There is an incredibly large lobby group who is fully invested in house prices rising or at least not falling, namely homeowners. and since most politicians at a high level usually own one or more houses, they are fully invested in it as well.
There is an incredibly large lobby group who is fully invested in house prices rising or at least not falling, namely homeowners. and since most politicians at a high level usually own one or more houses, they are fully invested in it as well.
> namely homeowners
I'm a homeowner and rising house prices are terrible for me. Property taxes have doubled, and the prospect of switching neighborhoods (as one might consider doing for work, school, or other reasons) feels off the table given the high costs involved in the transaction, since agent fees are a percentage of the sale.
But some homeowners are to blame, at the civic level, where those who are happy with the way things are reinforce the roadblocks against affordable housing. Minimum lot sizes and anti-apartment legislation dissuade the pesky low-income riff-raff from moving in.
> and since most politicians at a high level usually own one or more houses,
That's a factor, but the bigger deal is that eligible homeowners ar 50% more likely to vote than eligible renters, and that doesn't even count that many renters are not event eligible to vote!
https://nlihc.org/resource/new-census-data-reveal-voter-turn...
> That's a factor, but the bigger deal is that eligible homeowners ar 50% more likely to vote than eligible renters, and that doesn't even count that many renters are not event eligible to vote!
Even if the data seems to indicate that's true, I do see this statement thrown around a lot without much granularity into the groups counted.
In your link, it's broken down into a few different groups, but in terms of renters vs owners I'm kind of less interested in proportion of people eligible to vote who fit into each broad category, and more interested in normalized categories. How many more people who didn't vote and are renters share a rental unit with someone they're not tied to long-term, or rent alone, compared to people who own alone or own in a long-term committed relationship where both people would be owners and likely to physically vote together, for example.
As in, is there as significant of difference between households of the same structure, income level, age bracket, in terms of voter turnout (a couple sharing the status of renting or sharing the status of owning). I feel like you'd be much more likely to vote if your spouse that you split expenses and responsibilities with also votes, whereas your roommate might not give a damn and it has nothing much to do with you.
Likewise if you own a 1 bedroom condo alone, does that show up as different than someone who rents a 1 bedroom condo alone?
It's a much bigger group than homeowners. Banks don't want housing prices to fall, since then homeowners start foreclosing and then banks lose interest payments and own undesired property. Cities don't want housing prices to fall, since they were counting on money from developers and property taxes.
I don’t agree with this take, we’re overly simplifying the nature of housing here. It depends on the housing mix as well. If the vast majority of the pro-housing prices crowd is heavily invested in single family residential then they should favour widespread upzoning and deregulation of apartments because that would increase the value of their SFHs through two mechanisms: 1) presumably single family homes will be destroyed so any remaining single family homes become more valuable and 2) every single family home is now a potential townhouse or high density building which increases the value a developer would pay for it.
Are there any serious objections to that line of reasoning?
No, what you said is mostly correct; but I'm mostly talking about not having home prices go down, which is different but related.
There are different kinds of homeowners. There are those who are flipping houses and directly betting that the values go up, which is the crowd that you're describing. But at least in my area of the world, the majority of the anti-housing crowd is just old and is more anti-change than anything else. Even if the value of their home skyrockets even more, they won't sell and move. Their complaints are more about noise, traffic, and "quality of life" than home values.
But assuming that the upzoning and deregulation doesn't happen, isn't their calculation correct?
Property taxes are relatively independent from the absolute value of the property. Only the relative value of a property to other properties in municipality determines property taxes.
In Nevada, it's a percentage (approximately 0.5%, varying from city to city and with other conditions, like commercial usage) of its assessed value, which is 35% of taxable value. Taxable value is the market value of the bare land plus the replacement cost for all improvements on the land, less depreciation.
Ok, but if real estate prices half the city can just double the tax from 0.5% to 1%? Correct?
Yes, but every elected official will lose their job at that millage rate increase and you'll have riots.
Why? If the real estate prices half and the municipality doubles the tax rate, everyone pays the same amount of tax in dollars per year?
Because people don't enjoy paying taxes if they perceived they should go down.
The cost of running a city is largely independent of house prices, so if the real estate market crashes there is no getting around that municipalities need to increase tax rates to meet their cashflow needs. People may not like that they feel they are getting ripped off, but the existing infrastructure has relatively fixed ongoing costs to maintain.
I live in California where property tax is fixed at 1% due to Prop 13, so I don't really know how it works anywhere else.
Ok, I guess that is specific to California. Where I live it doesn’t work that way.
> Property taxes are relatively independent from the absolute value of the property.
In most places they are not. What would even compel you to write something like this?
Property values are regularly re-assessed according to recent sales and a % of the property value is then levied as tax.
Ok, where does the percentage come from? It is an arbitrary number set by the municipality to collect enough money from the property owners. Basically, if the city needs $100 million/year to operate it is just going to tweak the tax rate to hit that income number.
For example, in Vancouver the residential tax rate is around 0.15% and homes average around $2 million. Where I live which is a few hundred kilometres away the residential tax rate is around 0.5% and homes average around $600k. If you do the math, for both places the average place has $3000/year in taxes due — which is totally independent of house costs.
What does make the difference is if your house is more expensive than the average house. If you have a $2million dollar house in the place with 0.5% tax rate you are paying $10000/year in taxes despite your counterpart in Vancouver with a $2million dollar house is paying $3000/year.
I get this can be different across the world, but that is generally how it works in Canada.
That's a different question that I'm glad you were able to answer for yourself.
I never see the NIMBY movement really engage with what falling prices would mean in practice. It just seems impossible to be allowed for any really duration over a large area.
I think a more realistic (but depressing) goal is modest loss to inflation (so prices go up by 1-2% less then inflation).
> I think a more realistic (but depressing) goal is modest loss to inflation (so prices go up by 1-2% less then inflation).
If you read between the lines that seems to be what Canada's approach to house affordability is going to be. Their leaders are promising housing will be more "affordable" but that the goal isn't to decrease home prices.
10 years of 2% is a real value decrease of 20%. that would be amazing!
But it’s pretty rare to see a contentious policy last that long without really clear results.
And people don’t seem to understand inflation. They expected to see real prices go down (deflation) and were upset when that did not happen.
They are going down the same path of making a lower quality product available, then using deceptive averages.
I have not seen anything that would create a supply of equally desirable properties (compared with detached dwellings).
Most families being able to afford a detached SFH was a historical anomaly that came with massive costs, and won’t be sustainable long term.
The "anomaly" happened when we were less productive overall. What change made it possible, and why can't we go back?
Western societies are naturally below replacement rate, getting back to sfh as the norm seems like the inevitable outcome without the significant efforts at the national policy level.
>What change made it possible?
Massive federal investment (paid for by the entire nation but often only able to be capitalized on by white Christian nuclear families) and municipal bonds that pushed the costs of building infrastructure out decades.
>why can't we go back?
The original loans are still due and/or replacement costs for the infrastructure require new funding, at 2025 inflated prices, and civil rights and demographic changes mean that the old resistributive model can't work (not the least of which because of the outsize costs that will be incurred to maintain quality of life for the oldest Americans in the next two decades). There's probably more.
Not to say that reimagining the sfh couldn't lead to it still being viable. But 2500 sqft on an acre probably isn't tenable.
> I never see the NIMBY movement really engage with what falling prices would mean in practice
It means the landed gentry lose, and the working class win. Unlike the status quo of the past few decades where the landed gentry make fistfuls of cash by doing 0 actual work.
Obviously housing prices going down will make some people's assets mixes worth less. That's why they fight to stop building housing. But that's true for lots of commodities and businesses too. Just because many people are invested in diamonds doesn't mean we have to ban lab grown to save diamond prices
If we can keep the price of homes flat for 10 years then homeowners won't get hosed (still increasing equity by paying off principle) and homes get more affordable (assuming steady inflation and wage growth)
Falling prices are bad for economy. Lending brokers, construction companies, material suppliers - all will be hurt if price falls.
The best solution in my perspective is to have stagnant housing prices so eventually general inflation will make housing cheaper.
Many of the home owners would win in a freer market because their land would be worth more.
There's also a large lobby group that is fully invested in building new houses, namely real estate developers, and since most politicians at a high level usually need large campaign contributions, they are fully invested in it as well.
This is not the problem. We should not castigate people who want to build homes and earn a rightful profit from that endeavor. The problem is the undemocratic process that is the town hearing. It is unreasonable to expect working families and young adults to attend week day, day time hearings to state their position on the construction of new homes or anything else for that matter. The atrocities of urban renewal by Robert Moses and his followers in the 50s and 60s which wrecked many urban and black urban communities, many of which still haven’t recovered, led us into this mess. The antidote was that all movements towards progress must be debated by citizens (mostly seniors as they are the only ones with the luxury of time) in a hearing format. The citizens able to participate are most likely not going to live long enough to see the results of their positions anyways. It’s a disaster.
You want to let rich outsiders make decisions about what happens to a community instead of the people who live there, because... town hearings are undemocratic. All those annoying old people are just going to die anyway, so it's really best to ignore them.
I think I've heard everything now.
All these old people are going to die now so their incentives don’t really align with people from other demographics. This is factually true, same with how people that have more wealth generally have different incentives than poor people.
The casual ageism in this thread is disappointing. I hope you live long enough to see it from the other side.
Are you suggesting that the problem with housing is that we are producing too much of it?
No, I'm suggesting that one problem with housing is wealthy real estate developers who have undue political influence.
I wish they had more influence, then they’d be able to build more and prices would go down.
I'm all for building more housing, as long as it comes with the necessary infrastructure - schools, roads, parking, public transportation, etc. Where I live, developers seem to get government approval to build in locations where they can rake in a lot of money at high prices without having to worry about such things.
(In fact, my local government is actually closing roads near new housing because "f#ck cars" is apparently a hip idea these days.)
Your own example seems to show that the culprit lies with local governance, not developers, wouldn’t you agree?
Money is politics, at least since Citizens United. Depending on your locality, for much longer.
No. Let's not pretend that it's OK for developers to try to obtain undue influence over government officials.
There’s a puzzling contradiction between your claim that developers are the problem, on one hand, and then your own anecdote on the other, not to mention the article that very convincingly debunks the idea that housing shortage is the fault of developers. I must be missing something, because frankly this isn’t making any sense.
I'm not saying that developers are the cause of the housing shortage.
I'm saying that developers are eager to build housing and sometimes are able to cut corners via undue influence over public officials. That leads to more housing (good), but it also erodes the quality of life for residents (bad).
It's really not that hard to understand.
It's been hip since drivers started showing up and killing people. The less parking the better.
Right. Let's just go back to agrarian times when people rode horses to get around.
Indeed, that is the only alternative and the favoured option for those trying to make it safe for their kids to bike to school. Though I prefer mules myself.
Let me guess. You already own a home?
Yep. A town can become desirable after its residents carefully built its character and reputation, then suddenly apartment/condo developers want in.
Usually the town was made "desirable" by residents there from ~1890-1940, and the current NIMBY's are leeching off that. In most cases the desirable part was bulldozed in the 50's-70's to make parking for the suburbanites. Portland, OR had streets that could make you think you were in Budapest before they were demolished in the 40's
That's fine. On one hand the other saying "no" too much will stagnate the local economy, on the other a city doesn't need to accommodate an infinite number of people moving there. Either extreme will hurt property values in the long run, so there's a balance. I've seen places sell themselves out, I've also seen suburban sprawls where naive homeowners feel good about holding a house 20 years only to make 30% gain.
Nobody else should decide the balance but the residents who have semi-permanently set up their lives there. People considering where to move have no skin in the game, they can pick somewhere else if they don't like what they see or can't afford it. Developers at least have something to lose once they've set up shop, but they're still not raising families there. And by "should" I mean, I wouldn't buy a home in a place where homeowners don't have the most say. Those places do exist, and I'd only rent there temporarily.
This has just lead to Boomers getting a death grip on every city. Young people are forced to pay out the nose to rent the scraps of housing left, and then also get taxed to pay out the pensions of the same boomers because they moved all of their cash out of the bank and stocks to put in to a 5 bedroom house in Sydney so now they qualify for welfare.
What do you propose instead to allow younger people to buy homes, and if it were implemented, why would young people still want to buy a home under those rules?
I propose construction approvals be managed by a higher government level than the local council which has so far resulted in disastrous outcomes.
At the state level, planning can be done for the benefit of the whole city. Entrenched groups of property owners holding inner city areas hostage won't be able to push young people to the outskirts where there is no PT, schools or facilities. Medium and high density buildings would be able to be built where they make the most sense, not just where there is the least political resistance.
Young people want to live near jobs, transport, and entertainment. But those areas are currently locked up by property owners preventing construction of appropriate housing.
You're saying young people are pushed to outskirts, but it seems like you mean they can only buy there, and others are renting. Otherwise, there's no way boomers just occupy the entire main part of the city, there aren't that many of them.
So if you enabled them to buy the more desirable homes instead of merely renting, where in this are they actually benefiting from doing so?