This is at least 80% of the problem. The system is behaving exactly as you'd expect it to with even an Econ 102-level understanding. New supply isn't being built, or is being severely hamstrung, and more people want the supply and are willing to sacrifice (often too much) to get it. Add in rent-seeking behavior, both figuratively and literally, and prices quickly double in even mediocre areas with minimal long-term prospects for growth.

Relaxed zoning requirements for SFH and MFH buildings, relaxed or eliminated height restrictions for high rise density projects in urban areas, eliminating rent control, and a laundry list of other things would help alleviate the upward pressure.

You can sprawl further out and you can build infill in sparsely populated areas, but you run up against the reality that desirable areas are going to be expensive because they're desirable, and the cost of demolishing existing multifamily homes to increase density further becomes infeasible in already dense areas.

I bet you actually can find affordable housing in the middle of nowhere / towns where people are actually leaving.

This is not to say there isn't low hanging fruit that market rate housing can help with, and some areas have more room for improvement that way than others, but there's a limit to where that takes you that reveals a deeper problem: we treat housing as an asset that "should" continue to appreciate indefinitely, and we even subsidize people using extensive leveraging to acquire it.

Not that simple. In Australia over the last 10 years, the number of dwellings increased by 19% while the population increased by a smaller 16% [1]. Yet house prices still doubled. This is the same trend that has continued for decades, growth in number of dwellings has tended to outstrip population growth but house prices shot up since 2001 when the tax settings were changed to massively benefit speculation.

We also have a pretty high number of unoccupied dwellings that are left empty, since some investors see the bother of renting them out as not worth the money, since they’ll make so much when they sell that it doesn’t matter!

1. https://australiainstitute.org.au/post/is-population-growth-...

The price of homes has drastically gone up even in some communities around the world where no housing is being built because there is no demand for it; the given region is experiencing severe depopulation as everyone leaves for the faraway big city, except for a few elderly holdouts. Yet owners feel some kind of pressure to keep their asking prices high. To me, that means the situation is far from simple.

I don't think it's that simple. In my town, we're building like mad (thousands of units) and it is possibly slightly impacting pricing in that the rise is not as meteoric as it was 7 years ago. But new buyers are still priced out. Houses are vacant. There must be other factors.

I think there is another element, private equity (PE) has got involved in the housing market, and like anything that PE gets involved with it burns it to the ground and then exits with it's profit leaving behind a wasteland. PE equity will do anything to get their profit no matter who it hurts

This reductionism doesn't seem useful. The population of people who want to buy homes has not grown in any way that is proportional to the cost of a home.

Every amount of new housing will be purchased by competitive investors. You are heavily underestimating the amount of money unsophisticated investors have, and the psychological effect of owning more and more of territory. Most people will never say no to owning more money and territory.

HN, we seem to care about this. We post a lot about it. Maybe we should put together a site to consolidate this sort of information, work on articulating something insightful about what is going on, and then a system/group/accountability(this is important) for pushing this to our politicians. My grandfather used to do that and the US was improving. My dad did nothing other than vote. I've done nothing other than vote. The US stopped improving. It's easy to setup a ghost website and do nothing though, so we would need a way to hold each other accountable, broken out simple to follow actions to take. Basically a 10 step program but with the steps being political action we hold each other accountable to take.

i would love to hear a YIMBY consider the market forces/how capitalism works and not just reduce it to regulation. aka when it costs over $500k to build a single apartment unit and most of those costs are construction with very little of the regulation burden driving up that cost.

There is one hackish solution though. Unilaterally implode the real estate prices worldwide. People were so busy stealing covid money that they simply dumped the loot into real estate. This will not trickle it down (nothing ever trickles down), but at least would evaporate it.

Yeah even our best realtor, who I actually liked and thought he did a good job (see other comment here) spent probably 1/3 of his total time on our purchase just hanging out or also walking around an open house. Such a waste IMO.

> All three bidders waived inspection and appraisal, and they all had healthy financing

> I was transacting in a thriving market, with no special circumstances

Yeah, a hot real estate market is where a seller is likely to derive the least benefit. Although a talented agent in a hot market can drive a more competitive process, potentially generating higher offers. All of which is, to the author's credit, highlighted in the article.

Agents earn their keep in more normal/weak markets.

I would disagree. Theres enough information readily available to be able to see what relative home values are, where the good school districts are, etc.

The only reason I’ve ever used a realtor is because I don’t have the time to deal with the contract/legal side of everything. Most would be better served by hiring an attorney and title company if your state allows.

Realtors are indeed market experts (not product experts). Commission pay incentivizes them to close deals quickly, not to maximize sale price. Yes they can educate first time buyers that they cannot simultaneously get the best location, condition of the house, and price. Good realtors will ask their customer which two (or sometimes one) are their real priority and realistically match them to available listings. If you're moving into an area they can provide some local information although they legally cannot comment on schools or crime. If you've done this before, realtors mainly just serve as gatekeepers to a cartel and literally unlock houses for you to view.

But there is an adverse selection problem. Some realtors are experts in the market. Buyers or sellers have few ways to identify them accurately. Most of those ways amount to they themselves having good knowledge of the market.

It's the same problem as picking active fund managers.

The decade of zirp between like 2013 and 2021 created a lot of shitty realtors because anyone with a pulse could sell or buy a house with ease. The true value of realtors is in bad economic conditions where serious work is needed to market and negotiate.

> it's no surprise by and large they are not known for having a nuanced and academic understanding of economic theory

The folks I’ve worked with have been as dedicated to their career path as anyone, and while their expertise and skill varies that isn’t different than any job. I understand your point, but your (mis?)characterization hits me as a little biased and shallow.

It’s not “theory”; it’s literally what they do.

Yes, many.

The realtors I’ve met understand economics and markets very well. Not as academics but as practitioners.

It also depends on how hot the housing market is at any given time. Often time a realtor is just someone who decided everything else was too much work. (My whole family has been in the business for almost 70 years, both commercial and residential.)

No I am mostly agreeing with the quoted point

It’s also a diabolical amount. My friend bought a house in San Jose, and both, the buyers and sellers agent got $50,000 each on a $2M house. They didn’t even help with the house search much.

Merch has to move for them to earn a percentage. If prices are systematically too high I would guess liquidity goes down.

Actually realtors egg on buyers to offer more more more. And sellers to reduce asking prices. Whatever makes the sale happen quicker.

A good realtor should help the seller set a realistic price. Because if the house doesn't appraise for the selling price or more, the deal will fall apart before closing.

of course they are. what else could they possibly do? pressure you into selling for a little less? get sued for not getting the seller the best price?

also, they don’t get paid if something doesn’t sell for being overpriced.

it’s a market system.

For what it is worth, said home entertained was a manufactured home, so it is already pushing economies of scale. I'd hate to see a quote for a custom home. We have not truly figured out how to make housing scale very well, though. Even our most efficient methods are very primitive as compared to virtually all other manufacturing we do. Solve that problem and the price of all homes will plummet.

You gotta look at the motivations. Rich people and activists can both agree that affordable housing requirements are a good thing. The higher the better. This makes the project not pencil out so everybody is happy - the homeowners who don’t want new neighbors and the activists who think that everything is gentrification. The only people who get screwed are the only people who don’t have a vote, the non-residents. Which is why zoning policy and approvals cannot be locally controlled.

> the type of person that can afford to pay slightly more for the newer apartment.

Relying on that is the root problem. I could technically afford the new house, but in the end I couldn't find a good reason to tie up that much capital for something that does the same thing as what I've already got, only shinier. If the price were more reasonable then I'd make the move and then someone else could move into my much cheaper used house. But, as things sit, I occupy the cheap house instead, leaving the next guy out in the cold. Trouble is that just because I can afford it doesn't mean I am willing to be a buyer. The price still has to make sense.

I am not alone in this. It has been well reported that people are now staying in their "starter homes" instead of upgrading like past generations used to.

A lot of the stricter codes have very real safety benefits though - modern electrical is much safer, fire sprinklers add significant cost but really do help contain fires, etc.

(Not that it's all good, e.g. I don't like Washington's WAC 51-11R which just seems way overcomplicated.)

And then when you end up with actually accessible version of those it is different again. Which I had for a few years as student. No under sink cabinets. Even more massive bathroom. The bathroom was nearly the size of those small bedrooms.

We've had the technology to build skyscrapers for over 100 years. They're illegal in 90% of the city

Housing in SF and NYC are on some level substitute goods. Many of the people living there are mobile and the ones deciding prices on the margin. If SF rent was $10k and NYC was $3k, many are going to leave SF to get a similar type of lifestyle in NYC for cheaper, raising demand for NYC housing. If SF zoning laws allowed building an incredible amount of housing, lowering rents to $2k, while NYC is at $4k, many people would leave NYC, lower housing demand and thus rents, to get a similar urban lifestyle in SF.

This is the whole crux of why NIMBY is such a collective problem. When NYC doesn't build because SF should, when SF doesn't build because the Bay Area should, when the Bay Area shouldn't build because Texas should, everyone collectively pays higher prices because overall housing supply is reduced and many people move between them.

The rich only buy so many homes.

Its close to a pigeon hole problem. If there are 10 houses and 11 people, the homes are going to go up in price until the 11th is homeless (or moving away to somewhere cheaper). If there are 100 people, its the same issue except magnified, this is what happened in the bay area. Significantly more people than homes. But if there are 100 homes and 10 people, it doesn't matter how rich they are, the prices will drop because there is less demand. It will also be less attractive as an investment vehicle, because they will demand less rent.

Equal treatment sounds good to me. Which point are you responding to?

There is no "trillions that go into SpaceX". You and others seem to have a massive misunderstanding about how the stock market works... they could have sold 10 shares at $50 and still have a valuation in the trillions... Market cap does not mean they have that money in hand or even that it is being taken from someone else...

They literally sold less than 5% of the total shares in the ipo by the way...

What we spend on housing has doubled. That doesn't mean the cost has doubled. It means that we buy a lot more housing than we used to.

Real estate cost is local and there are parts of america where the prices have gone nuts. But there's a lot more where it hasn't and housing is affordable.

> So, housing cost has nearly doubled

That is in line with expectations:

1. The average house is ~60% larger than in 1970. More house equates to higher costs.

2. In 1970, the typical working-class man would spend time in a public house 5-6 nights a week. Today, third places are nearly nonexistent. Houses, largely driven by the internet opening it up to the world, has become more than a place to eat and sleep. Monetary spending is naturally directed to where one spends their time and energy.

Supply of housing has not kept pace with population since then. So you have more people chasing relatively fewer houses.

Also compare a 1960s or 1970s house to one built today. Today's houses are bigger and much more luxuriously appointed, with gourmet appliances, stone countertops, multi-head showers, walk-in closets, huge bathrooms, etc.

Once the boomer generation dies off or goes into assisted living you'll see a lot of those 1970s houses coming back on the market.

You seem to be using family income and not household income for 1970.

https://fred.stlouisfed.org/series/MEFAINUSA672N

Incidentally, the 1970s are when productivity kept rising, but typical worker pay stopped rising with it.

In 1970, median rent was $108 a month, utilities included.

https://www.nytimes.com/1973/04/08/archives/108-a-month-rent...

Probably not many. The median rent reported in the census was 108.

Per state breakouts: https://www2.census.gov/programs-surveys/decennial/tables/ti...

My parents bought the home we grew up in, which is located middle of Queens/NYC for ~$30k around 1977/8. It sold most recently for $3M. Rents were typically well under $300mo. $150 in not so great areas. That was a high inflation time though.

Today, I live in a small city in a house I bought for about $200k 20 years ago. IIRC, it sold for $80k around 1992. Worth about $450k today. A decent 2BR apartment rents for like $2k here, a nice one >$2700.

Very few, 300 USD was considered rather high in my area back then, maybe a house would be 300. That area is now in the top 5 expensive areas to rent.

In the late 80s early 90s I was paying 350 USD for a 2 bedroom.

Markets aren’t magic, they are the result of people pushing back and forth on each other.

What do you mean by “blame?”

I felt like my post was generally in the less-finger-pointing direction.

It's largely landlords causing trouble building housing where it's needed because it would limit how much they can make.

don't forget about algorithmic collusion

https://www.justice.gov/opa/pr/justice-department-requires-r...

$35,000 in 1998 is $72,500 in 2026, which is still a totally fine income. I know people living pretty well on that in New York City.

I think SRO's are very different from "One bedrooms" and even from studios? a studio or a one bedroom has a kitchen, a bathroom, and some living space... I think SRO's typically have a bed, a chair, and sometimes a desk. Bathrooms were shared, I'm not sure how kitchen/cooking space worked?

yep, a ton of SROs have been lost in cities like SF https://ccsroc.net/s-r-o-hotels-in-san-francisco/

also - gentrification of apartment housing stock over time raising the price floor and phasing out of public housing

Apartments exist everywhere with a population over 100. Does no one rent an apartment with roommates anymore?

Actually the US is a first-world country because it's allied with the US. Russia is a second-world country because it's allied with Russia, and Switzerland is a third-world country because it's allied with neither.

Probably also doesn't help that to many people want/need to live in the same few areas. If you could take your office job (which in most cases would work perfectly fine) and move to a less popular area, 30% might be rather high.

Does median represent the normal anymore?

Link for the curious:

https://en.wikipedia.org/wiki/Baumol_effect

Baumol plus zoning and NIMBY driven real estate hyperinflation basically explain the modern economic malaise among especially the young.

I’ve also heard this called “in-deflation.” Inflation in everything you need, deflation in everything you make.

Imagine if current hospitals could object to opening new hospitals. Or grocery stores could object to competitors getting permits.

It's the opposite of a thought-terminating cliche. It refers to an entire world and body of work, which include solutions.

You could start by reading Marx, who laid a lot of the groundwork.

> Shaking your fists at "the elites" and regurgitating populist slop is not going to

I like the way you trailed off halfway through your knee-jerk reaction, underscoring just how much your response is an automated result of indoctrination.

Frankly the statistics do not feel right - I remember jobs that were easily found at $15 per hour in 2012 and cost of everything was insanely low. One bedroom / 750, McDonald burger, $1, McDonald soda $1, a pack of beer $7. Now eveything is easily double or triple and the basic jobs are still at $15.

Landlords do not assume risk in their role as landlords.

The land is there regardless of whether anyone "takes on the risk."

Landlords often take on risk in their role as property managers or developers. They should be rewarded more for that, and not at all for their simple ownership of land, which again: would be there regardless of whether someone else or no one at all owned it.

Landlords assume artificial financial risk entirely created by landlords

When ownership shows up at zoning meetings, the main risk they seem to be concerned about is accidentally letting someone build enough housing. Heaven forbid!

Those same landlords also control many of the levers that might cause their investment to be less profitable.

This is exactly my problem with these arguments that demonize landlords. I've lived in multiple cities where I knew I'd only live there for a couple years, and I'm only interested in renting. How do you live somewhere short term without someone owning the rented property?

They can be privately owned and have the land value (unearned value, by definition) simply taxed away.

Or you can have the government own the land but do long-term (99 year) leases, like they do in Singapore.

Community land trusts, cooperatives, nonprofits, universities, local government, etc.

The problem is always financing. If you're going to own a place you need a lot of upfront capital. If you own a place and plan to maximize rent increases it's easy to leverage your new asset to buy more properties. But if you just want to keep it near cost then you need a new infusion of capital for each new property. So, by their nature such endeavors don't grow as fast as rent maximizing landlord can grow.

The steelman interpretation would be that government is the only party allowed to own rental properties.

Nobody would be allowed to rent out a space they owned because it would turn them into a landlord. All of the rooms people rent out to others would go away. You wouldn’t be able to rent a private house from someone, you’d have no choice but to live in government owned housing developments.

This would be incredibly unpopular if implemented because it wouldn’t resemble the utopian fantasy it’s supposed to represent. It’s a vacuous idealism in the same category as “billionaires shouldn’t exist” that serves as a placeholder for an unspecified utopian government-run economy. The details are never specified, you’re just supposed to imagine it works and nothing is lost as a tradeoff.

You tax away all the gains generated by the land value, which effectively eliminates the "landlord" component of a rental fee and directs the owner's incentives toward producing value via construction, improvements, or services instead of rent-seeking on an asset they did not create and which would continue to exist if they never set foot on it.

Is this the most charitable interpretation?

You could, for instance, require people who own habitations to actually live in that location. You could tax people who own property they do not actually live in very aggressively until they would be willing to sell for less to avoid the tax burden. You could have a system which taxes aggressively and builds lots of houses and gives it to people who own it as long as they live there.

There are quite a lot of ideas between "government owns everything" and "let vampire landlords do unlimited rent seeking."

As it happens, I think there is quite a lot to be said for the free market solution of just letting supply meet demand more or less freely, but I think your interpretation really is not the most generous one.

Shelter, heat, and comfort? No: Location, location, location.

A crack shack with a busted roof and broken utilities in a good location sells for the same price as a pristine, functional mansion in the middle of nowhere.

"And that's to make a measly 8% on my money."

Amazing how many people insist on being landlords despite it apparently being a life of sawdust and sackcloth.

> If you hire out a property manager and all of your maintenance you are not making money.

Because you can't acquire attractive real estate. Who cares about a unit in Slutdrop, Idaho?

The difference is that investment in a company can create “more company”, whereas investment in land can’t create more land.

That is not a problem, but the problem is that now they are financially incentivized to screw their tenants as much as possible. With a different capital project, sure they're screwing their customers, but at least I go shop at a different store. Humans need housing, and moving is annoying and expensive.

With realtors taking a 10% cut on each transaction? Or do you envision a more liquid market with less paperwork? What about escrow, inspections, and handling disputes on large transactions?

BTW in the US, a big advantage of renting is not having to buy, sell, or maintain appliances like a fridge because the landlord has to deal with it.

> without a strong guarantee you'd get it all back?

Mortgages are backed by the asset you are buying. $400k for a house is backed by the house. On top of that, almost every bank can sell off those mortgages and get the cash back immediately.

So, you are correct, I would not lend hundreds of thousands unsecured to a random person, but if I had the disposable capital, though, I WOULD buy a house with that money, and price in their credit rating to their interest rate, and turn around and sell it to Fannie/Freddie and recoup the principal that I lent.

Banks aren't on the hook for any of this (except for mortgages that don't conform, but most banks don't touch those, you have to go to brokers for those).

>You lose close to zero money owning land even in down markets.

You still lose relatively though because the next person with their money in the market made some %

Land and real estate assets are generally a poor investment relative to the market without a ton of active management. There are god knows how many millions of people who own land that would be incredibly valuable if not for the civil engineering lobby getting environmental rules and laws written to their favor.

How else do live in an area short term, with no desire to purchase property, without the existence of someone owning the rented property?

> Developers should get more reward

From who? Someone has to pay them to do the development, right?

In my state (Idaho) they can (and do) pay less than minimum wage if you are a tipped employee. [1]

"Most" who are in those positions tend to make at least minimum wage, if not more, but that is not a guarantee, and it is harder to claim tips as "stable income" when trying to get credit/housing.

Median wage/rent is hard to apply. Totally different results if you look at what the typical renter makes (at least in my area). Minimum wage is one thing...but when it takes 3-4x minimum wage to stay at 0 every month things get difficult.

[1] https://www.dol.gov/agencies/whd/state/minimum-wage/tipped

I'm making that much as a software engineer in a 3rd world country. Hire me :)

I could probably pack a bus or several buses just with the town I live in. How many openings do you have? :P

i can introduce you to ~50 people making about that amount. let me talk to my school and i can probably get a few hundred more.

very kind of you to offer them all a job at twice that. how do i reach out to you?

I'm making zero. I have been in IT, a developer (but out of date mostly VB and SQL), managed dev teams, managed IT departments. Unfortunately I have a record and it's hard to get someone to give me a second chance plus now I'm over 50 and too old/overqualified for the minimum wage jobs. Would love to hear your ideas.

Shit, people don't even make minimum wage in states with tipped minimum. Bartenders be getting less than that, and people aren't drinking like they use to.

I'm very interested in hearing the opportunity you can give someone who's willing to work for $14.50/hr though.

Havent you got states that haven't increased the minimum wage, just for inflation, in decades? Don't most people live in cheap wooden houses on top of all this? Isnt all your livestock full of chemicals to counteract the unsanitary factory conditions they must be processed in so the average American can even afford it in the first place? Doesnt half your country still hate blacks?

And finally, why do so many people kill themselves in America? Can't be that great. Don't know of many hunter gatherers offing themselves

Pretty much no.

Yeah, I was going to comment on the remote side of things... Can't manage that at the moment, so it's a no-go for me on that ground.

It originated in the US, not meant to apply to all contexts/countries.

I saw it in Berlin. In two occasions I saw the realtor be openly bribed in front of all of us, although whether he took the bribe or not I cannot say. I also saw a man bring mini muffins and a personalized letter from his wife, family picture included, but I'm not sure it counts.

People who do don't have the time to talk with you about it:)