Working people can't afford homes
Always amusing that this is the go-to argument against free markets, when the major cause of housing unaffordability is that governments prevent housing from being built.
Working people can't afford homes
Always amusing that this is the go-to argument against free markets, when the major cause of housing unaffordability is that governments prevent housing from being built.
> Always amusing that this is the go-to argument against free markets, when the major cause of housing unaffordability is that governments prevent housing from being built.
I’m not sure where you live, but in my little corner of California, this is not the major problem.
The bottleneck is builders.
There are requests from local government for affordable housing all the time, but builders earn more on the higher end stuff.
The governments are starting to do workarounds by bundling high end developments with affordable housing, so I hope that works moving forward.
Source: My buddy who is a general contractor. I don’t know how this works, but he has pointed out local examples to me.
Builders may earn more making "higher end stuff" but the people who can afford those units can also afford the less expensive ones, pricing everyone else out. More housing, regardless if it's affordable or not helps keep prices in check.
Dictating what builders can make, if they can at all, is a large reason housing prices have gotten out of hand.
Builders gonna build for most profit. Why wouldn’t they?
But if they build tons, the older stock drops in value. Nobody is paying $500k for a 20 year old house if a brand new one is available for $500k next door.
> But if they build tons, the older stock drops in value.
Maybe I wasn’t clear.
The local builders are at capacity. They literally can’t build any more.
> Nobody is paying $500k for a 20 year old house if a brand new one is available for $500k next door.
People are paying $700k for a 70 yo 750 sq ft house in a mediocre neighborhood, and $1m+ for a 50 yo 1000+ sq fr house.
New houses start at $1.5m and quickly go up from there.
Most of the new housing is not in the most desirable neighborhoods (there is no space to build new SFH housing in there), so the houses in the better, established neighborhoods are holding their prices. Note that the prices might be lower than the new houses (sometimes), but they are not going down.
A result of this, using your example, is that there are rarely comparable old and new houses at similar prices.
If the builders are at capacity why aren’t there more?
> If the builders are at capacity why aren’t there more?
Great question!
My friend says that it’s tough to hire for the following reasons:
1. Many people don’t want to do the work.
2. Many people aren’t willing to adhere to drug policies.
3. Some people, after being hired, don’t reliably show up to work.
Note that I have heard other similar stories in the trades locally — plumbing, hvac, electricians, etc.
Arguably, they could offer more pay or a more aggressive pay schedule, but I’m not actually sure that increased pay would eliminate most of the problems.
I think it’s mainly a pay level situation-because when demand REALLY skyrockets (think after a disaster) you get hired guns appearing from far out of state.
So the response of the government is to add even more rules and limitations to building housing…
> So the response of the government is to add even more rules and limitations to building housing…
I mean… they are rules, but not limits. Low-income housing is being built. All of the locals I know consider it a win.
Note that “low income” housing qualification here is about $60k for a single person (often retirees) and $120k+ for a family of four.