The Biden administration announced new steps Friday to ensure access to affordable housing, launching a slew of resources to convert high-vacancy commercial buildings to residential use.
Houses in the middle of Nebraska do not meaningfully help the housing market of New York City or San Francisco. Sure, I could go and buy a house in my hometown in bumfuck rural Missouri, but I don’t want to live in a homophobic conservative hellhole, so housing stock there isn’t really relevant to me in any way.
And if you look at a city like Seattle, where there actually has been meaningful construction, the pressure on renters has been way lower. Straight from the horses mouth:
The rise in vacancies across Seattle is directly linked to the rate of newly constructed apartments, according to Capital Economics, and it’s increased from 5.2% at the end of 2019 to 7% by midyear 2023. Already, Seattle’s asking rent growth rate is at -2% and could fall further. With that, the city’s apartment values will fall, and average annual total returns could become negative by 2027, meaning those properties are losing value as an asset and investment.
Here’s a London-based investment firm complaining about how housing in Seattle is becoming a bad investment due to increasing supply.
Not to mention, more rentals isn’t a bad thing! More rental units means fewer competition for each individual unit and ultimately cheaper rents. If you have 1000 people wanting to move to a city but there are only 500 open apartments, only the richest 500 people get to move. If you have 1200 open apartments, those landlords have to find a price that’ll get them a tenant or they’ll completely miss out on rents.
I completely agree with the sentiment that housing shouldn’t be treated as a productive investment asset, but the real question worth asking is why the market is so slanted towards landlords that housing can even serve as a productive asset in the first place. If you look at places like the Soviet Union or Communist China, they managed to house everyone easily because they build a metric fuckton of housing everywhere, so the questions of determining who gets housing and who gets to starve on the streets didn’t even apply.
It’s a supply issue. Essentially every economist agrees that it’s a supply issue. Evidence has shown time and time again that increasing supply lowers rent pressures. This is not a controversial question.
We study the city-wide effects of new, centrally-located market-rate housing supply using geo-coded total population register data from the Helsinki Metropolitan Area. The supply of new market rate units triggers moving chains that quickly reach middle- and low-income neighborhoods and individuals. Thus, new market-rate construction loosens the housing market in middle- and low-income areas even in the short run. Market-rate supply is likely to improve affordability outside the sub-markets where new construction occurs and to benefit low-income people.
Turns out there may be a meaningful difference between randomly cutting taxes from businesses and building a bunch of new housing.
Seattleite here. We also focused on supply side housing issues. We passed a ballot initiative last year that allows the city to establish its own housing developer which will compete with capital to build public housing.
It’s a supply side issue AND a capitalist greed issue. Don’t listen to this person.
I didn’t say “don’t believe this person” I said “don’t listen to them” meaning I think your stance doesn’t fully reflect reality with regards to this topic. I don’t think you’re a liar, I just think you shouldn’t be the only voice in the thread speaking for Seattle when I have an opinion to share too. Sorry if my words were offensive; it was meant to be dismissive but not offensive.
Looks like the board meets at the Capitol Hill library branch. Also I was wrong about how long ago the vote was, it was in February 2023. I’m a bit time blind so I kinda suck at that, sorry 😅
It seems like they are still setting up shop and laying the groundwork to get things done. The worst thing about government in my opinion is how damn slow everything moves.
I’m in agreement. Also in Seattle. The median house price in Seattle is over $800,000. Down a whopping 2%. This means you’d have to make over 200k a year to afford your mortgage. How many more apartment units will trickle this down the other 50% or 75% to make it affordable to everyone? People need to be realistic. Bans on for-profit home ownership need to be part of the mix here, not just more supply.
Not everyone wants to own, even when housing was affordable there was still a bit more than 30% renting.
At the point we’re at there’s more competition to own because renting is so expensive that it’s way more logical to purchase, flood the rental market to crash prices there and people won’t buy at a ridiculous price, they’ll simply rent instead, lowering pressure in the whole market.
One to four units can only be privately owned, 5 to 8 units can only be owned by a registered company, more than that must be run as a non profit (ideally a state corporation).
People are only allowed to own one property in a 50km radius (meaning that if you own a 4 unit you pretty much have to live in it unless you live in the next city over).
Well they can, it just means that the building management needs to show that all the money they get gets reinvested in the building or put aside for repairs. Non profits are much easier to investigate than private companies because they need to be able to justify everything they spend so they don’t overcharge. If it’s a state corporation? Even better, profits get sent to the government coffers to spend on services and you’re sure that the charges are lowered the next year. That’s how our health protection works for anything related to roads where I live and there’s a pretty good reason why it’s the province where it’s the cheapest to insure a vehicle!
Disagree with what you’re saying though there is some truth in what you’re saying:
We’re low on supply on housing in major business areas, because we haven’t kept up with house manufacturing for like 20+ years. If we just allow developers to build what they like, yeah they’ll mainly aim for luxury apartments/condos which only the rich will be able to afford. There will be strong resistance from the landlords to drop the property/rent value since the property is constructed to be more luxurious, so we’d need a ton of those luxury homes before medium and low income homes get built or become available (through price drops). That’s why, governments need to require some low income/median income offered units to help house more people with these new units until supply catches up or some other way to ensure that lower income people (non-rich) are able to afford homes.
Overall, making more homes is the ultimate solution to our low supply problem, we can argue of better ways to make more homes, get more average/median people housed, and decrease living costs, while we make new homes. Otherwise, we’ll be here arguing about what to do, and letting the problem continue to fester instead of refining imperfect solutions.
As of the last time a city government report was made on this just two years ago, over 61,000 homes were vacant in San Francisco. In answer to anyone who would write that off to pandemic effects, the number a few years before was around 40,000 homes sitting uninhabited. In San Francisco. Just sitting around being some well-off person or corporation’s investment, empty.
From some data I could find, the average one bedroom rent in January 2020 was $3050. From the same source, it’s currently around $2900. That 2020 number adjusted for inflation is $3600. So, rents seem to have both nominally and truly fallen.
I’d assume it’s largely due to lower demand because of remote work, since SF surely hasn’t been building anything. Thanks for the good example that increased vacancy does indeed lead to lower rents.
Houses in the middle of Nebraska do not meaningfully help the housing market of New York City or San Francisco. Sure, I could go and buy a house in my hometown in bumfuck rural Missouri, but I don’t want to live in a homophobic conservative hellhole, so housing stock there isn’t really relevant to me in any way.
And if you look at a city like Seattle, where there actually has been meaningful construction, the pressure on renters has been way lower. Straight from the horses mouth:
https://fortune.com/2023/10/24/how-much-seattle-west-coast-apartment-worth-landlords-rents-capital-economics-forecast/amp/
Here’s a London-based investment firm complaining about how housing in Seattle is becoming a bad investment due to increasing supply.
Not to mention, more rentals isn’t a bad thing! More rental units means fewer competition for each individual unit and ultimately cheaper rents. If you have 1000 people wanting to move to a city but there are only 500 open apartments, only the richest 500 people get to move. If you have 1200 open apartments, those landlords have to find a price that’ll get them a tenant or they’ll completely miss out on rents.
I completely agree with the sentiment that housing shouldn’t be treated as a productive investment asset, but the real question worth asking is why the market is so slanted towards landlords that housing can even serve as a productive asset in the first place. If you look at places like the Soviet Union or Communist China, they managed to house everyone easily because they build a metric fuckton of housing everywhere, so the questions of determining who gets housing and who gets to starve on the streets didn’t even apply.
It’s a supply issue. Essentially every economist agrees that it’s a supply issue. Evidence has shown time and time again that increasing supply lowers rent pressures. This is not a controversial question.
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I know you don’t care about evidence, but for anyone reading who does, here’s a study from Helsinki.
https://ideas.repec.org/p/fer/wpaper/146.html
Turns out there may be a meaningful difference between randomly cutting taxes from businesses and building a bunch of new housing.
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Seattleite here. We also focused on supply side housing issues. We passed a ballot initiative last year that allows the city to establish its own housing developer which will compete with capital to build public housing.
It’s a supply side issue AND a capitalist greed issue. Don’t listen to this person.
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I don’t know, I’m not on the city council so I don’t have all the details. I would hope they do approach that issue though if they haven’t already
deleted by creator
I didn’t say “don’t believe this person” I said “don’t listen to them” meaning I think your stance doesn’t fully reflect reality with regards to this topic. I don’t think you’re a liar, I just think you shouldn’t be the only voice in the thread speaking for Seattle when I have an opinion to share too. Sorry if my words were offensive; it was meant to be dismissive but not offensive.
You can find out directly how things are going, here: https://www.seattle.gov/neighborhoods/public-participation/boards-and-commissions/seattle-social-housing-public-development-authority-board
Looks like the board meets at the Capitol Hill library branch. Also I was wrong about how long ago the vote was, it was in February 2023. I’m a bit time blind so I kinda suck at that, sorry 😅
It seems like they are still setting up shop and laying the groundwork to get things done. The worst thing about government in my opinion is how damn slow everything moves.
The paper came out before that investigation was opened, so unless the paper is wrong, you’re probably wrong.
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I’m in agreement. Also in Seattle. The median house price in Seattle is over $800,000. Down a whopping 2%. This means you’d have to make over 200k a year to afford your mortgage. How many more apartment units will trickle this down the other 50% or 75% to make it affordable to everyone? People need to be realistic. Bans on for-profit home ownership need to be part of the mix here, not just more supply.
Not everyone wants to own, even when housing was affordable there was still a bit more than 30% renting.
At the point we’re at there’s more competition to own because renting is so expensive that it’s way more logical to purchase, flood the rental market to crash prices there and people won’t buy at a ridiculous price, they’ll simply rent instead, lowering pressure in the whole market.
It’s one of the many ways to lower prices!
deleted by creator
I’ve got similar ideas!
One to four units can only be privately owned, 5 to 8 units can only be owned by a registered company, more than that must be run as a non profit (ideally a state corporation).
People are only allowed to own one property in a 50km radius (meaning that if you own a 4 unit you pretty much have to live in it unless you live in the next city over).
deleted by creator
If it’s rental then it’s non profit, they can convert them to condos if they don’t agree.
deleted by creator
Well they can, it just means that the building management needs to show that all the money they get gets reinvested in the building or put aside for repairs. Non profits are much easier to investigate than private companies because they need to be able to justify everything they spend so they don’t overcharge. If it’s a state corporation? Even better, profits get sent to the government coffers to spend on services and you’re sure that the charges are lowered the next year. That’s how our health protection works for anything related to roads where I live and there’s a pretty good reason why it’s the province where it’s the cheapest to insure a vehicle!
Disagree with what you’re saying though there is some truth in what you’re saying: We’re low on supply on housing in major business areas, because we haven’t kept up with house manufacturing for like 20+ years. If we just allow developers to build what they like, yeah they’ll mainly aim for luxury apartments/condos which only the rich will be able to afford. There will be strong resistance from the landlords to drop the property/rent value since the property is constructed to be more luxurious, so we’d need a ton of those luxury homes before medium and low income homes get built or become available (through price drops). That’s why, governments need to require some low income/median income offered units to help house more people with these new units until supply catches up or some other way to ensure that lower income people (non-rich) are able to afford homes.
Overall, making more homes is the ultimate solution to our low supply problem, we can argue of better ways to make more homes, get more average/median people housed, and decrease living costs, while we make new homes. Otherwise, we’ll be here arguing about what to do, and letting the problem continue to fester instead of refining imperfect solutions.
deleted by creator
As of the last time a city government report was made on this just two years ago, over 61,000 homes were vacant in San Francisco. In answer to anyone who would write that off to pandemic effects, the number a few years before was around 40,000 homes sitting uninhabited. In San Francisco. Just sitting around being some well-off person or corporation’s investment, empty.
From some data I could find, the average one bedroom rent in January 2020 was $3050. From the same source, it’s currently around $2900. That 2020 number adjusted for inflation is $3600. So, rents seem to have both nominally and truly fallen.
I’d assume it’s largely due to lower demand because of remote work, since SF surely hasn’t been building anything. Thanks for the good example that increased vacancy does indeed lead to lower rents.
That’s amazing news about Seattle. It’s my dream to be able to afford to live there again one day