What I’m talking about is housing affordability, which has nothing to do with FICO scores or medical debt. I’d agree that the healthcare system needs to be fixed.
I’m simply talking about the complaint that prices are too high. That has a very easy solution. If the complaint is that not everybody can qualify for a mortgage, that’s always been part of life and always will be. If the complaint is that people can’t always live in their most ideal location, this also is an eternal fact of life that no policy is going to fix.
What’s not normal is that housing prices are too high across the board. The cause is a permanent loss of homebuilding capacity in the Great Recession that’s never recovered. Result - too many buyers competing for existing stock. Good solution - incentivize building. Bad solution - easier credit for riskier borrowers, or 50-year mortgages. And to some extent big cities have a problem with NIMBY attitudes, which again is a supply issue because they won’t allow new homes to undermine value of existing homes.
This is a logical contradiction. If adding a million units wouldn’t decrease rents, then what would motivate these million out-of-towners to come and try to pay rents that they can’t currently afford?
The other point is, even if a million people moving from Philly to NYC didn’t help affordability in NYC (which I don’t concede), it would surely provide massive relief for Philly, and NYC residents are free to relocate.
There’s no fix for the fact that the hottest markets are off-limits to all but the most wealthy. That’s nothing new, it’s an eternal truth. If you’re not ultra-rich and you want a reasonably-sized home, then you have to be open to relocating where those homes are. I’d love to live in NYC, SF, or Seattle, but I have to live in a B-tier city because that’s all I can afford if I don’t want to live in a shoebox.
Who says they can’t currently afford the rents? Usually when people are talking about “affordability” , they’re talking about rent being affordable to a particular group. It doesn’t mean that there aren’t any people who can afford and are willing to pay $5k a month for a studio. It does mean that the people who can afford that end up chasing the people who can’t further out. The only way to change that is to make it less desirable to live in NYC, which I don’t see happening.
I think putting enough homes to house all of Brooklyn might put a bit of a dent in the housing market.
But where to put them?
I’ve lived in NYC/Hudson County, NJ for 25 years and no matter who is running any of the surrounding cities or how much people claim “people are moving out of New York!” they just keep building. And not just those obnoxious skinny megatowers for billionaires. If they can’t find a lot for a new 10-20 story “modern living luxury buildings they are converting old factories and warehouses.
The problem with NYC is if you want a home with actual living space (like if you have kids). Then you get into the calculous of apartment vs townhouse vs single family home and commuting distance and all that.
FYI, the NYT reported today that 54 blocks in Long Island City, Queens was rezoned from industrial (mostly warehouses and parking lots) to residential, offering the possibility of 14,700 new residences.
There’s also the Interborough Express, a light rail line from Jackson Heights, Queens to Bay Ridge, Brooklyn (I think). The thinking is that there will be lots of development along the route.
On the one hand, people want to work from home, lowering the value of commercial real estate. On the other hand, there’s a shortage of housing.
It turns out it’s expensive to convert commercial space to residential space. Residential space needs windows and bathtubs and ventilation for kitchens (and passive ventilation in general, so people don’t suffocate in their beds if the power goes out.) Commercial space has prioritized big open floors… But older commercial buildings are narrower and have more windows and can often be converted to living space.
An understanding that more housing units are needed. If new capacity would be swamped, then the number of new units needs to be higher. We only disagree on the number – You think a million wouldn’t move the needle, I disagree, but you’d probably agree that there’s a number between 1 million and 50 million that would change things.
An understanding that some of the demand is inelastic due to NYC’s prestige and shortage of land. Which is really just a rephrasing of #1. People want to live in NYC because it’s special. It’s special because not everyone can live there. Not everybody can live there because there’s not enough housing. If more housing is built, then it will be more affordable, but that’s difficult because (a) land is too scarce, and (b) incumbent NIMBYs don’t want their property devalued.
Building more housing is the answer to affordably on a nationwide level, which is where federal policy is drafted. It’s also the answer in local hot markets like NYC, but (a) it would take a lot of units to move the needle, and (b) incumbent property owners aggressively resist the devaluation.
I would also argue (c), that deep down, NYC residents don’t want the cultural devaluation that would come from adding enough units that “just anyone” could live there. It wouldn’t be special anymore. They feel that they should be able to live in the most special place in the world, at a deep discount from what the market would bear, simply because they’re already there, or they found it before the rest of the rubes, or they just really have an elevated sense of belonging and entitlement.
To my proposal about zero-interest owner-occupant construction loans, I have another, which is relocation aid. If you can relocate to a lower cost of living area, the government would foot all the cost of relocation (excluding housing) once every 10 years or so. Help people pair with jobs and lower-cost housing that exists all over the country. This would rapidly reveal which parts of the “affordability crisis” conversation are truly driven by price, as opposed to frustration at not being able to live in the hottest areas at the coolest prices.
There are many reasons for the “hot” real estate markets: opportunities, nice climate, close to things like entertainment, education, culture, cuisine, transportation, being around like-minded people who also value these things, etc. People want to be there, that’s why they’re hot. Living in California, I hear this a lot - “…you could get 2x the house on some land in [insert state]”. Yeah, but then you have to live there.
I have seen locally some of these “infill” projects that redevelop properties in the core area, but they all tend to be luxury condos and like. Building of new homes in adjacent, unoccupied land doesn’t seem to help with affordability, either. Even if a builder wants to develop a neighborhood of affordable homes near the city, and takes advantage of tax breaks, the price of the land itself makes it hard - they are not going to build for a loss. The farther you get from the city, the less expensive the land gets, but the less desirable it will be. How effective is building affordable housing where people don’t want to be?
That’s why we should allow/encourage housing to be more dense in areas where existing housing stock has very high demand.
That can be by having the government build housing on land it owns or it can be by allowing developers to buy people’s single-family homes and build townhouses, multifamily, apartments, etc. on that land.
If the problem we’re talking about is purely affordability, then building affordable housing is the entire fix to the problem.
It’s emerging in this thread that affordability isn’t the real issue, it’s affordability in a desirable area. That’s not something the government can or should try to address, at least not at the federal level. It should be handled at the city level, and the major obstacle is that these cities mostly don’t want their housing to be affordable.
If homeowners in San Francisco don’t want new housing built because it undermines their investments, then there’s no solution to affordability in San Francisco, because San Francisco doesn’t actually want to be an affordable city. There is no fix for that.
As to nationwide affordability, there’s tons of affordable housing being left behind as people pack more and more into dense cities. In my area, if you don’t mind living in a well-worn split level in a subdivision built in the 1970’s, there’s tons of affordable housing stock on the market that would put you within a 45 minute commute of the city center, with low crime even. People don’t move there because they don’t want to live in a bougie 1970’s subdivision fulll of retirees. That’s not a housing crisis, that’s something else.
I really thought (hoped) that the companies embracing remote work would have stuck when it was implemented during the pandemic, but now we’re seeing the steady rollback of this. Remote work would have helped reduce the ever-increasing real estate prices by allowing people to move out of the cities - anywhere that you can get broadband internet can be your home.
Bozeman MT is an interesting case study in this. The last 3 years have seen an enormous boom in multi-family development, most of it rental but a fair amount for sale. And prices have come down in both markets. The vast majority are still under construction, so the next 18 months will be instructive. Lots of people want to live here.