Comment by vlovich123
10 hours ago
I feel like people complain about “food” but it’s a stand-in and that the cumulative increase in rent, transportation and food probably rose faster than wages. So Cato reply “but food hasn’t grown as fast as wages” is a myopic retort (admittedly one they acknowledge) that tries to fight the narrow factual argument ignoring the broader one where the emotional narrative probably remains true.
Also we can probably simplify this bucket even more and just talk about the elephant in the room which is rent/mortgage.
It’s 30 to 50% of most peoples paycheck, it’s really the piece that matters and the one that is most complicated to solve.
It's not very complicated; it's just that the solutions are deeply unpopular. Making housing affordable by definition means driving down prices. But existing homeowners don't like to see their home prices go down! And about 2/3 of the US public lives in a house owned by a resident.
I'm semi-convinced that the reason why we see so many bad ideas in housing is because the good ideas negatively affect too much of the voting public. Or, they perceive the ideas as negatively affecting them.
You're mistaken about the reasons why solutions are unpopular. Have you actually talked to the most active NIMBYs who oppose new housing development? Most of them are barely aware of affordability and home prices. They have lived in the same neighborhood for decades and intend so stay there until they die so prices don't impact them at all. Instead they are concerned about quality of life issues: traffic, parking, noise, petty crime.
“Making housing affordable by definition means driving down prices.”
This is not true.
Not that it matters as I don’t think this is what motivates NIMBY’s but for anyone reading that believes so, this is incorrect.
The old single family home next to the new apartment building gains land value. And this shows up county after county [1]. Building more housing is a valuation win-win, the pie just grows.
[1] https://gardner.utah.edu/news/recent-apartment-construction-...
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IDK if things are fundamentally different in Czechia, but I talked to a lot of Czech NIMBYs and they almost never mention home prices. What they usually obsess about is change in a neighborhood that they are used to and want to keep intact. The resentment against new people and new buildings is just palpable, even if the newcomers would be solid middle class.
Noise and dust from construction are often mentioned as well. Construction means heavy trucks entering places where they usually don't intrude.
> But existing homeowners don't like to see their home prices go down!
As a homeowner I don't want to see my home price go down relative to all other homes as that leaves me in a precious position if I need to move, but if all homes fall in price together then that actually makes the prospect of moving less risky as, if I have to move into a house that is a step-up from the one I have, the cost to do so is lower. That would be an improvement over the status quo. High housing prices are a problem even for those with significant equity in a home.
But who doesn't want to see their wage go down is those who build houses. This is the bottleneck. The vast majority of people cannot afford a new house, which means they're stuck in their used houses, which means there is no inventory opening up for those with no houses.
> it's just that the solutions are deeply unpopular.
Is it? The solution in motion is to use AI to push software developers out of software development so that they have to become construction workers, thereby increasing the supply of construction workers, pushing construction wages down. It doesn't seem that unpopular (at least not outside of HN, but even on HN many welcome it with open arms). Maybe it will become unpopular once the motions are complete? That's a tad bit late, though.
Saying, "2/3 of the US public lives in a house owned by a resident" sounds like a phrase talking around the problem that young people can't afford to move out of the family home. A true fact but with a story behind it.
The government heavily interferes in the housing industry. Hence, the higher costs. It's the same for everything the government interferes with - such as education and health care.
For examples:
1. there are 57,000 unoccupied apartments in NYC because city regulations on rents make them unprofitable to rent out.
2. the glacial pace of issuing building permits for burned out homes in LA.
3. the sudden influx of many millions of immigrants pushes up the demand for housing, resulting in higher prices
The correct quote should be:
The key term here is "rent-stabilized". And the reasons why they are vacant is much more complex "because city regulations on rents make them unprofitable to rent out". That is simply one category of rent-stabilized apartments that are vacant.
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> there are 57,000 unoccupied apartments in NYC
That's about 2.4% of the total number of rented apartments, and about 1.5% of the total housing stock.
How long do you think those apartments are unoccupied, on average?
What portion of the stock do you think would normally be healthy to have on the market?
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The share of income people spend on housing has been very stable over 40 years: https://economistwritingeveryday.com/2023/04/26/spending-on-...
The problem isn't so much that housing has gotten expensive. It's that many of the existing places have moved up-market compared to what they were 30-40 years ago. 75 years ago, Scarsdale NY or parts of Long Island were expensive. But Palo Alto was a drab middle class suburb. As the tech economy has boomed, that has driven prices up in Palo Alto for the same reason they were already high in Scarsdale. And now you have to move to Gilroy.
> The share of income people spend on housing has been very stable over 40 years
That's a misleading metric for two reasons. First, "people" includes all the people who bought a house decades ago before the prices went up, and correspondingly paid the old prices instead of the current prices. And second, it assumes that if housing becomes more expensive what people all do is pay more for housing rather than being unable to afford it and then having to take a longer commute to access housing they can afford, live with their parents, become homeless, etc., which negatively impact the amount or type of housing they get instead of the amount they pay for it.
Meanwhile between 1984 and today median income increased by ~290% while median new home prices increased by ~425%:
https://fred.stlouisfed.org/series/MSPUS https://fred.stlouisfed.org/series/MEHOINUSA646N
And that's with the gap having reduced a bit in the last couple of years, since home prices have declined slightly since the peak in 2022 while median income continued its usual trend.
Fighter planes coming back with holes must mean the parts with the holes are the ones that need reinforcing.gif
People are moving out of opportunity zones (and you know…losing opportunity) or moving in with roommates to keep the average percentage low.
Feels like such a basic factor to miss for what is supposedly an economists blog. That metric means nothing.
That stability claim is an average for all American households, gathering together high-income households and long-tenure homeowners along with poor renters. But in a K-shaped economy where the wealthy do well and the rest do worse, averaging the two forks of the K hides the hardship of those on the lower fork.
From https://www.jchs.harvard.edu/blog/rental-housing-unaffordabi...
> The net effect of this longer history is that renters today spend much more of their incomes on rent than they did in previous generations. The median renter household in 1960 spent less than a fifth of their income on rent. By 2022, housing costs consumed 31 percent of the median renter’s income. And in inflation-adjusted terms, the median rent is up 75 percent over these six decades while the median renter income has risen by just under 15 percent.
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a friend showed me their budget recently, and about 45 hours of their wages go to rent each month (for a single room in a house with roommates). That seems very high to me, and their rent is considered "low" in their area (a small suburb)
Assuming they work full time, that is pretty average. The old "30%" rule is that you should spend no more than 30% of your pre-tax wages on rent. Your friend is spending just over a quarter post-taxes.
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That seems high. 14 hours of my salary (pretax) goes to my rent.
That’s another bad metric without more nuance. if I used to pay 30% and now pay 50% but the remaining 50% buys 2x what it used to then overall I’m still doing better
I’m not saying that’s the case. I’m only saying the metric “housing cost as percent of wages” isn’t enough to judge if people are doing worse or better
To take just one example: a 65inch tv costs just $700 compared to $4k just a few years ago
You are right, I'll just eat a 65 inch TV and live in the box.