# The affordable-housing crisis -- is more supply really the answer? **URL:** \ **Category:** In My Humble Opinion\ **Created:** [March 7, 2023, 3:31pm UTC](https://boards.straightdope.com/t/the-affordable-housing-crisis-is-more-supply-really-the-answer/980836 "2023-03-07T15:31:29Z")\ **Posts on this page:** 20\ **Page:** 6
**Author:** ![Sam\_Stone](https://avatars.discourse-cdn.com/v4/letter/s/ecccb3/32.png) [@Sam\_Stone](https://boards.straightdope.com/u/Sam_Stone)\ **Post date:** [March 8, 2023, 9:22pm UTC](https://boards.straightdope.com/t/the-affordable-housing-crisis-is-more-supply-really-the-answer/980836/101 "2023-03-08T21:22:01Z")
The problem is slowly solving itself. The most expensive cities are shedding businesses and people, who are moving to parts of the country where it is cheaper to live and do business. > **[Why Silicon Valley Companies Are Moving to Texas](https://www.investopedia.com/why-silicon-valley-companies-are-moving-to-texas-5092782)** > > Silicon Valley has long been considered the epicenter of the tech industry, but its days at the center of the tech universe may be numbered as more firms move to Texas. These firms that are moving out of Silicon Valley are citing the high cost of housing, high taxes and smothering regulations as their primary reasons for moving. Also, major stores are closing in these cities because of shoplifting, homelessness and general disorder. They’ll take all those jobs with them, and the reduction in low-income facilities for shopping will further hurt the rssidents and make these cities less livable. That will increase the outflows. There is a very real problem that the rise in real estate prices has trapped a lot of people who cannot afford to sell without losing a big chunk of their value to taxes. So people remain in homes that would otherwise be freed up for others. If you are looking for a scapegoat for this mess, try the last two decades of constant stimulus, artifically low interest rates and other efforts by the federal government to goose real estate prices. Couple that with an inability to expand laterally and an unwillingness to build vertically, and San Fransisco was ripe for this. Oh, another fix is coming as well: The increase in mortgage interest is going to,lead to a lot of foreclosures and less money flowing into real estate as an investment. House prices almost always come down as rates rise. A recession is likely this year, and inflated bubbles are the first to pop when times get hard. Assuming the government doesn’t bail everyone out with printed dollars and make inflation worse. ---
**Author:** ![HMS\_Irruncible](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/hms_irruncible/32/7394_2.png) [@HMS\_Irruncible](https://boards.straightdope.com/u/HMS_Irruncible)\ **Post date:** [March 8, 2023, 9:34pm UTC](https://boards.straightdope.com/t/the-affordable-housing-crisis-is-more-supply-really-the-answer/980836/102 "2023-03-08T21:34:19Z")
One solution I think would help is taxing units that aren’t rented for X number of months. Be generous about the time period (say 12 months) and exemptions (exempt buildings less than say 8 units). And perhaps allow a generous writeoff of turnover costs between tenants, to support shorter leases if they want. But outside of that, it should be painful to squat on large numbers of empty units trying to wait out a low-rent market situation. This way, landlords would be motivated to actually discover the current market rate instead of squatting indefinitely on empty units waiting for someone else to take the first step. Then the market could function as it’s supposed to. Naturally this would not be a universal solution, because every regional market has its own particular issues, but this would help areas that do have a problem with land-squatting. ---
**Author:** ![Ruken](https://avatars.discourse-cdn.com/v4/letter/r/f475e1/32.png) [@Ruken](https://boards.straightdope.com/u/Ruken)\ **Post date:** [March 8, 2023, 9:36pm UTC](https://boards.straightdope.com/t/the-affordable-housing-crisis-is-more-supply-really-the-answer/980836/103 "2023-03-08T21:36:02Z")
> [@k9bfriender](#): > > Right, so the city dies, no one wants to live there anymore, problem solved. Plenty of other places to live. Demand responds to price and to filth because the city wouldn’t let anyone build somewhere for the janitors to live and companies won’t pay enough for them to stay. > [@k9bfriender](#): > > Okay, SF is the only place where housing prices have gone up faster than income, I am simply imagining all the reports that indicate otherwise. > 😕 > > Now, SF is the worst example, and may be one of the few with, as you say “_ **truly ludicrous** _” housing situation. But the problem is nationwide, housing is becoming less and less affordable even in your Fayetteville/Huntsville/McAllen/Lincoln/Lubbock/etc. It doesn’t have to be “truly ludicrous” to price you out of a roof over your head. And when I got priced out I moved. Housing has gotten more expensive while other necessities have gotten cheaper. It’s also gotten bigger with fewer people per unit. Some will double up. Others will leave. That goes for the SFs and the Fayettevilles. > [@k9bfriender](#): > > Ah, corporate housing. How could that _ever_ go wrong. It’s not something I’d go for. But Bar Harbor won’t expand and Jackson Lab no doubt found it cheaper than paying people enough to put up with commuting from the mainland. If it were a company, the owners likely would have cashed out the real estate by now. ---
**Author:** ![jjakucyk](https://avatars.discourse-cdn.com/v4/letter/j/3d9bf3/32.png) [@jjakucyk](https://boards.straightdope.com/u/jjakucyk)\ **Post date:** [March 8, 2023, 9:45pm UTC](https://boards.straightdope.com/t/the-affordable-housing-crisis-is-more-supply-really-the-answer/980836/104 "2023-03-08T21:45:39Z")
> [@Sam\_Stone](#): > > These firms that are moving out of Silicon Valley are citing the high cost of housing, high taxes and smothering regulations as their primary reasons for moving. And then they realize that Texas sucks and their business suffers because they can’t get the talent they need and they lost the connections they had with other businesses in the same industry. [https://thehill.com/opinion/finance/563572-dont-mess-around-with-texas-just-move-back-to-california/](https://thehill.com/opinion/finance/563572-dont-mess-around-with-texas-just-move-back-to-california/) > **[Tesla to move engineering HQ from Texas back to California](https://www.dallasnews.com/business/technology/2023/02/22/tesla-to-move-engineering-hq-back-to-the-state-it-left-for-texas/)** > > The electric car maker will occupy the former Hewlett-Packard site in Palo Alto. ---
**Author:** ![k9bfriender](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/k9bfriender/32/3283_2.png) [@k9bfriender](https://boards.straightdope.com/u/k9bfriender)\ **Post date:** [March 8, 2023, 9:51pm UTC](https://boards.straightdope.com/t/the-affordable-housing-crisis-is-more-supply-really-the-answer/980836/105 "2023-03-08T21:51:52Z")
> [@RTFirefly](#): > > (I know people will jump in and say, ‘$180K? That sounds pretty good!’ but 70K would have sounded a lot better, and that would have been more likely just a few years back. The point is, you don’t get this upward pressure if there aren’t more jobs for more people than there is housing for more people. And LA/SF/NYC/DC/Boston are far from the only places where this is happening.) Yeah, I have friends that live in the “poor” part of town. Some of them have bought their houses back 15 years ago for like $35k, and are now selling them for $150-200k. The ones that were renting were priced out. > [@Sam\_Stone](#): > > There is a very real problem that the rise in real estate prices has trapped a lot of people who cannot afford to sell without losing a big chunk of their value to taxes. So people remain in homes that would otherwise be freed up for others. I know people like this. My mother for instance. She doesn’t want to stay in her 4 bedroom house on 3/4 acre. In theory, selling it more than pays for getting into a more reasonable house, but not after taxes. I wonder if a solution is to allow home sellers to defer the capital gains on proceeds used to purchase another house. It would have to be their primary residence, and have some time frames in to prevent people from taking advantage of it while flipping houses. But it would free up housing space for those who need it, and also get people who don’t _want_ a big house the ability to get out of it. > [@Ruken](#): > > Plenty of other places to live. Demand responds to price and to filth because the city wouldn’t let anyone build somewhere for the janitors to live and companies won’t pay enough for them to stay. Right, but all those people who NIMBY’d out any affordable housing are now just shooting themselves in the foot when their property values plummet. > [@Ruken](#): > > And when I got priced out I moved. Housing has gotten more expensive while other necessities have gotten cheaper. Which necessities are those? IME, _everything_ has gotten more expensive. And, as I said, housing is getting more expensive _everywhere_. > [@Ruken](#): > > If it were a company, the owners likely would have cashed out the real estate by now. I’m just surprised it’s legal. I was under the impression that tying housing to employment generally was not. ---
**Author:** ![Ruken](https://avatars.discourse-cdn.com/v4/letter/r/f475e1/32.png) [@Ruken](https://boards.straightdope.com/u/Ruken)\ **Post date:** [March 8, 2023, 10:51pm UTC](https://boards.straightdope.com/t/the-affordable-housing-crisis-is-more-supply-really-the-answer/980836/106 "2023-03-08T22:51:01Z")
> [@k9bfriender](#): > > Right, but all those people who NIMBY’d out any affordable housing are now just shooting themselves in the foot when their property values plummet. I’d like to think so. I’d also like to think the fallout will mostly be on them vs others who knew better or who were just scraping by. But I suspect the usual suspects are more likely to get screwed than anyone seeming to have done it to themselves. > [@k9bfriender](#): > > Which necessities are those? IME, _everything_ has gotten more expensive. > > And, as I said, housing is getting more expensive _everywhere_. The long-term trend has been downward for food, clothing, transportation, and (not a necessity but hey, bread and circuses!) entertainment, upward for housing, healthcare, education. > [@k9bfriender](#): > > I’m just surprised it’s legal. I was under the impression that tying housing to employment generally was not. I don’t know the particulars. One sibling lives in employer-owned housing. I believe there are tax implications if rent is less than market rate unless certain conditions are met. ---
**Author:** ![Mijin](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/mijin/32/9369_2.png) [@Mijin](https://boards.straightdope.com/u/Mijin)\ **Post date:** [March 8, 2023, 11:32pm UTC](https://boards.straightdope.com/t/the-affordable-housing-crisis-is-more-supply-really-the-answer/980836/107 "2023-03-08T23:32:54Z")
> [@Chad\_Sudan](#): > > Second, a meaningful increase in housing supply puts a strain on existing, underfunded infrastructure (transport, schools, etc.) and can easily ruin what makes our cities special. Does anyone want San Francisco’s built environment to look like Hong Kong’s? What makes a city “special” is of course highly subjective, but I think Hong Kong can be a misleading example, particularly for the point the OP makes. Hong Kong is not a city that has let housing development run amok, on the contrary, it has confined house building to a small area, and consequently has perhaps the world’s worst shortfall of housing for its population. It’s an example of what happens when you _don’t_ allow sufficient new homes. If SF doesn’t build new homes then you might get increasing subdivision (legally and illegally) and ultimately end up with something that looks as chaotic as the chungking mansions. (This is not to beat up on HK too much; most expats I know who’ve lived there have loved it) ---
**Author:** ![DavidNRockies](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/davidnrockies/32/6279_2.png) [@DavidNRockies](https://boards.straightdope.com/u/DavidNRockies)\ **Post date:** [March 8, 2023, 11:39pm UTC](https://boards.straightdope.com/t/the-affordable-housing-crisis-is-more-supply-really-the-answer/980836/108 "2023-03-08T23:39:41Z")
> [@k9bfriender](#): > > I wonder if a solution is to allow home sellers to defer the capital gains on proceeds used to purchase another house. It would have to be their primary residence, and have some time frames in to prevent people from taking advantage of it while flipping houses. It’s a thing, more or less: > **[Topic No. 701, Sale of Your Home | Internal Revenue Service](https://www.irs.gov/taxtopics/tc701)** > > If you have a capital gain from the sale of your main home, you may qualify to exclude up to $250,000 of that gain from your income, or up to $500,000 of that gain if you file a joint return with your spouse. Publication 523, Selling Your Home... ---
**Author:** ![Horatius](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/horatius/32/3572_2.png) [@Horatius](https://boards.straightdope.com/u/Horatius)\ **Post date:** [March 9, 2023, 12:10am UTC](https://boards.straightdope.com/t/the-affordable-housing-crisis-is-more-supply-really-the-answer/980836/109 "2023-03-09T00:10:21Z")
> [@k9bfriender](#): > > I wonder if a solution is to allow home sellers to defer the capital gains on proceeds used to purchase another house. It would have to be their primary residence, and have some time frames in to prevent people from taking advantage of it while flipping houses. In Canada, [you don’t have to pay any taxes when you sell your primary residence](https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/about-your-tax-return/tax-return/completing-a-tax-return/personal-income/line-12700-capital-gains/principal-residence-other-real-estate/sale-your-principal-residence.html): > When you sell your home or when you are considered to have sold it, usually you do not have to pay tax on any gain from the sale because of the principal residence exemption. This is the case if the property was solely your principal residence for every year you owned it. We did that with my mother’s house a few years ago, and she walked away with enough cash to pay for her retirement home for the foreseeable future. Of course, in Canada, there is no tax write off for your mortgage payments, as I understand there is in the US. So you’re getting your tax-break up front. That’s good when you’re first buying, but also bites you in the ass later. ---
**Author:** ![thorny\_locust](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/thorny_locust/32/431_2.png) [@thorny\_locust](https://boards.straightdope.com/u/thorny_locust)\ **Post date:** [March 9, 2023, 12:18am UTC](https://boards.straightdope.com/t/the-affordable-housing-crisis-is-more-supply-really-the-answer/980836/110 "2023-03-09T00:18:29Z")
> [@bump](#): > > I would think a way to mitigate the problems might be to assign a home purchase to a category, and if it’s a person buying it and it’s not their primary residence, or if it’s a corporation, then there’s some sort of clause that requires them to rent it out within some time frame, or suffer some pretty hefty penalties- percentage of the home’s value or some such. Better make sure that short-term renting doesn’t count: needs to be by the month or longer. Otherwise, they’ll pick up an occasional Air B&B; but still nobody gets to live there. > [@Ruken](#): > > > [@k9bfriender](#): > > > > Which necessities are those? IME, _everything_ has gotten more expensive. > > > > And, as I said, housing is getting more expensive _everywhere_. > > The long-term trend has been downward for food, clothing, transportation, and (not a necessity but hey, bread and circuses!) entertainment, upward for housing, healthcare, education. The long-term trend, at least for food and clothing, has been downward. The short-term trend is way up. ---
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [March 9, 2023, 12:53am UTC](https://boards.straightdope.com/t/the-affordable-housing-crisis-is-more-supply-really-the-answer/980836/111 "2023-03-09T00:53:21Z")
> [@Cheesesteak](#): > > That is clearly a problem today. Part of the concept of expanding supply is that the demand for luxury units is not unlimited. If that demand is unfulfilled due to restricted supply ALL new builds will be luxury. Why would anyone build an affordable unit if there’s an untapped demand for luxury units? I suspect that, as in luxury cars, the markup for the luxury items is pretty high, which encourages builders to go that way. Before I retired there were tons of high rise condo buildings going up on the San Jose - Santa Clara border, near Cisco. Dense housing, I suspect expensive, and it in no way decreased property values. I did check out the price of a condo unit across the street from work, and it was a significant chunk of my fairly large house. More of these houses should at least free up apartments for lower income people, and with more units available might help the price. I was happy to retire before having to deal with all the new traffic from these places, though. ---
**Author:** ![Ruken](https://avatars.discourse-cdn.com/v4/letter/r/f475e1/32.png) [@Ruken](https://boards.straightdope.com/u/Ruken)\ **Post date:** [March 9, 2023, 1:42am UTC](https://boards.straightdope.com/t/the-affordable-housing-crisis-is-more-supply-really-the-answer/980836/112 "2023-03-09T01:42:42Z")
> [@thorny\_locust](#): > > The long-term trend, at least for food and clothing, has been downward. The short-term trend is way up. Then we can all go home because Case-Shiller has fallen since June? No, because we aren’t talking about short term blips. ---
**Author:** ![HMS\_Irruncible](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/hms_irruncible/32/7394_2.png) [@HMS\_Irruncible](https://boards.straightdope.com/u/HMS_Irruncible)\ **Post date:** [March 9, 2023, 2:34am UTC](https://boards.straightdope.com/t/the-affordable-housing-crisis-is-more-supply-really-the-answer/980836/113 "2023-03-09T02:34:24Z")
> [@Sam\_Stone](#): > > There is a very real problem that the rise in real estate prices has trapped a lot of people who cannot afford to sell without losing a big chunk of their value to taxes. So people remain in homes that would otherwise be freed up for others. The only thing “trapping” such people is that they don’t like taxes. In the US, the first $250,000 of profit from home sales (that’s _profit_, not _proceeds_), is exempt from capital gains. That’s just for individuals. For couples it’s $500,000. So for a couple, you get to keep your entire cost basis in the house, plus a half million dollars in profit, and then you keep all the excess profit after taxes (the absolute highest marginal rate being 37%). (Unless of course you’ve been stiffing the county on property taxes, as some people do). You might not get to buy your exact same house on the exact same street, but downsizing or moving to the country is no issue at all. I know this because my own parents are in this situation. They rant about how they can’t afford to move because of taxes. When I look at the situation in detail, it appears that their primary residence would be entirely unencumbered by taxes. The real sticking point is a rental property that has different rules (because it’s a business, of course it does). They are facing walking away from the deal with $620,000 instead of $680,000 (again, not on their primary residence), and refuse to do so, and they go around telling everybody that nobody can move nowadays because of taxes. So I’m a bit skeptical on stories like these without seeing some numbers. ---
**Author:** ![bump](https://avatars.discourse-cdn.com/v4/letter/b/7c8e57/32.png) [@bump](https://boards.straightdope.com/u/bump)\ **Post date:** [March 9, 2023, 3:17am UTC](https://boards.straightdope.com/t/the-affordable-housing-crisis-is-more-supply-really-the-answer/980836/114 "2023-03-09T03:17:49Z")
I’d say maybe on non-commercial property; I’d think it’s counterproductive to saddle small businesses with a high tax like that, even if it’s passed through from the property owner. And I’m not so sure we need to make it difficult for people to rent homes either. What we do want to avoid or mitigate is companies/entities buying homes as investment vehicles without any actual intent to use them to provide housing in some fashion. THAT is the primary problem here. Maybe there ought to be some sort of consideration paid toward market manipulation as well; one thing I could see happening (it may well be) is corporate owners buying many houses in an area, renovating them, and then selling them at higher price, thereby driving up the sales prices in that area. Nothing nefarious about it, other than the fact that it’s possible for companies with enough money to materially affect prices by doing that in ways that individual or small-scale landlords can’t. ---
**Author:** ![thorny\_locust](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/thorny_locust/32/431_2.png) [@thorny\_locust](https://boards.straightdope.com/u/thorny_locust)\ **Post date:** [March 9, 2023, 3:20am UTC](https://boards.straightdope.com/t/the-affordable-housing-crisis-is-more-supply-really-the-answer/980836/115 "2023-03-09T03:20:46Z")
> [@HMS\_Irruncible](#): > > So for a couple, you get to keep your entire cost basis in the house, plus a half million dollars in profit, and then you keep all the excess profit after taxes (the absolute highest marginal rate being 37%). In many cases, that isn’t mostly “profit”. There’s no adjustment provided for inflation – the purchase price (which is probably much of the cost basis) may be in 1983 dollars, the sales price in 2023 dollars, and taxes are assessed on the difference as if those were the same thing. If we’re talking about something that was purchased recently, of course, that’s a different situation. ---
**Author:** ![squeegee](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/squeegee/32/14537_2.png) [@squeegee](https://boards.straightdope.com/u/squeegee)\ **Post date:** [March 9, 2023, 3:22am UTC](https://boards.straightdope.com/t/the-affordable-housing-crisis-is-more-supply-really-the-answer/980836/116 "2023-03-09T03:22:17Z")
> [@HMS\_Irruncible](#): > > The only thing “trapping” such people is that they don’t like taxes Thank you, I was thinking exactly the same thing. Boo fucking hoo, your property appreciated more than $500,000 flipping dollars, you might have to fork over a token amount to the gummint. 😭 Jesus, crybabies, take the damned money and be happy. If I made half a mil in wages (and I have), I’d walk away with way way _way_ less than 100% of it. ---
**Author:** ![wguy123](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/wguy123/32/3161_2.png) [@wguy123](https://boards.straightdope.com/u/wguy123)\ **Post date:** [March 9, 2023, 3:24am UTC](https://boards.straightdope.com/t/the-affordable-housing-crisis-is-more-supply-really-the-answer/980836/117 "2023-03-09T03:24:47Z")
What @squeegee just said. You buy a house in 1975 for $30K and sold it today for $600K. You’re married and have to pay cap gains on $70K. Most people can deal with that. It isn’t “trapping” them. ---
**Author:** ![thorny\_locust](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/thorny_locust/32/431_2.png) [@thorny\_locust](https://boards.straightdope.com/u/thorny_locust)\ **Post date:** [March 9, 2023, 3:30am UTC](https://boards.straightdope.com/t/the-affordable-housing-crisis-is-more-supply-really-the-answer/980836/118 "2023-03-09T03:30:01Z")
But to keep saying that you made $570K “profit” on that deal is misleading. ---
**Author:** ![squeegee](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/squeegee/32/14537_2.png) [@squeegee](https://boards.straightdope.com/u/squeegee)\ **Post date:** [March 9, 2023, 3:33am UTC](https://boards.straightdope.com/t/the-affordable-housing-crisis-is-more-supply-really-the-answer/980836/119 "2023-03-09T03:33:14Z")
> [@thorny\_locust](#): > > In many cases, that isn’t mostly “profit”. There’s no adjustment provided for inflation – the purchase price (which is probably much of the cost basis) may be in 1983 dollars, the sales price in 2023 dollars, and taxes are assessed on the difference as if those were the same thing Hold on a second there cowboy. If someone bought a house in (say) 1980 on a fixed interest mortgage, they made payments over 15, 20, 30 whatever years. Are we to take each monthly payment and adjust for inflation over decades? That’s nuts. Calculating the cost in 1980 dollars when the last payment was in (say) 2000 just doesn’t make sense to me. Or maybe I misunderstand your argument? ---
**Author:** ![wguy123](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/wguy123/32/3161_2.png) [@wguy123](https://boards.straightdope.com/u/wguy123)\ **Post date:** [March 9, 2023, 3:35am UTC](https://boards.straightdope.com/t/the-affordable-housing-crisis-is-more-supply-really-the-answer/980836/120 "2023-03-09T03:35:50Z")
I don’t think that is what @HMS_Irruncible was saying (it definitely isn’t what I was saying). In my example, the cost basis is $30K. There is $500K in tax free profit. Then, there is $70K in cap gains eligible profit. What you get out of that $70K depends on your other income. BTW, netting a half mil in untaxed income is a pretty sweet deal. [Previous page](https://boards.straightdope.com/t/the-affordable-housing-crisis-is-more-supply-really-the-answer/980836.md?page=5) [Next page](https://boards.straightdope.com/t/the-affordable-housing-crisis-is-more-supply-really-the-answer/980836.md?page=7)