Highlighting the owner-renter differential is an important topic. One thing that creates conflict is that subsidizing home-ownership, makes renting more expensive. Subsidizing mortgages means house prices will go up. Since rents are a flow from housing, a higher house price means higher rents. So there's this conflict between homeowners and renters.
The tension between renting and homeownership is quite real, and factors that influence one realm can often drive up prices in the other. Increasing the supply of housing overall though may lower prices across both. Your suggestion around improving transit gets at this as well - if we can increase the overall area where housing is accessible, particularly for getting high paying jobs, this increased housing stock may make access easier
It is interesting that you have not included any analysis of the financialization of single family and small homes. Hedge funds and investors (including AirBnb owners) have substantially increased their holdings and are responsible for 20% of home purchases since 2020.
That number rises to 33% in some hotter municipalities. The extreme capital and interest rate advantage of modern funds makes them modern-day feudal estate holders for all intents and purposes. Combined with the high cost and restrictions on new home building, they are creating a significant part of the new renting reality.
We as a society need to ask whether homes are corporate investments or a bedrock of society, as they really cannot be both.
Ah such a good point! And yeah this data you present is very compelling. It could be interesting to map some of those hotter municipalities too as you mention (probably Austin, Nashville, Seattle, etc) and figure out the split between corporate investments vs. individuals who are renting out
The critical factor to consider in the quest to increase supply in the UK is considered to be the restraints imposed by a planning system that gives too much influence to the permission givers who have a dread that their decisions will be met with criticism by interested parties in the bureaucracy and their local communities. Giving a bureaucrat discretion to deny or limit development panders to sectional influences, causes harm to those least equipped to defend themselves, a form of enslavement, and results in the long run economic decline. It's a recipe for impoverishment due to the decline in national productivity. See: https://www.centreforcities.org/wp-content/uploads/2023/02/The-housebuilding-crisis-February-2023.pdf
The effect of the rapid increase in interest rates on the housing market in the US will be interesting, given the fixed rates over the term of the loan, and even more so in Australia where variable rates apply, many mortgagees now being unable to pay out their mortgage if they are forced to sell. Can house prices advance at a rate that will save new entrants who were sucked into the market by government largess that peaked during the pandemic? Will skyrocketing rents outweigh the influence of increasing interest rates and encourage developers to build? Will local government planners allow developers to build cheaper rentals to meet market demand?
Excellent post, Jeremy. What I have found is that many times, both government and the private entities they hire to conduct its business, or any company, claim one thing-- like they will conduct business in a particular way, but in practice, do nothing even close to what procedures it says it will follow. I liken this to the home appraisal process which is supposed to be conducted according to set criteria, but as these examples point out, it doesn’t always work that way.
Interesting on how nearly all of the "progressive" cities are the ones failing the most at fair housing prices and opportunities. You reap what you sow.
When you turn this into a silly blue/red thing you don't help people, you just shut down thinking.
There are so many factors at play, some of which are higher regulations in progressive cities, but high prices are also indicative of demand, so one could also say that progressive cities are just frankly more desirable.
I am a progressive, but more importantly I am empathetic to people (including right wing and MAGA) who are decreasingly able to afford a home. It isn't good for our country or our society for everyone to be a renter.
Being in residential construction for 40 years has provided me a lot of insight as to how it works and whether you agree to it or not. It is definitely a blue/red issue. The regulatory propensities of blue politicians is non sensical and counter productive to improving housing affordability. The Democrat solutions are always, at least in this day and age, focused on racial, gender and other idiotic superficial identity groups at the core, which turns into, special grants, credits, funding projects, government housing type solutions which are actually not any kind of solution and which only inflame and perpetuate the problems they already created.
Being in Minnesota, we have a front row seat to this blue lunacy as it increases housing inflation, reduces sustainable ownership, creates feelings of unfairness - because it IS UNFAIR, as the government puts it's self of picking winners and losers. Minnesota has a highly progressive tax rates and the productive people in our state are leaving faster than they are being replaced. All progressives can respond with is "at least we are trying and we have empathy in hearts" while they burn down the city.
Great article! We've also written about housing affordability - one solution we discussed is the expansion of city transit as it is a policy that benefits everyone (and in many cities will pay off) - https://nominalnews.substack.com/p/housing-and-public-transit-in-cities
Highlighting the owner-renter differential is an important topic. One thing that creates conflict is that subsidizing home-ownership, makes renting more expensive. Subsidizing mortgages means house prices will go up. Since rents are a flow from housing, a higher house price means higher rents. So there's this conflict between homeowners and renters.
The tension between renting and homeownership is quite real, and factors that influence one realm can often drive up prices in the other. Increasing the supply of housing overall though may lower prices across both. Your suggestion around improving transit gets at this as well - if we can increase the overall area where housing is accessible, particularly for getting high paying jobs, this increased housing stock may make access easier
Excellent information. Gloria Malcolm Lawrence iville Georgia 30046
It is interesting that you have not included any analysis of the financialization of single family and small homes. Hedge funds and investors (including AirBnb owners) have substantially increased their holdings and are responsible for 20% of home purchases since 2020.
That number rises to 33% in some hotter municipalities. The extreme capital and interest rate advantage of modern funds makes them modern-day feudal estate holders for all intents and purposes. Combined with the high cost and restrictions on new home building, they are creating a significant part of the new renting reality.
We as a society need to ask whether homes are corporate investments or a bedrock of society, as they really cannot be both.
Ah such a good point! And yeah this data you present is very compelling. It could be interesting to map some of those hotter municipalities too as you mention (probably Austin, Nashville, Seattle, etc) and figure out the split between corporate investments vs. individuals who are renting out
The critical factor to consider in the quest to increase supply in the UK is considered to be the restraints imposed by a planning system that gives too much influence to the permission givers who have a dread that their decisions will be met with criticism by interested parties in the bureaucracy and their local communities. Giving a bureaucrat discretion to deny or limit development panders to sectional influences, causes harm to those least equipped to defend themselves, a form of enslavement, and results in the long run economic decline. It's a recipe for impoverishment due to the decline in national productivity. See: https://www.centreforcities.org/wp-content/uploads/2023/02/The-housebuilding-crisis-February-2023.pdf
Your work is most admirable. Great to see data based analysis rather than the usual fluff.
The experience in Auckland New Zealand is enlightening. See: https://www.afr.com/policy/economy/how-auckland-took-on-the-nimbys-and-won-20230522-p5da9o
The effect of the rapid increase in interest rates on the housing market in the US will be interesting, given the fixed rates over the term of the loan, and even more so in Australia where variable rates apply, many mortgagees now being unable to pay out their mortgage if they are forced to sell. Can house prices advance at a rate that will save new entrants who were sucked into the market by government largess that peaked during the pandemic? Will skyrocketing rents outweigh the influence of increasing interest rates and encourage developers to build? Will local government planners allow developers to build cheaper rentals to meet market demand?
Always interesting to learn from other regions to evaluate how events may unfold in the US so thank you for sharing!
Excellent post, Jeremy. What I have found is that many times, both government and the private entities they hire to conduct its business, or any company, claim one thing-- like they will conduct business in a particular way, but in practice, do nothing even close to what procedures it says it will follow. I liken this to the home appraisal process which is supposed to be conducted according to set criteria, but as these examples point out, it doesn’t always work that way.
Tell us about your experience trying to buy a home and any difficulties you may have had
Interesting on how nearly all of the "progressive" cities are the ones failing the most at fair housing prices and opportunities. You reap what you sow.
When you turn this into a silly blue/red thing you don't help people, you just shut down thinking.
There are so many factors at play, some of which are higher regulations in progressive cities, but high prices are also indicative of demand, so one could also say that progressive cities are just frankly more desirable.
I am a progressive, but more importantly I am empathetic to people (including right wing and MAGA) who are decreasingly able to afford a home. It isn't good for our country or our society for everyone to be a renter.
Being in residential construction for 40 years has provided me a lot of insight as to how it works and whether you agree to it or not. It is definitely a blue/red issue. The regulatory propensities of blue politicians is non sensical and counter productive to improving housing affordability. The Democrat solutions are always, at least in this day and age, focused on racial, gender and other idiotic superficial identity groups at the core, which turns into, special grants, credits, funding projects, government housing type solutions which are actually not any kind of solution and which only inflame and perpetuate the problems they already created.
Being in Minnesota, we have a front row seat to this blue lunacy as it increases housing inflation, reduces sustainable ownership, creates feelings of unfairness - because it IS UNFAIR, as the government puts it's self of picking winners and losers. Minnesota has a highly progressive tax rates and the productive people in our state are leaving faster than they are being replaced. All progressives can respond with is "at least we are trying and we have empathy in hearts" while they burn down the city.