eli5: Would making house’s cheaper fix the housing issue?
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The only real solution to the housing issue is building a LOT more housing. A fucking TON of housing. And, preferably make most of it high density housing.
Corporations and slum lords not buying up all the housing and jacking up the rent would make housing more affordable.
It’s zoning laws more than anything else; they prevent developers from putting a lot of tiny apartments in a small area. If you tell a developer he can only put five homes on the five acres of property he owns, then he’s going to build the five biggest and nicest houses he can, to maximize his profit. But if you let him put 50 tiny, basic homes on the same five acres, he can probably make more money that way.
Would using/tearing down unused plots be cheaper than making a house in a completely unused spot? I feel like they should be doing that more.
Well, sure… making houses cheaper would help fix the issue, but the question is how do you make houses cheaper? Materials cost what they cost, labor costs what it cost. Land, especially in desirable places gets more and more expensive. So we’d need to find ways to reduce land cost. The easiest solution is to increase density. Smaller yards, townhouses, condos, etc. Would also create benefits of generating more density to support local businesses, help create sufficient demand for forms of public transit, etc. but we need to convince home buyers they don’t need 3000 sq. ft. on half an acre of land. We also need to get cities to embrace the future of transportation and reduce the parking requirements in zoning laws. With the rise of ride share, bike/scooter share programs, future self-driving cars, etc. we don’t need a garage/parking space for every single unit built. That space could go to more units, that cost reduced from each unit’s purchase/rent price.
Housing prices are just a function of supply and demand. You can tinker with both. Supply is the easiest one to tinker with. You can build more to try to bring prices down, or you can make building harder to push prices up. Allowing higher density building (and smaller homes) makes prices go down. It does cause other issues (like increases in government services needed). Demand for housing can also be addressed. You can restrict ownership to people who live in the homes. That would really lower demand right now, when almost 25 percent of homes are being bought by investors (people who don’t plan to live in the home). The increase in interest rates also makes it more expensive to buy a home, which puts pressure on prices. At any rate, price is a response to a lot of different factors. You can address those factors. Having the government set the price of housing low causes a lot of problems (i.e., not enough incentive to build, more demand, very low supply, etc…). So you can try to address the factors that contribute to high prices.
No. Housing, as it stands today, is traded as a speculative investment asset. Creating more doesn’t prevent anyone from hoarding them as they already do today. The induced artificial scarcity we see today is what is driving up prices. [More than one in ten homes already sits empty](https://www.nytimes.com/2022/03/10/realestate/vacancy-rate-by-state.html). One of the easiest ways to lower prices is to increase supply. But if 10% is already being hoarded, what’s to stop it from being 30% or 40%? Given that the population is always growing and that we aren’t “creating” more habitable land (especially around job centers), the fix isn’t to make housing cheaper **solely** through increased construction because the demand floor will always exist. You have to prevent the hoarding in the first place through taxes and regulations. If this was done effectively tomorrow when you woke up, an increase of the housing supply by 10% would already drive prices down significantly.
I’m not sure what other “housing issue” you’re talking about, since the issue I hear the most about is that housing is simply too expensive? Making housing cheaper *would* help to alleviate homeless-ness, but honestly a lot of homeless-ness is driven by more complex issues.
Anyway; yes absolutely it will fix the problem, but the question is “how?” Although again, the obvious answer is “change laws that mandate single family housing”. This allows housing to be built in greater densities, which is far more productive and useful than our current legally mandated, sparse suburban zoning.
It really won’t even result in a *noticable* increase in density, in almost any city where this is a problem. (Assuming a city doesn’t go the other direction and mandate apartment buildings everywhere). It’s not like we need 10x the current number of houses to bring home prices down; we could really do a lot with just 5-10% more housing units. In a neighborhood with 100 houses to begin with, that means building just one 10 unit apartment complex, or more likely, renovating ~10 of the larger single family homes into duplexes.
What do you mean by “making houses cheaper”? Costs of materials and labor to build new houses and repair old ones have skyrocketed over the last 2 years. Those costs continue to increase.
In the U.S. and probably most of the world communities have minimum building standards that create a base cost to be able to meet those standards. Standards requiring a certain level of materials and construction practices so that a house that will last and not collapse on the inhabitants, or melt in the rain, and so on.
**The true reason for the rising cost of houses is that there are not enough houses for sale to meet the current demand. In other words, there are a lot more buyers than there are houses to buy. They are getting into bidding wars.** That could change.
Eventually when (if) demand falls off, prices will drop at least slightly and houses will be easier to obtain. Right now there is no reliable forecast for when that will happen.
Currently the most knowledgeable analysts are predicting that the supply will continue to be less than demand for the next couple of years at least. Maybe longer.
But even if that cycle dip happens, it is unlikely that housing will be “cheaper” than it is today because prices will already be higher, and the increased cost of labor and materials will probably not have decreased. Prices will just dip a bit from whatever the high is then. New build houses will slow down as demand drops. Then the market will correct and prices will continue rising. This has always been the pattern in the U.S. – dips are temporary, inflation and housing cost are always on the rise over periods of 2-10 years.
As for the more rapid price increase that is happening right now, many millennials who had started their adult lives in apartments and more dense urban housing are now moving out to the suburbs for more space and a yard for the kids and pets. The covid lockdown seems to have spurred this trend. This has added a lot of demand that wasn’t there before. Among other factors moving prices upward.
Kinda, this is simple and nuanced at the same time. It’s simple as in there are proven paths towards reducing housing costs, as seen all over the world and even in the US. And it’s simple because a driving factor in the states is zoning. I think the nuance comes in when we acknowledge there’s more than one path forward, and we can walk more than one path at a time.
https://www.youtube.com/watch?v=SfsCniN7Nsc can give you a quick understanding of how zoning is a driving factor here. And a bit of history too. I like this video because it breaks a lot of this down, and doesn’t allow the faux complexity politicians bring to the table in.
Federally regulating ***some*** zoning practices will have a big impact on affordability, pollution, and expanding sustainably.
Zoning keeps us from building proportional dense housing in cities, forcing urban sprawl, and increasing the cost of living. Forcing massive parking lots, taking up space that could have been used for dense housing, or apartments.
Forcing cities to allow more apartment zoning, with public transportation, would help quite a bit. Further requiring that some apartment zoning be used for publicly funded apartments could also force the market to compete with a public option, and lessen how ghoulish we are when it comes to housing rights in the states.
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