which throws a light wrench into those calculations, likely making it a bit more expensive on the build side.
That is using numbers I would pay a custom builder for, but even if you add in 20-30% profit for the builder the math isn't super great for the new build end of things.
Houses depreciate. Markets can do funny things (remember the COVID days when a used car could sell for more than the same new car?), but generally the remaining value of a standing structure is going to be a fair bit less than the cost to build the same thing new. It is likely that the parent also sees >50% land value on the current property now that the house has been lived in and is showing some wear and tear, but key here is that to rebuild the building from scratch it would cost as much as the land plus current building is worth just to build the same structure again.
I had a 1200 sqft house built for about €180,000 in Ireland.
Why would you build a small new home when you can buy a large used home for the same price?
1- Costs of operating an larger house are higher than a smaller house 2- Yearly maintenance of a new house is cheaper than an older house (older the house, the greater this gets) 3- Easier to keep a smaller house tidy 4- Mobility/lifestyle issues. 5- Indifference towards resale value
Not everyone wants a giant house, and plenty of people like a small one. It's not the size that matters, it's how you use it.
I don't think anyone is talking about giant houses. Last time I priced a new 1,500 sq ft home they wanted over $800,000. That was an instant nope from me. Another commenter pointed out that their 650 sq ft home would be $400,000 to build new. These are already beyond most people's affordability even before considering the cost of the land.
So when we talk about small and affordable we're talking more like 100 sq ft. Large compared to that is what most would call a modest home.
Okay, if you just want to have a conversation with yourself I can see myself out as you addressed literally none of what I said and went off on some affordability tangent about housing in general.
Housing prices are too high for most people to afford. That wasn't what the sentence I responded to was asking about.
It does address what you said: Nobody is talking about giant houses. In context, "large" houses are still quite small. It remains that very few people want a 100 sq ft home even if it is technically cheaper to own and easier to take care of. If you won't give your comments any thought before posting them I'll happy keep making fun of them.
How about a bit of empathy. People don't have 10 years to wait for necessities, those vulnerable are suffering today
Owning a home creates a stable, personal nexus with a set of vital institutions: Family, community, local economy, government, …
As a driver and measure of well-being, it’s probably at least 10,000 years old, since agriculture made migratory hunter-gatherer societies obsolete.
You can have these things without owning a house.
Community is IMO easier in apartments, the higher density means there’s a bigger pool of folks you might click with.
Community gathering spots are more prevalent as well: pools, playgrounds, green spaces, etc are common amenities. Especially if you get a dog, you will meet lots of people.
Of course it depends on which complex you live in. If I move I will miss my apartment and its community. I won’t miss my window aircon though, central air would be awesome.
And then after 3 years in the apartment the landlord (or a new owner, if the place you call "home" is merely a line on some out-of-state investment leech's spreadsheets) decides to "adjust" the rent and price you out and you are, with little to no warning, forced to move and very likely abandon many of those connections.
> You can have these things without owning a house.
Yes this is feasible, but respecting it as a design problem, renting is more transient than ownership and tilts the floor away from deep communal relationships.
Comparing the neighborhood I grew up in with the one I now live in is night and day. My mom has had the same next door neighbors for 44 years. Up and down the street there are many similarly familiar persons.
By comparison, from my own front door, I can only physically see two houses that are owner occupied. There are good neighbors (and friends!) in the rental houses as well, but investing in those relationships pays off with lower certainty because circumstance is very likely to uproot them at any given moment.
You can own and appartment and live in it. For some reason ownership every discussion with USAmericans seems to come with the premise that home ownership implies houses. The vast majority of home owners I know personally own a flat.
> 10,000 years old, since agriculture made migratory hunter-gatherer societies obsolete.
This isn't really how the transition to agriculture worked. Historically agricultural elites captured lands with conscripted armies and forced people to farm. There are plenty of examples where central authority collapsed and the archeological evidence shows us that people largely stopped farming.
I’m not sure you’re disagreeing with me: Those who owned the land and didn’t have to migrate / soldier around or work someone else’s land to survive were doing well for themselves!
The people farming didn't really own the land, in many cases they were captured or corralled in place and forced to farm. The were also forced to dig canals and occasionally do the soldiering. All of the early Mesopotamian city states use corvée labor. Being an early farmer was super shitty, and no one did it by choice.
Right, I’m saying the jerks who did the capturing and the forcing (the owners!) were doing well, not the proto-feudal farmers.
When archaeological evidence shows that people largely stopped farming, it usually means that those people largely stopped existing. Or at least living in that area. Apart from a few rare exceptions, agriculture is the only viable way to support substantial populations.
Farming came first, and with it came larger communities and higher population density. That led to surplus, which enabled elites and other forms of existence beyond basic subsistence. And that lifestyle mostly spread organically. Not because the agricultural elites didn't try to conquer hunter-gatherer societies, but because there were so few hunter-gatherers to conquer. Conquered lands were mostly farmed by descendants of farmers from neighboring regions, because they formed the majority of the population.
> When archaeological evidence shows that people largely stopped farming, it usually means that those people largely stopped existing
No, there are signs of habitation. If you look at the evidence from the alluvial plain around ancient Babylon and similar cities from the early history of cities in the region you see people returning to fishing, hunting, and sort of opportunistic planting on river banks. These cities had a tenuous grasp, and people would often just leave, or the city would collapse and people would stop doing intensive agriculture. People would abandon irrigation channels which they had been forced to dig and simply just go fishing. James C. Scott's Against the Grain covers the archeology nicely.
That's what I meant by "largely stopped existing". With the decline of agriculture, there was a major decline in food production and therefore a major decline in population.
Again, you don't see a major decline in population in many cases based on the archeology. Insofar as we can tell people would spread out a bit away from the cities. In the fertile crescent early city states attempted to corral people in to controlled zones of production. Absent coercion, people didn't die they just moved.
If you are basing your claims on Against the Grain, Scott focuses on early centralized states, which emerged thousands of years after agriculture and towns.
Such states were by definition exceptional. Most of them were in regions, where rainfall alone was insufficient, and agriculture dependend on irrigation. Such a dependence on centralized infrastructure favored state formation, but it also made the communities fragile. Local population collapses were common everywhere, but the fragility made them worse. When the irrigation infrastructure failed, harvests failed, the town failed, and the survivors dispersed.
But agriculture spread long before states. Where the local conditions were favorable, agricultural communities naturally had a surplus of labor. If there was unclaimed land available, landless men and women would occasionally split from the community and start a new one. That was the primary mechanism of the spread of agriculture.
I see you have read James C Scott as well.
His book, and Graeber and Wengrow's The Dawn of Everything as well as some miscellaneous books on Mesopotamia. The Dawn of Everything does a great job challenging some popular ideas around state formation as well.
This seems reasonable without negating the previous comment.
With no army to protect the farm, there can be no farm. A return to hunting and gathering would occur as an effect of warfare, regardless of whether or not the farmers have any choice. But hunting and gathering is still obsolete, whereupon agriculture is possible.
Obsolescence does not by definition imply permanence.
Pastoral nomadic animal husbandry made agricultural societies obsolete.
There was an interesting video by Ben Felix that makes a case that home ownership doesn't significantly (or at all) increase happiness - https://www.youtube.com/watch?v=0G_OSohLC_A
That being said housing has gotten worse for both buying as well as renting. I think there is a case to be made that having a place you feel comfortable/home in (whether rented or owned) affects people's wellbeing disproportionately.
Here's a follow-up video by Ben Felix posted more recently about the case for home ownership: https://www.youtube.com/watch?v=16eA5ebWMQQ
In the end, home ownership is more based around the kind of life you want to live than costs/benefits of the house as an asset. As a Canadian I see that many of my friends would choose to pay a lot more each month on the principle of a mortgage than they would ever save in a registered account.
> home ownership doesn't significantly (or at all) increase happiness
N=1 but for me it didn't. I'm probably repeating myself on this site but 70 years ago a home was a box that kept you out of the weather. Now it's an investment that you have to treat as a going concern. Many industries - contractors, window salesman, landscapers, HGTV, realtors, mortgage brokers, driveway pavers, deck builders, HOAs, etc. - have substantial swaths pushing this neo-feudalist "your home is your castle bro they aren't making more land" narrative so that people are socially pressured into dumping their life savings into a non-fungible asset then spending even more on ridiculous things like building pergolas and updating a 10-year-old bathroom to purportedly improve its value. Everybody's become a property speculator and wants to "get on the ladder".
The upshot is that I spent a lot of time and money on a bunch of stuff I didn't care about for my house because I was concerned with getting my money out of it when I sold. Conversely I chose not to pursue several interesting projects that I liked because they might have been dealbreakers to potential buyers. The whole thing is depressing. It's centered around building/projecting wealth and getting one over on the next guy more than it is on having a place to live. Corporate homeowners have nothing to do with this.
One issue is that if you plan to have an expanding family your home needs to retain its resale value to allow you to sell it and move into a larger home to suit your family needs.
Life is much harder when you don't have a roof over your head or when that roof can be taken away from your or take more from your salary than you were anticipating. I don't think people understand the psychological safety of knowing you will not pay a single dime more on a loan for your home for 30 years. It completely erases that worry from your head.
I couldn’t agree more. I’ve lived in the city my whole life and have seen rents rise. That’s been extremely frustrating for me because I’ve been at the mercy of market trends and have worried about what would happen if, at some point, I didn’t earn as much anymore, or if rents rose so much that they became too expensive even for me. What would I do then? The worry that, despite a relatively good income, I might be at risk of poverty in old age because I have to hand over a good portion of my take-home pay to a landlord month after month is very frustrating in the long run.
A year ago, my partner and I bought a small house a short distance (40 minutes by car) from the city, and I moved into a much smaller, cheaper, and less central apartment in the city. I still spend a large part of my time in the city, but I’m also at the house regularly, especially on weekends. I’ve been much more relaxed ever since, because I know that I can give the city’s rental market the middle finger at any time and retreat to our house.
Then come the property taxes
This seems like FUD. Anecdotally, even with property taxes, insurance, and all the rest of it, my 1,000 sq-ft 40s constructed house is 60% the cost of what my girlfriend was previously paying to rent a 1bd apartment on the outskirts of our town. And that is with a "first time homebuyer" $0-down mortgage I got through a local credit union.
The landlord also pays property taxes, so this comment must be trolling.
> disproportionately affects people's sense of content and wellbeing
It's probably not just homeownership, but the cost of real estate as a whole. And not even just residential. Isn't the often-lamented "loss of third places" at least in part due to those places not being able to pay rent unless they heavily monetize?
I've also heard the theory that the arts often take off in an area when real estate prices drop and it suddenly becomes possible to build cheap art studios and such. No proof or anything, just something I've heard random people talk about online, but it makes some sense.
Making the concept a little more abstract can help: if you have personal access to capital because you've got collateral, that has numerous beneficial effects, as some of the other commenters here have pointed out. This effect might be less strong in the US because we have relatively well run capital markets that you can invest in. This would be a book length post to dive into all of the details of it but the net effect is plain to see. It's one of those things that looks a little irrational but in practical terms it's a proven benefit.
Manufactured consumer products and food have gotten much more available. Housing, education, and healthcare have gotten less available.
Recently the trend in food and consumer products getting cheaper has also reversed.
> It got me thinking that maybe the home ownership, or having a place you can call yours […]
Do a search for "the housing theory of everything".
It has been an idea growing in popularity over the last few years, especially in the Anglo-sphere where housing/shelter costs seem to be worse than other places. (One hypothesis I've seen for this is because of Common law, which can give NIMBYs more power to challenge (new) things.)
Not hard to see why that is the case. No amount of flatscreen TVs is going to make up for the lack of food, shelter and medicine.
CPI disagrees.
Possibly referencing the "Chart of the Century": https://www.aei.org/carpe-diem/chart-of-the-day-or-century-8...
Oh, thank god, TVs are less expensive.
;-)
Can’t really spy / collect data if they’re expensive
When it comes to housing I think the key thing is stability.
Certainly many would prefer to own if that’s a possibility, but easily the worst part of renting for most I think is the need to move periodically, whether that be to keep housing costs within budget, because their landlord decided they’d like to give the condo to their niece, or because the their apartment complex changed hands and the new corporate giant owner is doing a terrible job at managing it.
At least, that’s why I hated renting. If I could stay the same place for 10+ years without getting priced out, without being kicked out for the landlord’s personal use, and without corporate enshittification (which often takes place alongside rent hikes), I doubt I would’ve purchased.
Owning isn’t a perfect bed of roses but at least my costs stay somewhat pinned and I don’t need to move unless I personally decide to. It’s such a weight off my shoulders that I won’t need to go through the stressful ordeal of apartment hunting every year around renewal time just to have options in hand in case things don’t work out.
I love to see metrics that evolve over time. Land is a finite resources, as such it inevitably trends up as the best and easiest locations are consumed. So I think the correlation here has to be understood from that baseline.
Land is finite but not meaningfully so at this point. If my early morning napkin math is right, we could give every person on earth about 6.4 acres of land.
Land where people want to live is scarce. Obviously a variety of factors but one of them is that land is bifurcating the way income is. Small amounts are growing in value rapidly and the rest is declining (or growing more slowly). Urban property is skyrocketing, rural property in coal country is struggling.
Land as a finite resource only affects first tier real estate market markets. You can see this vividly in China where there's a housing glut on aggregate, but not in first tier cities.
That's too simplistic. The best (and maybe even easiest) locations and local population evolve over time as well. Land can be developed in different ways, allowing for different density. Different people buy property for different reasons, which affects its value.
Everything better now than it once was? Hard disagree, take me back to the early 2010s
The early 2010s, the age of financial bailouts, Occupy Wall Street, and two "forever" wars.
No one ever thinks they're living through a Golden Age.
The 2010s were the beginning of the decline. The '90s and 2000s were the Golden Age.
See ya, I'm time-traveling back to the 70's, ha ha.
It's very likely. It's place we rest, do some of the fun part of life and a place to call our "own" in world where increasingly nothing is.
On top of that having that high mortgage or even rent hanging over your head, making sure you can't really downgrade work to something more fun but maybe less paid can be stressful too. Especially in the firing season where you might be let go and take months to find new job.
And housing taking higher and higher part of the income is also effectively getting us poorer or at least stagnate.
The articles with similar claim I have seen attributed disproportional value to, basically, stupid crap: better phone, more entertainment (streaming movies), cloth I buy once in a while, cheaper gym nearby, some or other luxury I would miss for roughly 3 months and then forgot.
And that leads us to "only housing has gotten more expensive relative to income" - precarity does matter. If I am one sickness or two paychecks from not being able to pay rent, it causes a lot more actual real material insecurity then "having slower phone while everybody else has equally slow phone".
Likewise, if you have trouble to find a job, fear of loosing it makes you work 12 hours a day in a job you hate, it affects you a lot more then whether you can stream movies.
>policy heavily favor home owners
Policy doesn't "favor" favor homeowners. It screws everything else because it can.
You wanna add a deck to your home. You pay the people the government says you need to pay a grand or two and you're GTG (by which I mean, good to spend further money actually doing the project). Landlord wants to add decks to his triple decker so that he can make the place nicer (more $) while also hitting the egress requirements bird with the same stone and it's an instant 4-5 figure bunch of bullshit where half a dozen worthless interests who add nearly no value in the base case exercise their enshrined in law right to sink their teeth into what should be a petty project.
And it's not just some slum lords triple decker, it's a 10-unit condo, it's those new luxury apartments and on and on and on and on. Everything about owning property, improving property, etc, etc, is ungodly expensive and exclusionary because there's a mile long list of jerks with their hand undeservingly in the pot.
Don't get me started on the financialization that underpins all this, it's just as tileted too.
Policy "favors" homeowners by somewhat exempting them from the worst of this because the buck stops with them. When they get screwed there's nobody else to pass it on to, so they push back.
Your comment got me thinking how youtube videos are a bad place to get any information that is not showing how to do a hands on activity.
Singapore is surveyed as either the happiest or second-happiest country in Asia (IIRC), with at one point a >95% homeownership rate due to government policy (although I believe that's now closer to 90%, in part due to foreign immigration?). It seems self-evident that having a home is somewhere on the order of 1000000x more important than being able to buy lots of cheap junk that barely matters.
Finland is consistently ranked as the happiest country in the world and has a home ownership rate comparable to the US. Denmark ranks 3rd and has a slightly lower home ownership rate than the US. Oh, and Singapore ranks 36th[1], while the US is 23rd[2].
So you're probably wrong on all points here.
[1] https://data.worldhappiness.report/country/SGP
[2] https://data.worldhappiness.report/country/USA
I'm curious what people are quibbling with here? Romania has the world's highest rate of home ownership at 96% and only ranks as 34th in happiness. Or maybe Kazakhstan but I can't verify the data on that, and it's right beside Romania in happiness. Switzerland has the world's 4th lowest rate of home ownership and ranks 10th happiest. It seems like from a data perspective there is no empirical support for the idea that home ownership directly correlates to societal happiness.
I might also point out that Finland has very good social programs, probably some of the best in Europe
Right, my point is that you can't boil happiness down to a single causal factor and if you could the evidence doesn't support home ownership being that factor.
> I'm curious what people are quibbling with here? Romania has the world's highest rate of home ownership at 96% and only ranks as 34th in happiness.
which means they are happier than 35th, the France, which has double GDP per capita
So you're probably wrong on all points here by your own data
I'm sharing Gallop survey data about happiness, it's the "happiness" data everyone uses, and what OP was referring to as well. I'd challenge the idea that GDP per capita correlates to happiness. Mississippi has a higher GDP per capita than France and I'm not sure that tells us anything about who is happier.
> probably wrong on all points here by your own data
again, it's not my data its the data OP referenced initially, I just linked to it.
Also if you buy lots of cheap junk for your apartment and then have to move, you will not be happy.
In some ways I actually liked the moving every few years aspect of renting. Every move made me really re-evaluate all the junk I had and if it was really worth it to hold on to. Do I really want to have to move this thing I didn't even really use to yet another place? I got to live in a lot of different places, have some different lifestyles, have some different roommates, and live a pretty different kind of life every now and then.
Living in the same place now for years makes it too easy to just hold on to junk, it makes it too easy to just fall into the same routine.
There's some pros and cons each way. It really depends on what you're wanting in life at the moment.
True, although I've also moved houses and turned everything over. Having lived at the current place for a while I find it's important to, every five years or so, turn everything over and re-evaluate it. Even if my domicile isn't changing I'm still changing as a person.
A lot of that cheap junk is clothing and food, which now both make up a much lower percentage of total income than they did 100 years ago.
What's the point of being able to spend less on cheap junk if the surplus is eaten up and outspent by important things that inflated during that timespan?
And you don't even have a choice. If junk was expensive and houses were cheap, you could scale your junk consumption. You can't scale your house consumption.
You can to a degree. You can buy/rent a way too small house/apartment for your large family (what many immigrants do). You can also get roommates. If worse comes to worst, you can move another hour or two away from the big city.
I feel like these are much worse than the alternate reality where I simply have to spend more on or lose access to consumables, if I had to choose one or the other. For people that use the same smartphone for 10 years, never shop for clothes, never go out to eat, etc., it seems unfair that we'd construct a dichotomy (assuming it's even a valid one) and choose the one that worsens the resources that everyone needs rather than the more fungible one.
I didn't say it's nice to downsize. I said it's possible to downsize.
Fair enough, you're correct. It is... possible
Which is an extremely important point to make when the claim is "you don't even have a choice" and "you can't scale".
There is a choice. We would just prefer nobody had to make that choice. We consider it a failure of the modern society that this choice is on the table. But housing consumption can be scaled, and that it can has important economic implications (such as, social housing can be made cheaper by making units smaller. It literally wouldn't be possible to pull it off if housing consumption was perfectly inelastic.)
> If worse comes to worst, you can move another hour or two away from the big city.
It is rarely the case that someone who can't afford housing in their current location can afford to move away from their support networks to a place with no jobs. Places with significantly cheaper rent almost invariably give you significantly less income, if you can even get a job without connections (which are important in general, but especially important in rural areas where everyone knows each other). That can work out for you if you have substantial savings or a comfy remote tech job, but if you have those you probably don't need to move in the first place.
Your other points are valid ways to technically scale housing down but, I think, bring with them a significant decrease in quality of life that far outweighs what is gained by being able to afford 500 big macs and 10 pairs of shoes.
You misunderstand. Keep your job. Move away. Drive to work 3 hours one way everyday. Have no life except work, commute, sleep and family.
And yes, it will drive your QoL to the ground, I'm fully aware of that. I'm just saying it's neither impossible nor infeasible nor unheard of. It's "merely" undesirable. Extremely undesirable. But possible.
> If worse comes to worst, you can move another hour or two away from the big city.
I would loose a job, easy access to friends, access family nearby in the process. All those matter, I value all three.
Meanwhile, if I dont buy latest toy, whether phone or sports equipment or netflix subscription, I adapt and dont care in 3 days.
That's why I said "worse come to worst". Where I'm from, it's not that uncommon to drive 3 hours to work, and as a result have no social life outside closest family. People do it because the alternative is homelessness.
I would argue that their situation straightforwardly sux. And no amount of gadgets, fridge connected with wifi, etc etc will really unsux it.
I would argue that a reply to "you can't scale your house consumption" doesn't need to say how much the situation sux or what amount of gadgets will or will not unsux it.
Many forms of media and social pressure point to owning your own home as a measure of personal success. It probably is. If it wasn't, rich people wouldn't buy so many. Plus it's harder to kick you out of a place you own than a place you rent.
Additionally, buying a house is probably the easiest way to build some kind of generational wealth. It's easy to see this as yet another way the older generation is pulling up the ladder behind them.
"No man who owns his own house and lot can be a Communist. He has too much to do." - William Levit (the Levittown one)
His point appears to be that each person should only look after their own interests?
Is that your intent in posting it?
Many of us, my siblings and our families inclusive, owe our lives to socialised medicine.
I think it's more that communism appeals to those that didn't really made it or worked for what they have.
> Many of us, my siblings and our families inclusive, owe our lives to socialised medicine.
commonly mistaken with communism, yes.
Country having strong social services and caring about their citizens is not the same as communism.
> His point appears...
No, Levit said that in 1948, when Americans were vastly better-connected (socially) than today, "Godless Communism" was their #1 fear, and everybody was aware of communism's easy appeal to those who felt dispossessed.
I'd read the quote as a clever way to say "let me sell millions of cheap houses to Americans, and you'll never have to worry about the commies".
Yes, exactly. The idea was that people could be content with our system if people's material conditions were good. We seem to have lost this insight and continued for the next 50-60 years to degrade the quality of life.
The catch here is that homeownership rate is the highest in history now except 2000s speculative subprime bubble when a lot of purely investment properties were bought at 103% mortgage by people who could not afford the risk.
In almost every place in the world, at almost any point in history, the propaganda will always tell you that you've never had it better than you have it now.
But once you start digging and thinking, you start realizing that it's not true.
I understand that most hackers reading the above sentence are already raging, but were you actually there to know that things were worse in the past, or has it been hammered so strongly into you that you're now greatly offended at suggestions that it isn't true?
There are a lot of factors. Some things are worse than the past. However other things are better. There is no universal correct weighting of these different factors.
In general I think that nobody would be willing to go far back in time. You don't need YouTube, but would you want to live without it? How about electric lights? Safe drinking water? Flush toilets?
What crack was the YTber on?
Income has only raised ~15% (on average), while inflation has been at 30%... meanwhile in the past century, money has lost 96% of its value...
Not sure how that translates at all into "stuff" being more affordable...
> Not sure how that translates at all into "stuff" being more affordable...
I'm pretty sure "stuff" in this context is mostly manufactured goods, and those have fallen in absolute price. Examples abound in the tech sector: even adjusted for inflation, a MacBook Neo is the cheapest Mac ever released, and so on...
Manufactured goods, food, and clothing. Note that we tend to think of these things as not being a big deal, but that’s colored by the fact they’re so cheap. In 1970, a wall mount AC was about $400, when the median family income was under $10,000. Lots of people simply could not afford one. Today, a wall mount AC is still $400, while the median family income is over $80,000. People dismiss the fact that an AC unit has gotten 90% cheaper in real terms. But you wouldn’t do that if everyone in your family was huddled around a single AC unit in one room during a southern summer, as was very common in the 1970s.
Average temperatures were also lower in 1970 and we didn't put as many of the jobs in places where you absolutely needed an AC.
What's average income less average house price? Has that gone up or down?
> Average temperatures were also lower in 1970
Yes, but not enough to change whether you want AC or not: https://www.extremeweatherwatch.com/cities/washington-dc/yea.... In DC in 1970 you had 98 days above 85 degrees. The year before was 80 and the year after was 71. Last year was 72 and the year before was 93. There are more warm days, but you wanted an AC in the DC area back in the 1970s too.
> and we didn't put as many of the jobs in places where you absolutely needed an AC
I don’t think that’s true. The south and mid atlantic was always a huge share of the population. And the midwest was a bigger share than today, while the temperate west coast was a smaller share. You need AC in Chicago too: https://www.extremeweatherwatch.com/cities/chicago/yearly-da.... Even in the 1970s in Chicago you had 30-60 days over 85 every year.
> The south and mid atlantic was always a huge share of the population.
The population share of the South and West regions of the US have grown while the population share of the Northeast and Midwest have shrunk.
https://www.census.gov/popclock/data_tables.php?component=gr...
What are the fastest growing metro areas in the US these days? DFW, Austin, Houston, Phoenix, Orlando, Atlanta, Raleigh, Tampa, Nashville. Which ones are in the cooler parts of the country?
I agree overall its not like half the population moved to the Sun Belt, but a pretty large amount of the population growth in the US has been focused on the hotter parts of the country.
You're pointing to days over 85 as days you need AC. To me that's pretty warm, but not unbearable. Days where it never goes below 80F for a week or more at a time, or places with extreme humidity mixed with such high temperatures, now that's a place where you need AC.
To your point about high humidity exacerbating heat, I think it’s relevant to consider wet bulb globe temperatures (WBGT) instead of air temperature. It’s more objective than heat index or the ad hoc “feels like” metrics. Above 30-35C WBGT, humans start dying without intervention.
In the United States at least, days with high WBGT have increased and more places experience them. I hear the same is true also in Europe.
They are increasing in Europe, yes, and unlike the American southwest, any sort of artificial cooling is pretty uncommon in most of Europe.
On the flip side, the cost of cooling is steadily falling due to government incentives to replace oil-fired boilers with heat pumps, and the rapid growth of solar driving down daytime market prices for electricity.
Durable goods have deflated compared to wages while health care, housing, and education soared. If you are given the job of spinning this (or take it upon yourself in a bid for access), focusing on the former to the exclusion of the latter is how you do it. "Think of the iPhones! Never mind that rent in a mid-rate city is 1 iPhone and 2 big screen TVs every month!"
It’s true there’s a spin in that direction. But I think there’s also a tendency to take things for granted in the other direction because they have become so cheap. Food and clothing used to make up significant line items for ordinary people. I remember in the 1990s seeing ads for discount cereal (“it comes in a bag on the bottom shelf but it’s just as good as the branded stuff!”). When was the last time you saw a commercial like that?
A lot of the durable goods that became very cheap were a huge quality of life improvement that we simply take for granted. In 1970, which was when boomers were about the same age as Gen Z is today, only a third of americans had air conditioning. Today it’s almost 90%—basically only the people in very temperate climates don’t have it.
The food also became qualitatively different over the same period. We're not eating the same meat, bread, fruits, cheese etc. that our grandparents did at our age.
Durable goods became much less durable, too. Furniture is the biggest one I'd say - they're just not built to last anymore. Whether it's planned obsolescence or just extreme cost cutting, we aren't comparing apples to apples here.
> A lot of the durable goods that became very cheap were a huge quality of life improvement that we simply take for granted.
Like the previous poster mentioned, I'm not sure that's really such a quality of life improvement.
First of all, food. I don't know where you shop, but the cost has definitely doubled, even tripled.
Second of all, the idea that it's some "good" that these things are "cheap" relative to wages - before they may have been expensive, but they were also investments. It doesn't really matter that much, because you can save to obtain them, and don't need to worry about re-obtaining them. Being in a situation where durable goods are cheap, but cost of living is high, means that you are disproportionately struggling - you can't save anything, any good that these products provide is outweighed by it being too expensive to live...
What is the time period for you numbers?
I find it hard to trust economic narratives when so many metrics cited upon further inspection do not really measure what they are implied to measure.
Or maybe we measure what is easiest to measure, not what is best.
I see this everywhere, though. Jobs data is really job openings not actual hires. Unemployment data is really paperwork filing not people out of work or retiring early. And now home ownership is really "count everyone in the home if the owner resides there".
To your last point, the Minneapolis Fed just put out a call for a new actual-owner backed housing occupancy rate called HPOP which I think is a step in the right direction: https://www.minneapolisfed.org/article/2026/new-homeownershi...
Are you aware that you are linking to TFA of this exact hackernews post?
> "count everyone in the home if the owner resides there"
It’s even worse than that, it’s not counting people at all. It’s number of houses with at least one owner living there divided by total number of houses.
Looking at the statistics that are used to measure growth and performance at a population level are such a great window into how they themselves are opinionated stances.
The two measures are both great measures of house ownership that measure different things. The article frames the second one as better, and if you are looking to see the ownership proportion of people (for example as they note to look at the numbers of young people who live with parents) thats great. If however you care about the housing development decisions that will incentivise owner occupancy you might care more about the standard owner occupancy per household.
I often see this with respect to GDP/GDP per capita vs mean income and other economic measures, but its great to see a non economic measure like this compared in this way.
> If however you care about the housing development decisions that will incentivise owner occupancy
Genuine question: who, precisely, cares about "incentivising owner occupancy" as a policy goal? What interest does that serve and why should the government prioritize maximizing that metric?
Basically right now we measure "what fraction of homes are occupied by an owner" and not "what fraction of people live in their own home?". It seems bleedingly obvious that the latter is the number we should be maximizing, if either. And in particular it seems to me that a lot of argument about the former is actually using it as a proxy for the latter anyway.
No one cares about the poor homes who don't have local owners!
If you live in a place which is used only for vacation homes, or worse, only as investment objects, you know the value of owner occupancy.
Non-occupants contribute very little to the actual value of a place - they don't work here, they don't buy here. But they capture much of the value of other people trying to make the place a pleasant place to live, though rising real estate values.
This depends heavily on the industry of the area. Go to a college town and you will find owner occupancy is not that big of a deal. Go to a luxury resort town and they literally make their money from non-residents transiently moving through.
I don't think you can get any of these situations non-organically. But schools and worker dormitories have a lot in common. More than most seem to admit to.
So long as the percentage of people who live in a home they own is high, there's not a great reason to care about owner occupancy.
You're just using it as a proxy for people owning homes. It's not a given that the two numbers are always opposed.
It's very easy to see that owner-occupancy is an incoherent metric.
Stipulate that owning a home is good.
As the number of homes goes up, owner-occupancy necessarily goes down (you can only occupy one home at a time). Homeownership might rise or fall while this is going on. But that doesn't matter; the number of homes going up is good, so the fact that the metric falls when it rises tells you that either (1) the metric is "evil", rising when bad things happen and falling when good things happen; or (2) the metric is incoherent and doesn't carry information about whether things are going well.
> As the number of homes goes up, owner-occupancy necessarily goes down
Not necessarily at all. Plenty of people rent who would like to own homes too
All you have to do is let the number keep going up. Yes, it's a necessary outcome.
Here's a hypothetical: if everyone owns a home, no one rents homes anymore, right? I mean why would you?
So why would anyone buy a second home in that scenario? Maybe as a studio or whatever, perhaps. But as homes become less useful as a rental investment, the number of non owner-occupied homes seems like it will decrease too?
The theory behind it is that 1) economic growth generally accrues to land values so distributing land ownership is one way to distribute wealth and 2) people generally treat the things they own better than the things they rent or consume.
Incentivizing ownership is more closely aligned with objective (1) while owner-occupancy is more closely aligned with objective (2).
These don't work in the presence of capital's outsized returns though, which allows people who (for whatever reason) have access to more capital to recursively seize more of the growth in land values from objective (1) and therefore price out objective (2).
> distributing land ownership is one way to distribute wealth
Right, so you want to know how many people own homes, not how many homes are "occupied" by an owner[1], which is at best a proxy, right? Sounds like you're agreeing with me but just getting the sides of the argument mixed up?
[1] As the article points out, a single person can in fact "occupy" more than one home!
It's also a pretty dubious metric for wealth equality anyhow. If 100% of people owned their own home, then some fraction owning additional ones that no one lived in wouldn't really matter; the value of them would surely not be as high in a world where there was no renting or homelessness, and even if it was, I'd still take that over the alternative where every home is occupied by an owner but there's still not enough to go around for everyone.
That is correct, I am defending neither the metric nor the overall policy goal. I'm just articulating why it is/was one.
> Genuine question: who, precisely, cares about "incentivising owner occupancy" as a policy goal? What interest does that serve and why should the government prioritize maximizing that metric?
Culturally, in many countries it helps with household formation (coupling, starting families), which, in an age of low birth rates, can be useful.
A key difference is illustrated in TFA. To maximize fraction of people owning a home, you dislike people renting or living with a homeowner. A spouse that marries a homeowner, for example. It would be "better" if they broke up and owned their own separate homes. Or perhaps they could buy two homes, one for each. Or they could by two homes and rent a third to actually live in - same metric value.
To maximize fraction of homes with their owner living inside, you focus on the ownership _and_ the lifestyle choice. A family living together is the best use of land in this case. A family renting a side room to a college kid is still the best use of land. If every home were lived in by its owner, you could still have 90% of your population renting and not building generational wealth.
> A spouse that marries a homeowner, for example. It would be "better" if they broke up and owned their own separate homes.
No, if you look at the first example explaining how the two metrics are calculated, it is clear that both spouses are considered homeowners for HPOP.
> A key difference is illustrated in TFA. To maximize fraction of people owning a home, you dislike people renting or living with a homeowner. A spouse that marries a homeowner, for example. It would be "better" if they broke up and owned their own separate homes. Or perhaps they could buy two homes, one for each. Or they could by two homes and rent a third to actually live in - same metric value.
Or they could... both own the home? Independent of the rest of your argument, this is a pretty weird hypothetical case to illustrate your point. Joint property ownership is way more common than any of the "alternatives" you're suggesting, so it's hard to take what you're saying seriously when you've dismissed the obvious way that this would work for the overwhelming majority of married homeowners.
Yes, we're not talking about reality, we're talking about the measures of it. A metric would fall down on corner cases, so identifying the corner cases is how you determine if a metric is a good one.
"% people owning homes" is maximized by joint ownership, as well, but the corner cases are interesting: It is lower with big families living together or when anyone rents.
On the other hand, the "% homes lived in by owner" metric falls down in a much more realistic way: When there are fewer homes and they are lived in by owners, you can still have 90% of your people renting apartments while this metric hits 100%
I feel like this could just as easily be accounted for as "are you paying rent to the person who owns it or not?", which rules out family members.
Yes, that would be a new metric, though, wouldn't it?
What's the goal - defend A vs B?
More importantly, nobody cares about the people where renting is their ideal condition (at least for now - in different situations different ways of living are ideal). There should be nothing wrong with renting. Owning your own should be a worse choice if you will live there for less than 5-10 years. Owning a home should be only slightly better if you will live there for more than 10 years - not enough better to make up the hassles of owning.
If you rent make sure you vote. Make sure you have an informed vote, all too often cities will put rules on rental units that make renting worse for you. (bad tenants and bad landlords exist - good tenants and good landlords need protection from the former). Likewise while rent obeys supply and demand, when property taxes go up that factors into supply and will make rent go up indirectly - is it worth it? (I cannot answer the later question - the more important consideration is make sure the taxes are similar for rental and owned units otherwise you are a renter are harmed)
I didn't vote when I rented in San Francisco for a few years because I had no intention to stay, and thought it immoral to disenfranchise the locals. Actually in my opinion you shouldn't be able to vote until you've lived somewhere for at least 5-10 years. Certainly even if you can, you shouldn't if you know you're only there temporarily.
I don't see why you think owning should only be slightly better after 10 years; if you don't want to deal with maintenance directly, you could always hire a management company as if you were the landlord and renter, but there's a benefit to you and everyone around you when you are invested in your home and community.
Risk is why owning needs 10 years. If the economy collapses you value goes down, by 10 years it will likely either have recovered, or at least not be done much. If the economy goes down and you lose your job in the process you have to sell to that down market and lose money.
Management companies have a terrible reputation. While you can use them, it is likely they will be much more costly than doing things yourself. Real estate investors tend to hire their own people for management even though this seems like the perfect thing for them to outsource because they have been burned so often. If they work for you great, but beware.
Even if you find a good management company, if the roof it 23 years old (expected lifespan 25 years) you should expect the big bill to replace the roof - over 10 years this works out since there will likely be one such big bill but not many. However if you live there less than 10 years these big bills will hit you.
You might want to maximize owner occupancy because you care about the poor homes who don't have local owners - as an owner living in the home might be better incentivized to take care of it and provide decent living conditions, for example.
Allowing people access fairly illiquid and predictable housing allows and incentivizes them to prioritize things on longer timelines which is good for society.
You are the second reply that seems to have misunderstood what the article is about. The point is that the current metric is not a measure of how many people own homes, even though everyone thinks it is.
I think that single family homes as a speculative asset needs to be done away with. If all this energy and investment went to purchasing, say, agricultural land, then more "little" people could own that and protect against institutional investors. Small landlords were only good because they kept institutional investors away, but now that they can't purchase more homes, the small real estate investor's money would be better used to hedge against market capture in the next thing up the hierarchy of needs, i.e. food. If we keep walking this back, then eventually we can prevent assholes from speculating on basic needs.
Actually I don't think this metric goes far enough. In my opinion a homeowner should "own" their home. I.e should have majority equity in his or her home. An owner who pays 3% down is basically a risk bearer for the bank. The bank really owns the majority and is renting out the "owner". I don't think my opinion is fringe. It does measure the risks of not being able to make rent and getting evicted.
50 year mortgage incoming to raise the home ownership rate to 90%
That's not a useful metric, because the mortgage interest deduction means that it's almost always financially optimal to take out a mortgage even if you have the assets to pay cash.
Point taken. But surely there must be a way to account for that. Can we assume if the net asset value of the individual is greater than the value of the house by some percentage? Then they are owners instead of renters.
Yes. Unfortunately, the Minneapolis Fed would get a whole lotta push-back if they suggested any such metric. That risk bearing & interest-rent is a near-perfect way for the 0.01% to milk the "could afford a house" demographic.
This isn’t “putting people first,” it’s baking in the cultural assumption that adults live separately from kin. Consider the examples:
> Housing unit 1. A couple owns their home. The woman’s parents live with them.
> Housing unit 2. A couple owns their home. Their son, a recent college graduate, lives with them.
> Housing unit 3. A man owns his home. A friend lives with him.
> Housing unit 4. A couple owns their home. Their two young children live with them.
> Housing unit 5. Three roommates rent their home. The owner lives elsewhere.
> As illustrated in Figure 1, these five housing units are home to 14 adults. Because four of these five housing units have their respective owners as residents, the owner-occupancy rate—the measure traditionally viewed as the homeownership rate—on the cul-de-sac is 80 percent. However, because only seven of the 14 adults are actually owners of the homes they live in, the HPOP is much lower, at 50 percent.
I think 1, 2, and 4 should all count as “owning their home.” The new measure is also a recipe for confounding attempts to compare the metrics over time, as demographic change brings in cultures that embrace multi-generational living. So what seems to be a drop in homeownership rate could instead reflect a growing and aging sub-population where the cultural preference is for parents to live with adult children instead of separately.
"Housing unit 3. A man owns his home. A friend lives with him."
I own my home. If I let a friend stay with me for unstated terms(friendship, charity, money, sex, whatever) then I no longer should be counted as owning my home?
1,2,and 4 all have owners and non-owners. Are you suggesting that the parents of the adult children and the adult child should also be marked as owners?
How does the multi generational preference living theory work given the correlation to rent to income ratio? Is multi generational living preference a cause or a symptom?
It's an economic metric, not a political statement.
Also the whole thing is just weird to me. The woman's parents, the kid just out of the college and the two young children aren't going to be paying the mortgage, upkeep and property taxes.
Once those stop getting paid, none of those people are housed. This is tracking things that don't matter.
Perhaps this measure is useful to something but I find it directionally annoying as I don't think "higher is better" as it would be with the more traditional metric.
Here's an example from the page - a couple and the wife's parents - a couple and their college grad son
In this example the two couples (4 people) are counted as home owners and the 3 others (wife's parents, the son) as non owners - so the ownership rate is 4/7 = 57%.
On the traditional metric that scenario would be 100% because roughly each family owns its home which is good.
Now look at what would have to happen for the new rate to move to 100 - the wife's parents and the son would need to move out and buy separate homes. In other words the metric "punishes" living with family even if that's what you want to do.
I find the traditional metric is more useful. If I am a renter that indicates the desire to have a separate place - so it makes more sense to "ding" the ownership metric.
Yeah, I'm leaning towards this new metric could actually be harmful (assuming the government goal is to increase it).
It makes sense for some families to cohabitate. Family with infants cohabitating with grandparents providing some care. Elderly parents being cared for my their middle-aged "kids". Etc.
i think it would be best just to do a survey asking what housing situation they are in and if that's what they want. do you really think that every single renter wants to be a renter?
Of course not, but many do - it generally doesn't make sense to buy if you won't stay for a longer period of time (used to be ~7 years, not sure if that's shifted) due to closing costs, interest on loans, etc.
Looking at this, seeing that 50% are homeowners is actually astoundingly good. In a lot of countries 50% cannot afford to be homeowners.
This is an international community here on HN, would love to hear takes from other countries.
Instead of praising a mediocre number, maybe we should strive to make that number 90%
50% is anything but mediocre.
Another similarly flawed measure is household income (https://en.wikipedia.org/wiki/Household_income_in_the_United...), which is used frequently as a measure of socio-economic class. Under this measure, a single adult making $90k and a household of two adults and two children making $90k combined are treated equally, which has always struck me as quite stupid.
If both parents work they're also easily spending roughly 30+ grand a year on daycare alone. The DCFSA can help, but its tapped out at 7500 atm, which is cute, but unrealistic. A real daycare following all the best standards is not cheap, its like a second mortgage. I can see a major difference in my daughter coming back from daycare, I mean she knows things I don't think I knew when I was her age...
> If both parents work they're also easily spending roughly 30+ grand a year on daycare alone.
Depends on how old the kids are, because at least in most cases, daycare costs are for a very short period of time compared to the the overall life of the child. And the average in most states is wildly all over the place.
We absolutely should be focused on free childcare, or ideally ways that parents don't need childcare to begin with, but I don't think that has a lot to do with household income. Hell, at that point, why as well talk about transportation costs, as it's different in a single household vs a two parent two kid household, and different still depending on where you live.
I'm thinking mainly infants to preschool age, but that is fair, and I'm going by Florida... I can't imagine other states.
No mention of vacation homes, homeless people, or some other situations - but their new metric appears to treat those properly.
(Yes, I saw the reference to dorms, nursing homes, & prisons.)
Everything in the study makes perfect sense. However one thing that's not discussed is change in culture and expectations. For example the United States is probably the only country where there's a general expectation that grandparents parents and adult children all live in separate homes... and most other countries multi-generation living is the norm. And perhaps some of those norms are starting to float into the United states. On the other hand no doubt the fact that people are not able to live to the traditional American norm is contributing to malaise. Still it feels a little simplistic to characterize everyone's goal is having their own home.
Maybe a way to handle this better would be to look at the size of the home because if a home can easily fit multiple generations it feels like a very different situation. Also it's somewhat arbitrary who happens to be the owner on the deed not to mention key questions like whether or not the home is truly owned outright versus largely in debt to a mortgage
Right now adult Americans can freely chose to live with their parents, and overwhelmingly chose not to.
The article links ownership to costs. Attributing diminishing ownership as "norm float" needs some justification. I suspect multi-generational norms seen elsewhere are rooted in poverty and a lack of opportunity.
Suppose I told you I am losing weight because I cannot afford food, I don't think you should speculate I chose to go on a diet.
I think you have some valid criticisms, but we have to take baby steps here.
As you mentioned, multi-generation homes are not the norm in the US. If there is a change in that norm, it's worth investigating why that's happening, before we conclude that we need to adjust metrics around it.
Purely anecdotal, but every multi-generation home in my (American) family is the result of disability or student loan debt - multiple generations live together, but that doesn't mean they want to.
Also remember that this new metric is meant to be more informative on wealth, generally. Those other generations living in the home don't typically share in the wealth the home confers, not until someone dies at least.
There is not much difference between the US and Europe in that. In the Nordic countries, children move out earlier, while multi-generational households are more common in Southern Europe.
I’m happy to see our metrics being improved because much of the economic policy seems to have been based around what was good for boomers.
Not what was good for young people who, for the most part, can’t afford to live in houses and these days are getting ripped off with overly expensive apartments too, so they never have a chance to buy a house and build equity.
TL;DR: Instead of measuring the percentage of homes that are owned by people who live there, they want to measure the percentage of adults who own a home.
Feels like an apples and oranges situation. The two numbers each have their own value but they’re measuring different things.
One is calculated based on the number of houses, the other is a measured based on the population of adults or households. Both measures have always existed. Trying to replace one with the other doesn’t seem right because they both have value for different reasons.
Both also make the assumption that owning a house is good. Renting should be just as good.
Renting isn't 'good' though in many metrics. Ownership is, and that's what the push should be for, rather than promoting basically a monthly subscription to have a roof over your head.
It's not that simple. Owning a home is not just a better version of renting. It's a whole different thing with pros and cons.
Your mortgage is the lowest amount you'll pay. On top of that you have to manage the upkeep of the house, which costs both time and money. Lots of people go through phases in their lives where they move around and owning just doesn't make sense for a few 1 to 2 year stretches.
On the other hand, rent is the highest amount you'll pay. You generally don't have to worry about upkeep, and you're free to move. The commitment is lower and that has real value for certain people at certain stages of their lives.
I rented for 6 years in different areas until I figured out what I liked, and then I bought a house. Those 6 years weren't just wasted years. Those were very valuable years where renting really made the most sense.
> Your mortgage is the lowest amount you'll pay. > rent is the highest amount you'll pay.
I don't like these 2 statements because they are only true at a starting point. If someone gets a mortgage today for $2k/month, 10 years from now it'll still be $2k/month, or even less if rates drop and they refinance. Rents OTOH will continue to rise with inflation. I had a $2k/month mortgage at my last house and the house next door rented for $4500/month.
> On top of that you have to manage the upkeep of the house, which costs both time and money.
Well guess who has to pay for that in a house that is rented? It's the renter!
Just the same as when you rent a car, the cost for maintenance is included in your rental fee.
You're just as free to move if you own a house: Just sell it, or rent it out. Any inconvenience from doing that is easily worth the money you save by not giving it away in paying rent.
> Well guess who has to pay for that in a house that is rented? It's the renter!
On average, over time, in a free market, yes. But not necessarily in any specific case. The rent is a cap during the lease period, no matter what the landlord has to pay for maintenance.
Does this correct for mortgage? Because owning through a bank loan still amounts to a monthly subscription.
If you live there for 30 years - and don't cash-out-refinance - in 30 years your subscription costs go much lower.
However if you rent for less than the mortgage you can invest the difference into something that will grow in value more than the house (which SHOULD track inflation) and in turn end up about the same in the end.
In what world is rent lower than mortgage? Part of the reason my fiancé and I bought a house is because it was cheaper than renting. Not just long-term, but our monthly payment is actually noticeably lower.
Of course, we did need to pay a down payment. But if you amortize that over a 30 year mortgage period, we’re still better off buying than renting.
If houses are capital, renting can never be just as good without de-incentivizing renting via legislation, which in reality will result in a massive rental shortfall, since nobody is going to maintain rental property when they could just invest their money in another asset.
Why? It’s a position of less security and stability
Personally, I like the asset diversification that investing 40% of my income allows. Buying a house at this point in my life would mean a very significant portion of my net worth would be concentrated in one asset, and I'd have less cash flow every month to boot.
I don't feel my rental situation in either insecure or unstable. I recently moved (my choice) but previously I lived in the same rental complex for almost a decade. I took advantage of COVID to move to a larger apartment there for cheaper rent, which was a massive advantage I had over friends who owned homes at the time.
Renting is significantly less risky from a financial standpoint.
> the U.S. homeownership rate is 53 percent
I hope this number drops below 50%. Well below 50%. Maybe then we can finally vote down the NIMBY regulations and NIMBY politicians. And start rapidly expanding our housing supply. Given our current political system, it seems high homeownership rates are the root cause of the housing affordability crisis