The affordable-housing crisis -- is more supply really the answer?

In My Humble Opinion
181

There don’t seem to be any rational markets. Maybe in the most bombed-out depressed meth-infested locations, but even in Cincinnati it’s been like @InternetLegend said since the mid 2010s, and Cincinnati has historically had some of the cheapest housing in the country for a city of its size. That’s still true relative to SF or NYC, but the same insanity in listing practices and offers applies.

I offered $10K over asking on a $160K listing for the house next to my apartment in January and still didn’t get it. These are 2-3 bedroom bungalows from the 1920s that were selling fully fixed up for that price just 10 years ago, and this one is a dump. It needs a new kitchen and new bathroom, all the junk from the previous owner cleaned out, there’s vinyl tile on the 2nd floor, the detached garage is falling apart, it has no attic insulation, and the whole thing needs painting and probably electrical/plumbing work and new A/C. No inspections, gotta have your pre-approval in-hand, earnest money of course, sold as-is. The listing went up on a Friday and they collected offers until next Monday, no sign was ever put up in the front yard.

Two nearly identical houses at the end of the street were purchased last fall for $179K each. They were in worse shape, and both are now piles of rubble awaiting two new houses. In 2010 all three of these houses would’ve sold for maybe $50K. Even if prices go down due to interest rates, there’s just no inventory on the market, and there hasn’t been since before Covid, so everyone is chasing what few scraps do show up. When those scraps are rundown crapholes, individual buyers don’t have any funds left to do the needed renovations, so flippers are buying them and moving them significantly upmarket.

182

I’d worry that any place with enough excess parking space to allow this would sell it in a tight market, so the problem remains. Or at least kick everyone out at Christmas time. Land is valuable in a place with a shortage of housing.

183

The problem with homelessness is that it is a ‘wicked’ problem, in that solutions tend to exacerbate the problem.

If there were a fixed number of homeless, you could solve the problem by just providing housing. But homelessness is more complex than that, and efforts to make it easier to be homeless, or giant windfalls to homeless people in the form of accomodation is likely to create more homeless. In California it’s worse, because it’s a ‘homeless destination’ due to the climate and lax laws.

Fundamental economic principles apply. When you subsidize something, you get more of it. Make it easier to be homeless, and you get more homelessness. Always look at the incentive situation you are setting up, and how that will affect behavior.

A real ‘solution’ to homelessness would be to make it very difficult to be homeless (busting up encampments, arresting people for vagrancy, whatever), while ALSO providing help for the people to get out of homelessness.

As a society, we used to understand this. Homelessness was not as big a problem two or three decades ago not because people were doing better, but because we simply didn’t tolerate it. If that sounds cruel, it seems to me that setting up situations that encourage people to become homeless is far more cruel.

To forestall the claim that no one wants to be homeless and that everyone who is homeless has no other choice, remember that we’re talking about changes on the margin. There have always been homeless people. But we’ve never seen an epidemic of homelessness like this before, and during a time of great wealth even, so it’s important to ask what changed. Two things jump out: First, we closed all the mental hospitals and put a lot of sick people on the street. And second, we started looking the other way when tent cities form on public streets, people squat on others’ property, etc.

We need to reconsider how we deal with mental health. Some people absolutely need to be institutionalized, but we leave them on the street out of a misguided sense of ‘caring’ or because we don’t want to pay the money to keep them in a facility. And also, there were horror stories about mental hospitals that treated patients terribly, which led to the movement to shut them all down. But that extreme was also clearly a mistake.

Fundamental economic principle: people respond to incentives. If a social problem is growing, look to the incentives that drive it.

184

Why do you say homelessness is increasing? AFAICT it’s not, at least not in the medium or long term:

185

Homelessness overall may not have gone up. How about homelessness in the places that are tolerating it?

As to whether you can fix the problem by providing housing:

Italics mine. The ‘yet’ implies no connection between a big influx of aid into the homeless community and the increase in homeless people. It was a surprise to them that they provided 4,000 people with shelter, and the result was even more homeless the next year. That might not surprise an economist. Incentives matter, and some problems defy easy solutions.

186

I have little doubt that homeless people who are treated like vermin tend to leave places that treat them like vermin and go to places that treat them humanely. Maybe if every city treated them humanely, we could solve the problem, at least for the vast majority.

187

And in precisely what century did that happen?

188

I think the idea is that mental hospitals are just too nice these days, encouraging people to be mentally ill. If we just brought back cruel asylums the problem would solve itself.

189

What, exactly, are these “giant windfalls” that are being given out? Where? How much? If they’re that good why aren’t wealthy people throwing in the towel so they don’t have to work so hard?

NOBODY wants to be poor or homeless. And I have yet to see any proof whatsoever that there is anywhere with handouts so generous that being homeless has become attractive. Please provide cites, with numbers, for this claim.

And sure, climate has an effect - here in the Chicago area the climate can kill you. In fact, some people freeze to death every year in this area. If you have nothing it’s preferable to have nothing in a warmer climate.

Please provide these locations where being homeless is “easy”, along with cites.

Huh. So you propose “fixing” the homeless problem by 1) depriving them of whatever meager possessions they might still have and 2) turning them all into criminals. Because our criminal justice system is just that effective, right? What next, fines for being poor?

Hooverville

Yes, we have seen “epidemics” of homelessness before.

Great wealth? For some - but for many people their wages have stagnated or even dropped while the cost of housing, food, and other necessities has continued to rise. 1% at the top being wealthy does not mean a society has “great wealth”, and right now we’re seeing disparities of wealth not seen since the Gilded Age at the end of the 19th Century.

So… two points refuted, the first that we haven’t seen large numbers of homeless before in this country, and that we’re all getting rich. In fact, most of the US is NOT getting rich, either barely staying where they are or sliding behind.

Well, you’re correct that money, namely saving money, was a major impetus to shutting down the prior mental health system. And saving money is now a primary reason for denying or minimizing care to those who need it.

On the other hand, beating people does not improve morale.

Your approach is all stick. That sort of approach doesn’t have a great track record.

190

What, like the incentives to rent places by the night to people who want to vacation there, by which means it’s possible to make much more money than by either selling or renting the property by the month to people who need a place to live?

And the incentives to build only high-priced housing because more money can be made at that than by building affordable housing?

191

It never occurred to me that the problem with;
“Are there no prisons?” asked Scrooge. “Plenty of prisons,” said the gentleman, laying down the pen again. And the Union workhouses?” demanded Scrooge.”
was that it didn’t ask;
“Has Bedlam barred it’s doors from the outside?”.

192

I was in a critique group with someone who had been homeless, and she sure as hell didn’t live with her kids in her car instead of an apartment because of government incentives.
And IIRC the reason for de-institutionalizing people was not to save money, but because people trying to be helpful tried to get people out of rather nasty institutions. The policy was a failure, I think we can agree, but it wasn’t economic.
Perhaps Sam can point us to some ads for truly affordable apartments in San Francisco where the sheltered homeless can move. Most towns have some affordable housing, but there are long waiting lists for it.

193

The policy failed because everyone was in favor of deinstitutionalizing people but a certain ideology/party wasn’t in favor of spending the money on the second half of the idea, providing actual care and not just a fresh bottle of pills every month.

I’d love to hear how building what amounts to full service residential ‘spas’ is going to be cheaper than just building housing.
Yes, some people need to be hospitalized but watch what happens when the bills start coming in. I’m quite certain that we’d start seeing folks officially declared not ‘crazy’ enough to deserve treatment and we will be right back to where we started.
Fortunately, that same ideology/party has no problem with the funding of prisons, which are, certainly, the worst place to get mental health treatment,

In summer 2009, author and columnist Heather Mac Donald stated in City Journal, “jails have become society’s primary mental institutions, though few have the funding or expertise to carry out that role properly … at Rikers, 28 percent of the inmates require mental health services, a number that rises each year.”[22]

194

also in California we have the infamous prop 13 that messes with home values and taxes that should of never happened in the first place let alone last almost 50 years

195

This would have been a nightmare for me in my teens/twenties. I’m positive my folks would have kicked me out if they knew what I was doing nights and weekends. :slightly_smiling_face:

I could bore everyone with NY stories, but I think been that’s been covered already. We have a second home in the mid-west, where my in-laws live. Really nice town, 150,000 people. Three college campuses in a 10 mile radius. Lots of IT work, including a Microsoft campus.

Affordable housing? No way. Builders keep building apartment that go for more than most peoples mortgage payment. Even at a 44% average occupation rate they keep building them.

We had a 20 story apartment building that was built for seniors to retire in. Worked great until it got a new owner who wouldn’t sign new leases with anyone until they emptied out the building. This took about three years. Replacement is a block of shops with an extra story of expensive condos. Too bad if you were a senior.

This one I knew the building manager. It was an entire block of inexpensive apartment aimed at singles and new families. Two bedrooms were the largest they went. The city decided to buy it and change it into government housing for the poor. They spent a bunch of money to make larger apts. so families could move in. Unfortunately, they decided they didn’t need to do any background checks or to find who actually lived there. My friend left after a few months because she had no control over tenants and wasn’t able to give warnings or evictions. Five years later, police had to put a substation in the building because of the high crime rate. Theft, assaults, drugs, stabbings and shootings. It still has the highest crime rate of anywhere in the city, despite the police presence.

As for NIMBY, they closed a Kmart here. Along with parking lot and a few small shops, it took up w a entire city block. It sat there for a couple years until a buyer wanted to put a level of small shops with a second level of condos. Off to the sides would be low cost apartment buildings.

You would have thought he wanted to build a nuclear waste site from all the neighbor complaints. First, they didn’t want the low cost apts. because of parking problems. (Sure, it was the parking problems) He said he would build underground parking for all units. They then switched to they didn’t want their single family homes to look out at the back of shops and condos. It would ruin their home prices. These were the same people that were fine looking at the back of a Kmart and a tire shop for the last forty years.

196

We think we don’t have that problem, but actually we do. We may have a lot of unoccupied land, but much of this isn’t environmentally viable as a home for millions of people, let alone the fact that job opportunities and amenities still tend to be concentrated around the same metro areas today as a century ago. Sure, things are more dispersed now with suburban and exurban commercial development and light industry, but they are still essentially in the metro areas.

People need to live reasonably close to their work or they end up “supercommuting”, which causes a whole other set of adverse impacts, not only on the worker’s own family life but also on their co-workers.

197

The posts I was responding to were suggesting that cities such as Hong Kong or Tokyo are the model that we should emulate writ large, i.e. extremely high density, high rise developments. However, despite the cohort of people who feel as if this is the solution some set of largely unrealized problems, these developments are expensive, consume an enormous amount of resources, and are ultimate unsustainable as they age. Manhattan Island is essentially the only place in the United States where such development is actually necessary and that is because of the artificial nature of demand and constraints of available real estate in that market, and even then, many of the most expensive units are actually ways for people to ‘invest’ questionably acquired wealth.

Now, we certainly shouldn’t be building more subdivisions, especially not out in the desert where there are no sustainable water sources or draining wetlands to make ‘dry’ ground that is barely above the water table, and in fact, suburbia as a whole has its own problems with fiscal viability and decaying infrastructure that nobody wants to maintain because it doesn’t actually have a real owner, just ‘service providers’. What we should be building are medium density, mixed use developments that both reduce the need for automobile ownership (or at least two car or more households) and facilitate urban transit while providing a range of housing alternatives that don’t just hew to the top end of middle class. That many municipal codes restrict or prohibit that is problematic and needs to be addressed, for sure.

We do not, however, have a need to build dystopian mega-arcopolises rising ever skyward at enormous expense and embodied carbon debt to house some hypothetical masses of occupants who don’t exist (unless we open up the borders for mass immigration). You can see that error in China, in their “under-occupied developments” (i.e. “ghost cities”) where they have built for the future generations that will never be, and while the United States isn’t going to suffer the same demographic crash as China, we also don’t need a massive increase in housing per se; we just need housing that is more affordable and ideally more sustainable than what is currently being built in most markets.

Stranger

198

so why wouldn’t workers not want to move to Texas with no income tax

199

Gee, I dunno - maybe the notion that half of them are repulsed by the government trying to control their bodies and could, for example, be accused of having an abortion, whether they did or not, and being sued over and over into bankruptcy? That sort of thing? Not to mention the whole business about government dictating what you’re allowed to do with your body.

Another slice of workers concerned that having a same-sex spouse might open their families up to various forms of harassment? Also concern for a gay or genderqueer child, or anyone who doesn’t met the criteria for “socially acceptable” by the Texas legislature which of late seems more interested in regulating peoples’ lives and bodies than actually doing something like assuring the power grid stays up and running.

Anyone who doesn’t look sufficiently White concerned with ICE being sicced on them?

Like many places that have no income tax Texas has very substantial property taxes because the government has to raise revenue somehow (45th highest out of 50 states - New York State has a (slightly) lower property tax than Texas. California has a lower property tax rate than Texas). So you’re still paying taxes, either directly as a property owner or, as a renter, indirectly because you betcha the landlord needs money for his tax bill.

Recent years the publicity about the power grid going down there has been off-putting to people. See prior statement about state government priorities.

Oh, and the state ranks 49th for access and affordability of health care. If you’re young, healthy, and male maybe that doesn’t matter to you but women of childbearing age worry about bearing children (especially now in a state where abortion is no longer a realistic option) and having access to care so they don’t, you know, die in childbirth like what used to be a lot more common, older people, and folks with a chronic condition want to be able to get medical care when they need. So that is also off-putting to some people.

Some people find the gun culture extremely off-putting because, contrary to rumor, not everyone in America is in love with guns.

Contrary to what some people think, money is not the sole consideration people consider while living their lives.

Don’t get me wrong - there are many good things about living in Texas, too. Job opportunities, it still has a relatively low cost of living in most places, fewer government regulations for those who find that a plus, as noted no state income taxes, lots of culture and entertainment in the big urban areas, it’s the home of Tex-Mex food if that’s your thing, and a bunch of other stuff I can’t think of at the moment. But it’s not for everyone.