Increasing wages will not fix the housing crisis, and will just drive prices higher. How convenient for a bunch of realtors...
But the current housing market doesn't feel sustainable. I don't understand how a proper middle class family could afford to buy in this environment, unless they are willing to put off any savings indefinitely.
Relaxed zoning requirements for SFH and MFH buildings, relaxed or eliminated height restrictions for high rise density projects in urban areas, eliminating rent control, and a laundry list of other things would help alleviate the upward pressure.
I grew up with 6 family members in a 3/2 house that was 1250sqft. Houses today start at 2000+ square feet in the USA. We DON'T need that. On top of that, there is very limited stock of homes for people who no longer have kids.
Every type of manufacturing in the US has gone toward lower throughput, higher price. Luxury apartments, 2500 square foot houses with no yard, $50k for a car. And it is because we are all comparing ourselves to each other and wanting to appear like we can afford this lifestyle, and its finally breaking. But it was allowed to go this way, because it was working. Pricing out the bottom 25% didn't negatively affect the profitability of the companies making these items, in fact, it made them more profit.
Homes skew larger and more expensive precisely because it's so hard to build them so developers need to make more money from each one. The fixed costs per unit are too high, so the ones that need to be lowered or eliminated should be. That will incentive building more units not just more expensive units. You'd see a lot more 1200sqft new builds if it was more economically viable and developers could make a profit on a $125k home instead of needing $400k.
You do see them, but they are factory built. I could have a $75k manufactured home dropped onto a $20k slab, with $15k utility hookup, and have 3 beds and 2 baths and 1200sqft. It is viable outside of HOAs and "master planned communities" but it is hard to find places in the US that allow this in a "desirable" area.
I agree we need more, but we need smaller too. My parents right now have a 3600 sqft house they will die in, and can't maintain because they are in/approaching their 70s. They built it in 2008 for around $190k when there were still 2 kids at home, my grandmother still lived there, and my sister had a baby on the way.
Now their home is valued at $750k according to the county (after fighting and revising it down from $800k), and if it weren't for all the homestead exemptions and senior rates and whatever other tax breaks they were given, their property taxes would be over $25k/yr.
They've actually tried to sell it a number of times, but 0 bites even discounting it down to $500k, because the town they are in has no comps (single level 4 bed, 4bath on 3 acres).
Not at all. The important thing here is that price is set on the margin. Relatively modest supply increases can have outsized price effects. As an example, consider rents in Austin - something like 30% housing stock increase led to 16% drop in median rent, all while Austin simultaneously had massive in-migration, i.e., rents fell despite demand surging.
As another example of margin behavior: vacancy rates matter a lot, a modest vacancy rate increase can crater rents, which we see in the CRE market.
To earn a return through renting or appreciation. If there are more houses than buyers returns drop.
> You'd probably have to 4X to 5X the current housing supply to make a dent in prices.
So do that.
No. No no no! It's because capitalism rations by price and weights by wealth. Once inequality cooks up enough the whims of the wealthy outweigh the needs of the poor.
It is not the strength of those whims that squishes the poor, it is the strength of those whims multiplied by relative wealth that squishes the poor. The whims did not grow out of control. The multiplier did. Extreme inequality is the problem.
I bet you actually can find affordable housing in the middle of nowhere / towns where people are actually leaving.
This is not to say there isn't low hanging fruit that market rate housing can help with, and some areas have more room for improvement that way than others, but there's a limit to where that takes you that reveals a deeper problem: we treat housing as an asset that "should" continue to appreciate indefinitely, and we even subsidize people using extensive leveraging to acquire it.
We also have a pretty high number of unoccupied dwellings that are left empty, since some investors see the bother of renting them out as not worth the money, since they’ll make so much when they sell that it doesn’t matter!
1. https://australiainstitute.org.au/post/is-population-growth-...
Build, and keep building until it is cheap. Also, you would need to consider the specific places.
It very much looks like the "just build" model is insufficient to explain what's happened in that case.
Anyway they got into the housing market because the margins are so good because everybody refuses to allow new housing to be built. Congratulations, you played yourselves.
Fancy it up a bit (mostly nicer appliances) beyond that and you take a $300k house to a $1M house.
Developers make about 20% on the total ( https://www.nahb.org/news-and-economics/press-releases/2025/... ). They'd rather make 20% of $1M than 20% of $300k. Same work crew either way.
Next question then becomes "is it better to sell 3 houses at $1M each ($600k for the developer) out of 10, or all 10 houses at $300k ($600k for the developer)?"
This also applies to apartments. Do you build 200 "luxury" units? or 200 affordable ones?
And then ask the next "why".
And I don't just mean in this thread, I mean ever. It's always hand-wavey "it doesn't work like that" when the evidence suggests that it does.
Why is your solution "put 3 families in this single-family home" and not "build more single-family homes?" If the market isn't "interested" in "terminating" single-family homes what makes you think it would be a good thing to do so, other than the fact that it would hurt a cohort of people you seem to hate?
If you got rid of height caps, minimum lot sizes, and loosened zoning capitalist developers you hate so much would jump at the chance to build medium (and even high!) density housing. No need to have the government steal homes from people to do it.
The only cure to investors buying housing is to build enough housing to keep it from being a good investment.
In other countries with lax address registration laws like Poland, real estate can be the only investment vehicle without capital gains tax. Yes, if you sell real estate in Poland after 5 years you pay zero capital gains tax and anyone can buy (please invest and make that mofo pop). Opposite to every other investment vehicle from bonds to shares to even currencies where the capital gains tax exists.
It's just pure rectified human greed.
But beyond that, interest rates are a big driver of what people can afford for a monthly mortgage. These rates may come down a little. However, the FED facility that was creating sub 3% rates was likely a once in a lifetime opportunity.
https://x.com/heimbergecon/status/1943925791055917417
As for how it all happened, I don't have a comprehensive exploration of this to share, but look at interest rates and house sale prices:
https://fred.stlouisfed.org/series/MORTGAGE30US
https://fred.stlouisfed.org/series/MSPUS
Sale prices begin rising immediately once interest rates dipped to the lowest ever (borrowers could "afford" more principal - sale price - for similar monthly payments).
Combine that with houses making up a significant chunk of balance sheets for the US, and we (collectively) are loathe to let prices fall:
https://eyeonhousing.org/2024/02/homeownership-is-key-to-hou...
Allow me to introduce you to Bryan Caplan - https://www.amazon.com/dp/1952223415
Apartments are a different beast.
This was an explicit goal of the designers of the early building code split: make single family homes as cheap as possible, and apartments as expensive as possible.
What does it take to get a more efficient building market? Lots of building, lots of competition in building. Low barriers to new contractors becoming builders, etc.
It's truly only the YIMBYs who ever talk about any of this stuff in my experience.
Actually building is the same as building to regulations. Regulations make it more expensive. You can't just hand-wave separate them.
You would be surprised.
What? What?
I dare anyone here who's simping for regulation to try to develop from scratch something that does not benefit from the myriad of exemptions that apply to 1-few family residential development (because there'd be no political will for the racket if the average homeowner was subject to it).
Those $500k costs include $100k of which is engineering for a SWPPP that any sane site planner who doesn't want shit to erode in no time flat would have gotten 95% of the same effect of anyway.
And the dirt work guy's bill includes god knows how many extra hours it takes to get it all spot on to meet the plans. He could've shot from the hip and done the job but there were plans and had to hit them.
And of course the lawyer has to go rounds with the town over what level of maintenance detail needs to be specified in the SWPP.
And of course the rent has to cover the landscaper who comes once a month to mow the ditch grass and stuff because that contract is how they cover their own ass.
The reason every goddamn modern property looks the same with the same shitty corporate bland sidewalks and same planters and same parking lot and entry way with the same five styles of door and the same light level and same everything is because every party involved if formulaically trying to meet the regulations related to their trade as cheaply as possible. And everyone knows this stupid. Every single party in the chain of developing a building from the initial survey to specing the lightbulbs knows they could, without even getting close to underperforming solutions, deliver infinitely more value if they could just exercise their goddamn professional discretion.
The guy delivering a rented trench box to a construction site that's chiseled out of bedrock knows what he's doing is wasteful and stupid just as much as the guy signing the check and the guys wasting their dime dropping it into the trench but hey, the rules are the rules and they're all billing the next guy down the line for it so it all goes on.
Used to be, the contractor would rent a trenchbox at his discretion. But that means "almost never", because the contractor that doesn't has lower prices than one that does, and just has to pay the occasional OSHA fine. But workers keep dying in trenches, so the government has to step in and make a rule "thou must always use a trenchbox".
We can't go back to "contractor's discretion", because then people die in easily preventable ways. The other alternative is MORE regulation, and the contractor has to do a soil study to know if they're required to use a trenchbox for this particular trench.
I can do that easily. Give me a ~10ac property where what isn't steep is stream or bog. I want to clear ~1ac total for 5-houses on 2ac each and the road to reach them needs to cross a stream and traverse some bog (read: offsets). The houses will have to be on piles because as expensive as that is that's cheaper than cutting flat land and doing walls or offsets.
surveys and delineation $20,000 bridge $25,000 road and driveway $75,000 stormwater $40,000 Wetlands offsetting $25,000 250 Permitting $140,000 the houses themselves (remember, they're on fancypants piles) $100,000 septics (mounds) and wells $75,000
total: $500k, 100k per house.
You could cut some out by DIYing the actual permitting submissions but even if you don't make costly mistakes in wording and/or detail level there's a lot of value in having your shit cross the government's desks on the letterhead of an engineering firm who's stuff they've approved a million times before.
The developer needs to then build the houses rich af on the inside and generally check every box to sell for enough to cover the costs. This kind of stuff is why so much of the development in Vermont is rich assholes from NYC in brand new million dollar homes on the world's shittiest gravel road with the world's shittiest driveways. Granite countertops and picture windows the size of rail cars are damn near free compared to the cost of putting a shovel in the ground.
We get out of it by building more, read Abundance by Ezra Klein and Derek Thompson.
Its extremely simple.
I feel like I get very little value out of what seems to be a mostly fixed/required price.
I know flat fee realtors exist, and if/when we sell our home, I’ll be looking into this heavily.
But I feel like they rank up there with car salespeople/dealers.
The realtor cartel still enforced a 6% commission, with half to the seller's agent and half to the buyer's agent. Our contract with the buyer's agent refunded half of his commission to us. So basically we got a 1.5% home discount. Our buyer's agent still made 1.5% but didn't have to babysit us while traipsing through dozens of potential homes, so it feels like everyone wins.
Also when I sold my house (> 1M USD) 2 years ago I used $100 flat fee listing service and outright refused to pay anything to buyer's agents.
Both transactions went well.
https://www.nytimes.com/2026/05/28/technology/sell-house-wit...
> I was transacting in a thriving market, with no special circumstances
Yeah, a hot real estate market is where a seller is likely to derive the least benefit. Although a talented agent in a hot market can drive a more competitive process, potentially generating higher offers. All of which is, to the author's credit, highlighted in the article.
Agents earn their keep in more normal/weak markets.
Also, it's true this article isn't recognizing the root cause, overpriced housing, because realtors in general do better when prices are high. But "realtors in general" is a very different category than "your realtor".
The only reason I’ve ever used a realtor is because I don’t have the time to deal with the contract/legal side of everything. Most would be better served by hiring an attorney and title company if your state allows.
Which for probably 70-80% of people, especially young couple with or considering children, are the top two things they care about if not the only two things.
It's the same problem as picking active fund managers.
"We currently have 10 houses renting at $2500 for 15 people who have $2000 to spend on rent. WHAT IF, we gave those 15 people $2500 instead. Housing crisis solved?"
-This article...basically.
I’m not sure how or why this article got published by an organization that should, given its very nature, understand economics. The article doesn’t paint them or their members as people I’d trust in either side of a major financial transaction.
They want wages to go up so that home prices go up even more, and their members make even more money for doing basically nothing most of the time.
The folks I’ve worked with have been as dedicated to their career path as anyone, and while their expertise and skill varies that isn’t different than any job. I understand your point, but your (mis?)characterization hits me as a little biased and shallow.
It’s not “theory”; it’s literally what they do.
They either don't understand that addressing wages without supply simply increases prices, or they do understand and don't care because it's good for their pocketbook. Which one's worse?
They can be some great people but as a profession they are known more for their extroversion and soft skills than their high IQ understanding of economics lol
The realtors I’ve met understand economics and markets very well. Not as academics but as practitioners.
On the buying side, they do more such as drive prospective buyers around to look at houses, though it's been long enough since I bought a house that I don't know how much virtual tours have replaced this. Either way, it's not what I'd call difficult work.
I've bought and sold a handful of properties in a couple states through my life and have dealt with probably 2 dozen realtors in some professional capacity, and only 1 has been what I would call "good" and that was basically just him giving us insight into the market, being willing to tell us not to buy a house because it wouldn't fit our needs 5 years in the future, etc. Basically just willing to sacrifice a faster or larger commission to get us what we wanted rather than just closing a deal ASAP, which IMO should be the minimum and not the mark of a "good" realtor.
I'd say being a realtor is more about dealing with the psychology of buyers and sellers than the economy. And yes, you are wise to not trust them. Their interests are not yours.
And as the saying goes, it's difficult to get a man to understand something when his salary depends on him not understanding it. I bet most realtors would prefer housing prices to stay high and the average home owner to stay rich. They are not here to solve the housing problem. They are a part of the problem.
https://sfstandard.com/2026/06/17/san-francisco-marina-landl...
This is true though?
I bet there is a middle ground where we could relax or eliminate a lot of building restrictions and NIMBY policies to ease the upward pressure or even exert some downward pressure on home prices. We're also fighting against 6-7% interest rates after an extensive period of 2-3%.
for housing we need to replace zoning rules with a neighbor vote, put the community back in control instead of bureaucrats who block new apartments for dumb reasons or take bribes from developers to build luxury investment properties nobody wants. there should also probably be an escape hatch where anyone can build affordable/rent controlled apts without a vote but only if the location has high enough average rent. that would help balance out inequalities and break up exclusive rich neighborhoods, maybe even help against racism.
the other side is lower costs with less paperwork (removing zoning makes a big difference) and enforcing competition in the home building industry. make it easier to start a new business and break up corporate monopolies. create a safe path for undocumented immigrants to legalize themselves so they can have labor rights, make legal immigration cheaper and more predictable.
> for housing we need to replace zoning rules with a neighbor vote, put the community back in control instead of bureaucrats who block new apartments for dumb reasons or take bribes from developers to build luxury investment properties nobody wants.
> there should also probably be an escape hatch where anyone can build affordable/rent controlled apts without a vote but only if the location has high enough average rent.
In this case, housing prices are ridiculously high, and wages are ridiculously low, if you compare both to the overall cost of living excluding housing.
You can choose your realtor. You can discuss with them.
This person just bought a 2m house!
It's literally in the first paragraph of the article.
"At trial, a federal jury found that they violated antitrust law by conspiring to force home sellers to pay inflated commissions to real estate agents."
Realtors negotiate for themselves, not for either buyers or sellers.
I did have one who dropped their commission a little to close a sale, but that's not a common experience. (And they still did very well out of it.)
also, they don’t get paid if something doesn’t sell for being overpriced.
it’s a market system.
Are they legally required to do that? How would you even prove it was due to them?
So the second-hand/used market is red hot. Renting has become so expensive, that many landlords have exited - so we're likely heading into a really bad crunch in the near future for the renters. I've read about people spending 50%-60% of their net pay on rent alone.
I recently entertained the idea of building a new house. Not terribly surprising, but worth mentioning that the time and materials to put up the structure was going cost even more than buying a used house. If nobody can afford to buy a less expensive used house then naturally nobody is going to build the much more expensive new house either.
Therein lies the bottleneck.
The real killer for them is interest rates, as they finance the whole thing and then can pay it off when all the homes are sold. High rates make the finances much more challenging to work.
Where I live, people are blocking the construction of new apartments because the cost of the new ones is a bit higher, 10%-50%, than the average existing apartment.
The idea behind blocking the new apartments is that "new expensive apartments don't help anybody" and people get very upset that the new housing is going to the type of person that can afford to pay slightly more for the newer apartment. Rather they would prefer that new housing is only built if it's cheaper than existing housing.
So when housing does get blocked, the existing landlords demand the higher new rents that those wealthier people pay, driving up the overall costs on old apartments. The poorer people get displaced, the wealthier people have housing but worse housing, and the only people who are better off are the landlords of the older apartments.
They get displaced when rents rise, having to move away from their friends, family, their kids' schools, etc. All because "activists" convinced them that their enemies are the people able to pay slightly more, rather than the system that says "only the X wealthiest people can live here, oh and we won't change X even though it's trivial."
https://www.aeaweb.org/articles?id=10.1257/jep.20241428
I can't tell you how many times I've been told that "supply and demand doesn't apply to housing," both by super wealthy NIMBY homeowners and by those struggling to get by.
Relying on that is the root problem. I could technically afford the new house, but in the end I couldn't find a good reason to tie up that much capital for something that does the same thing as what I've already got, only shinier. If the price were more reasonable then I'd make the move and then someone else could move into my much cheaper used house. But, as things sit, I occupy the cheap house instead, leaving the next guy out in the cold. Trouble is that just because I can afford it doesn't mean I am willing to be a buyer. The price still has to make sense.
I am not alone in this. It has been well reported that people are now staying in their "starter homes" instead of upgrading like past generations used to.
Yet the same people lobbying to block the building of these new apartments are still saying that "nobody lives there" because it doesn't fit their mental model of the world.
Too expensive housing doesn't get build.
But people that claim to hate developers find this sort of situation, a developer that built too expensive housing and ends up eating a loss, much worse than the current state of people being displaced all the time.
I live in an apartment in Stockholm but I also own an old forest cabin. It’s perfectly legal for me to live in said cabin permanently, but it would be strictly illegal for me to build a new house to the same simple standard. The building codes are basically making it illegal to be poor.
Similar patterns exist for student housing. The old style of student corridors with small rooms are no longer being built. Instead we are basically getting full apartments with individual huge bathrooms because the building codes mandate that everything is wheelchair accessible even when it’s practically temporary housing and they could get by with making 1/10 apartments accessible.
And that’s not even getting into how NIMBYism is enabled by laws that basically guarantee stagnation anywhere housing is in demand.
Shit’s fucked.
(Not that it's all good, e.g. I don't like Washington's WAC 51-11R which just seems way overcomplicated.)
And it comes at a cost of slowly destroying our society and turning everyone into landless peasants. Is that worth it?
Nevermind that a lot the IBC is ghost written by industry to the benefit of industry. A lot of local addendums are the same but for local interests. A lot of the permitting process is hack garbage to obfuscate how bad it all really is.
- Boom of AirBNB's and apartment rentals with tourism, with real low tax rates
- Limited liability abuse - company opens up, sells 30 apartments in a new building, build out the building, don't get any permits, just close the company down and open a new one. Legally, they are untouchable, and getting the permits is now on the apartment owners. Multiple friends live in such buildings, and maintenance is a PITA, trying to legalize it is a PITA, getting water/power is a matter of making shady deals with the neighbours, basically even living in it is technically illegal but not much they can do.
- Large influx of illegal money into the housing market (we have no law to investigate source of income), so money could be laundered easily.
- "Legalization procedures" where if you built a house before a certain year, or just started construction, it could be legalised. This caused people to build "fake roofs" and then claim it as a real building later on.
- Recently, immigration joined too - workers from non-EU countries are now allowed to get work visa's, and a lot of landlords are renting out a small 50m2 apartment to 10 people at the same time for ridiculous prices. The poor workers have to share bedroom with 10 other people, which is a terrible living condition, causing accidents like a whole floor collapsing due to 50+ people living in the building. While it's not legal, inspections are rare and the grey market is thriving.
- And my favorite - as a large number of apartments are bought as investments and uninhabited - around 22% in the capital, according to official estimates, with about 500k free total, in a country of 3.5 million people - the government got a great idea:
They will free up more housing, by offering the landlords of the empty apartments to rent thenm out with government guarantees. This means the government will pay them out 60% of the future rent money immediately, so the landlord can buy another apartment as an investment immediately using that money, and just get richer.
Now, we're in an interesting situation:
- Prices have risen quite a lot, like 3x over the last 5-6 years
- Existing landlords will get funding from the government to buy more apartments
- Meanwhile, new loan rules came out, prevent people from getting a loan that is more than 45% of their salary (after subtracting the costs, including your current RENT). 10% of the value has to be provided immediately by the buyer, and after loan payment and living expenses, you need to have at least 900 euros remaining each month from your salary.
In a country with a median salary of 1300 euros, with median rent being about 500-700 euros, this puts a lot of people in a locked position - you can't get a loan to buy, because you are renting. So from the 1300 euros of your salary, the bank subtracts 500 euros of rent as your "living expense", leaving you with 800 euros monthly total, which is under the legal limit for getting a loan, even tho once you buy the apartment you would not pay rent anymore.
So to get a 30 year loan to buy a 50m2 apartment, you need to have about double the median salary.
Now, they are talking about property taxes, which will force people barely making ends meet to sell the inherited land/houses/apartments for cheap to people that can afford it.
Cost of money (inflation), building, and maintenance is the floor for rents.
Median rent in the us today is around $1,750, or around $21,000/year. Today's median income in the us is around $89,000. So, housing cost has nearly doubled, while wages have only risen by about 5%. And that's just housing. I'm sure the math for healthcare and education costs is even more grim.
Real estate cost is local and there are parts of america where the prices have gone nuts. But there's a lot more where it hasn't and housing is affordable.
We need to allowed for revealed preferences. In developers we trust.
In many of those places salaries have been stagnant or work has dried up
So we have a weird situation where someone living in a big city with a large salary is priced out of real estate by high prices, and someone living in a smaller city with more reasonable real estate prices is priced out by a lower income
It's not universal of course, but it's a squeeze that a lot of people are feeling
That is in line with expectations:
1. The average house is ~60% larger than in 1970. More house equates to higher costs.
2. In 1970, the typical working-class man would spend time in a public house 5-6 nights a week. Today, third places are nearly nonexistent. Houses, largely driven by the internet opening it up to the world, has become more than a place to eat and sleep. Monetary spending is naturally directed to where one spends their time and energy.
Also compare a 1960s or 1970s house to one built today. Today's houses are bigger and much more luxuriously appointed, with gourmet appliances, stone countertops, multi-head showers, walk-in closets, huge bathrooms, etc.
Once the boomer generation dies off or goes into assisted living you'll see a lot of those 1970s houses coming back on the market.
But will they be affordable? Or will they be bought up by real estate conglomerates to be rented to the younger generations?
https://www.nytimes.com/1973/04/08/archives/108-a-month-rent...
Per state breakouts: https://www2.census.gov/programs-surveys/decennial/tables/ti...
Today, I live in a small city in a house I bought for about $200k 20 years ago. IIRC, it sold for $80k around 1992. Worth about $450k today. A decent 2BR apartment rents for like $2k here, a nice one >$2700.
In the late 80s early 90s I was paying 350 USD for a 2 bedroom.
On the other hand, wages haven’t kept up with inflation and the super-wealthy are constantly capturing more of the value. At least in the case of small-scale landlords, maybe they are just the only lower-to-middle class people who’ve managed to defend the deal they had in the 90’s, proportionally speaking…
What do you mean by “blame?”
I felt like my post was generally in the less-finger-pointing direction.
The line of thought that links super-wealthy people and wages is described in my first post. If you want to argue against it that’s fine, it isn’t a perfect link. But I’m not sure what to do with general confusion.
https://www.justice.gov/opa/pr/justice-department-requires-r...
https://oag.dc.gov/release/attorney-general-schwalb-sues-rea...
it's a component but not central afaict. of course it's localized and depends on housing market concentration, major metros see a large share of units held by relatively few entities like Greystar.
Rent for one bedroom apartment was 500$ in 1998, cold / hot water included other utilities are extra.
I was making 35K back then and it was enough to afford relatively good living - car, groceries, gas, occasional meal for 2 at a restaurant.
And gas was 35cents on the Wet Coast of Canada.
median asking rent in 2026 for NYC is $3616/mo ($43,392/yr) meaning rent alone would be 60% of that income, assuming that the $72.5k figure is after taxes (which it probably isnt).
if you take taxes off, you're probably at like 55-60k. that means rent alone is 70%-77% of income!
"living pretty well"?
The median household income in New York City is only $81,000 per year! People make it work!
where as the 72K vs 35K is only x2 increase
So, no, your math doesn't work.
It was common plot point in media to: 1) kick your kids out at 18, 2) if two men lived together they were assumed to be dating.
also - gentrification of apartment housing stock over time raising the price floor and phasing out of public housing
HVAC, transportation, anything beyond maybe emergency medicine, Internet access, education, drinkable tap water, …
The fact that the bulk of the US population has these things is what makes us a first world country.
The common factor: the capital class screwing over the working class.
Also depends whether you can about the middle more than the 10-20% of the people most struggling who can earn much less than the mean or median
https://en.wikipedia.org/wiki/Baumol_effect
Baumol plus zoning and NIMBY driven real estate hyperinflation basically explain the modern economic malaise among especially the young.
I’ve also heard this called “in-deflation.” Inflation in everything you need, deflation in everything you make.
To add, politics usually responds to Baumol by subsidizing demand and/or more regulation. Needles to say both make it worse. Article: https://www.niskanencenter.org/cost-disease-socialism-how-su...
LMAO
They can! It sucks!
This thought terminating cliche is getting real old. What are your solutions? and what evidence do you have that those solutions will solve the problems? Shaking your fists at "the elites" and regurgitating populist slop is not going to
You could start by reading Marx, who laid a lot of the groundwork.
> Shaking your fists at "the elites" and regurgitating populist slop is not going to
I like the way you trailed off halfway through your knee-jerk reaction, underscoring just how much your response is an automated result of indoctrination.
> You could start by reading Marx, who laid a lot of the groundwork.
Are you aware that you just responded with another? You did the "read theory" meme lol
> I like the way you trailed off halfway through your knee-jerk reaction, underscoring just how much your response is an automated result of indoctrination
so you don't have solutions or evidence is what I'm gathering? just another lefty populist spouting tired platitudes?
https://usafacts.org/answers/are-wages-keeping-up-with-infla...
It is in fact rents, especially with mandatory add-ons. The actual cost of renting a place is a lot more than the direct rent payment.
Inefficiently taxed land, and artificial scarcity via laws, turned housing into an asset class. This problem will not go away, in any country, as long as those two things are not resolved.
Meanwhile, where do the money for OpenAI and the SpaceX IPO comes from? Who got hold of so much money? How did they got hold of it?
And here's the killer question: would they, and the rules and system supporting them, change in any way if there were less immigrants?
You cannot live in Musk's banking account. You have to have the actual physical structure, and current laws in hotspots like San Francisco and New York do their utmost to prevent new development.
Places like Austin, which are less restrictive, don't have this problem.
>Places like Austin, which are less restrictive, don't have this problem.
Not really fair to compare 2 cities on the waterfront with no obvious space to build over to a city in the middle of Texas. San Francisco is even worse than New York(IMO) because of the hills.
Not a great idea for coastline cities. Will cause soil to sink and the more you build the faster it goes.
In many places of the world, the skyscrapers are full, and the people who move there leave behind another apartment for those who don't want to live in a skyscraper.
This is the whole crux of why NIMBY is such a collective problem. When NYC doesn't build because SF should, when SF doesn't build because the Bay Area should, when the Bay Area shouldn't build because Texas should, everyone collectively pays higher prices because overall housing supply is reduced and many people move between them.
Its close to a pigeon hole problem. If there are 10 houses and 11 people, the homes are going to go up in price until the 11th is homeless (or moving away to somewhere cheaper). If there are 100 people, its the same issue except magnified, this is what happened in the bay area. Significantly more people than homes. But if there are 100 homes and 10 people, it doesn't matter how rich they are, the prices will drop because there is less demand. It will also be less attractive as an investment vehicle, because they will demand less rent.
Oh, don't worry, they also buy land to build luxury condos for the upper-upper class - that can't buy but can still pay rent.
>But if there are 100 homes and 10 people, it doesn't matter how rich they are, the prices will drop because there is less demand
No, the price won't drop. The market is extremely inelastic. These homes are collateral for other investments of the super-super-super rich (people or organisations). It is better to keep them vacant rather than drop their value by lowering the rent, which would cascade to their leveraged investment.
This is why: - rents only go down when there is a big generalized financial crisis, otherwise they never go down. The best that used to happen was that rent stayed stagnant while wages rise, but that isn't happening... - you see so many empty appartements and retail spaces everywhere.
I mean, there a a HN front-page story about vacant spaces a day ago. You should read it.
I’m sure many immigrants had money on the IPO as well?
Either it's bad faith or you don't understand the implications. Either way, GL with whatever.
They literally sold less than 5% of the total shares in the ipo by the way...
It looks like people on the upper arm of the K are not only experiencing the economy differently but are also grotesquely unaware of the lower arm.
> The EU should be abolished and sovereignty returned to individual countries, so that governments can better represent their people
Modern budgets are not much more complicated. The rent is too damn high!
"Most" who are in those positions tend to make at least minimum wage, if not more, but that is not a guarantee, and it is harder to claim tips as "stable income" when trying to get credit/housing.
Median wage/rent is hard to apply. Totally different results if you look at what the typical renter makes (at least in my area). Minimum wage is one thing...but when it takes 3-4x minimum wage to stay at 0 every month things get difficult.
[1] https://www.dol.gov/agencies/whd/state/minimum-wage/tipped
very kind of you to offer them all a job at twice that. how do i reach out to you?
(I'm not gonna spoil it, I wanna see if anyone else can figure it out)
I'm very interested in hearing the opportunity you can give someone who's willing to work for $14.50/hr though.
"Go tell that to the middle school travel team in my neighborhood."
Why are you even making this comment? The comment you responded to was obviously talking about median wages of the entire US population. Real Wages are near all-time highs - it's just a fact, you can look up the data yourself.
And finally, why do so many people kill themselves in America? Can't be that great. Don't know of many hunter gatherers offing themselves
Want to make a bet on what happens to rents in San Francisco after Anthropic's or OpenAI's rents after they IPO?
There's no reason either event should decrease supply or increase demand, correct? So prices should be stable?
"The biggest flaw: It uses gross income, not take-home pay
One of the biggest issues with the 30% rent rule is that it’s based on your gross income—not the amount of money that actually lands in your bank account on payday.
To illustrate this flaw, let’s use some real-world numbers. According to the latest FRED data, the median household income in the U.S. is about $84,000 per year, or roughly $7,000 per month before taxes.
Under the 30% rule, you could theoretically spend about $2,100 per month on rent if this is your income.
But let’s take a look at what your take-home pay could be with this salary. "
And unless your argument is that public services are 2.48x better now, then yes, I know that the problem is, as usual, that the government is taking workers money away to do as they please.
So when you say landlords are the least productive class in society, it is that they are totally unproductive by their nature. There is literally nothing to be produced! The land is there regardless! Then the fact that they collect a tax on consumption of a good they did not create makes them a negative-productivity component.
If you remove landlords (but keep property managers, developers, etc, which are all different jobs sometimes played by the same people), it would be a strict improvement to everything about our economy.
Landlords assume a similar role in economy that banks do, they assume risk on your belalf. We have quantified this to an extent that you can reliably put a dollar amount on how much risk there is.
When you are renting and there is a job change or war or natural disaster or really, anything inconvenient at all, you can more or less walk away without losing much.
The land is there regardless of whether anyone "takes on the risk."
Landlords often take on risk in their role as property managers or developers. They should be rewarded more for that, and not at all for their simple ownership of land, which again: would be there regardless of whether someone else or no one at all owned it.
Equivalently, we can just pretend that there has only ever been one owner.
A real estate bubble bursting or anything that makes your area unappealing to live in would suddenly be really problematic and in the case of leverage get you negative equity.
If they didn't "take on that risk," the land is still right there being land.
That is not true for banks or insurers, where if no one was willing to hold that risk then the inverse product wouldn't exist.
I'm sure you have a philosophical point here, but this is exactly how the modern economy prices risk. Your understanding of the semantics of risk is not being questioned here.
Any high risk high reward strategy gets you in charge of creating the risk to chase a higher reward.
The math is fairly similar between spending 10$ to buy a call option and a 1 million down payment to buy a 10 million property with 15 apartments to rent out.
As we speak, close to a billion people are in the middle of ongoing wars. There are entire countries where land is worthless. Ukraine has several hundred square kilometers of land with a thick covering of fiber optic cables from drones.
If you think insurance will save you, it might not if no one is willing to insure your property (large true in California nowadays) or the insurance company goes bankrupt in a crisis (happens pretty much all the time).
I have a much better idea: point, laugh, and say "sucks to suck!"
I'm telling you why the system works like it does now. You can, of course, choose to deliberately not understand it.
No, the system works the way it does because it was built by the rich, for the rich, to ensure they had a way to get paid for being rich. You can, of course, choose to deliberately not understand that.
Good luck changing things without understanding how they work though.
Where did they say that?
I take your overall point about rich people making laws. But on this specific point you're wrong. Take the L.
My neighbors, the homeowners who don't rent, are typically on the other side. And it's not unreasonable to want to keep SFH neighborhoods predominantly SFH.
My main risks have have absolutely nothing to do with more housing. It's more physical risk to the property and depreciation.
In this scenario, who owns the property? And if you are advocating that everyone should own their home, what is the point of a property manager? What about the people who do not actually want to own their home?
Instead of:
Investor owns the land
Investor pays for construction, finance, maintenance
Investor receivers rent
Government owns the land
Investor pays to lease the land for 30 years or whatever
Investor pays for construction, finance, maintenance
Investor receives rent
Of course it is not a solution to current situation when real estate are very expensive, but in theoretical discussion where real estates are affordable you can buy it and sell when you move.
Or you can have the government own the land but do long-term (99 year) leases, like they do in Singapore.
LVT has the same vulnerability as property tax: owners can worm their way into the policy details and redirect the surplus back into their own pockets. Leases bypass this problem through the competitive bidding process.
The problem is always financing. If you're going to own a place you need a lot of upfront capital. If you own a place and plan to maximize rent increases it's easy to leverage your new asset to buy more properties. But if you just want to keep it near cost then you need a new infusion of capital for each new property. So, by their nature such endeavors don't grow as fast as rent maximizing landlord can grow.
It's more about risk management. Do you want your university to be disbanded or your local government bankrupt if there is a war or natural disaster, or even a standard city block fire.
I assure you wars and natural disasters are not that uncommon in the grand scheme of things. That's why we have people or corporations with a higher appetite for risk assume the risk. These entities, unfortunately, don't always have your best interests in mind.
A university endowment or a city's tax revenue is legally and structurally earmarked. They can't just liquidate those assets to buy for local real estate. For the non-profits and community land trusts actually doing this work, securing patient, low-cost capital is absolutely the primary bottleneck.
The high leverage of private landlords actually makes them more vulnerable to systemic shocks. Meanwhile, non-market housing models (like land trusts) don't over-leverage their properties, which is exactly why they historically have much lower default rates during crises.
Given the option of landlords making bank for their risk and then getting a government bailout when there's an economic shock or having more housing decommoddified I'd take the latter. There's very little housing in the US that is under these alternative structures so at the very least I'd encourage more experimentation with them.
Most of the knowledge we have about what works and what doesn't is from decades ago.
Nobody would be allowed to rent out a space they owned because it would turn them into a landlord. All of the rooms people rent out to others would go away. You wouldn’t be able to rent a private house from someone, you’d have no choice but to live in government owned housing developments.
This would be incredibly unpopular if implemented because it wouldn’t resemble the utopian fantasy it’s supposed to represent. It’s a vacuous idealism in the same category as “billionaires shouldn’t exist” that serves as a placeholder for an unspecified utopian government-run economy. The details are never specified, you’re just supposed to imagine it works and nothing is lost as a tradeoff.
You need to be specific about what you mean by “remove landlords” because that’s a nonsensical statement by itself.
Some party must be responsible for the investment to produce the property. Some part must own the property.
The most charitable interpretation of what you’re trying to say would be that private rental contracts are forbidden and the government would have a monopoly on renting properties out. So only the government could own properties that are rented and the entire rental market would depend on how much housing the local government decided to build and manage.
You could, for instance, require people who own habitations to actually live in that location. You could tax people who own property they do not actually live in very aggressively until they would be willing to sell for less to avoid the tax burden. You could have a system which taxes aggressively and builds lots of houses and gives it to people who own it as long as they live there.
There are quite a lot of ideas between "government owns everything" and "let vampire landlords do unlimited rent seeking."
As it happens, I think there is quite a lot to be said for the free market solution of just letting supply meet demand more or less freely, but I think your interpretation really is not the most generous one.
This is how I know that you've never tried to run houses. If you hire out a property manager and all of your maintenance you are not making money.
I have to be an electrician, a plumber, a painter, a drywaller, an engineer, a salesman, a delivery driver, a businessman, an appliance repairman and a lawyer. And that's to make a measly 8% on my money.
> There is literally nothing to be produced! The land is there regardless!
No one rents bare land. They are renting a depreciating asset that you have to upkeep.
Yea yea yea, Henry George says that the value is provided by the citizens around your property. I call bullshit. The value is the shelter, the heat, the comfort. That's what people need.
A crack shack with a busted roof and broken utilities in a good location sells for the same price as a pristine, functional mansion in the middle of nowhere.
Amazing how many people insist on being landlords despite it apparently being a life of sawdust and sackcloth.
Because you can't acquire attractive real estate. Who cares about a unit in Slutdrop, Idaho?
But investment in housing can definitely create more housing, and that is by far the most common type of landlord.
If you genuinely think there is little difference, why do you care so much about not switching to a lease system?
The result is that real estate basically sells for roughly what it would cost to rebuild whatever is built on the land.
There is still a premium charged (in the form of LVT) to allocate access to desirable locations, but the revenue goes to the government/community instead of the previous owner. And the eliminating the incentive for land speculation should actually reduce overall costs.
you mentioned supply and demand, if everyone is struggling to buy houses, downpayments wouldn't just go down a little.
in the end, everyone needs housing, every single house would be occupied just as now, but instead of having renters being squeezed by supply and demand you would have owners.
how is that a worse scenario?
let developers have rent, they are the risk takers, they deserve it.
Not every house is occupied now. Not everyone will sell at loss if they can't rent out. So more homeless people?
What about people who don't have any savings living paycheck to paycheck? There is clearly some floor on housing price and not everyone can afford housing even at zero margin. Giving out free mortgages like it's 2007?
What about new housing? With lower prices supply will further decrease, and in places with high prices it's usually already insufficient.
Without renting everyone would have to buy a house / apartment on each move.
BTW in the US, a big advantage of renting is not having to buy, sell, or maintain appliances like a fridge because the landlord has to deal with it.
For instance: I bought my wife's grand fathers house. It appraised for $165k, and he sold it to me for $130k, I put $50k down, and got an $80k mortgage. I earn a very decent amount around 4x the median household income. I have 22 years of employment history with 0 days "unemployed". I have maintained a DTI of less than 10% and a Credit Rating of 800+ for at least the last 15 years I've been tracking. I have more money in my brokerage than the house is worth, let alone the mortgage, and yet it still took 3 different banks, and over 13 months to close on the house. I was denied by Bank1 (who I have over 20 years of history with) and Bank2 (who owns my business accounts and holds $10s of thousands on average up to $100k regularly). Bank3 approved me, but by the time they approved me, interest rates climbed from 2.5% to 5.75%.
TBF, would you give some randomer a few hundred grand without a strong guarantee you'd get it all back?
Mortgages are backed by the asset you are buying. $400k for a house is backed by the house. On top of that, almost every bank can sell off those mortgages and get the cash back immediately.
So, you are correct, I would not lend hundreds of thousands unsecured to a random person, but if I had the disposable capital, though, I WOULD buy a house with that money, and price in their credit rating to their interest rate, and turn around and sell it to Fannie/Freddie and recoup the principal that I lent.
Banks aren't on the hook for any of this (except for mortgages that don't conform, but most banks don't touch those, you have to go to brokers for those).
I personally think it’s usually a shitty investment and a waste of my life, so I’m glad to pay someone else to use theirs.
There's risk in owning housing and so we should make sure people get rewarded for that instead of rewarded for owning land.
You still lose relatively though because the next person with their money in the market made some %
Land and real estate assets are generally a poor investment relative to the market without a ton of active management. There are god knows how many millions of people who own land that would be incredibly valuable if not for the civil engineering lobby getting environmental rules and laws written to their favor.
Landlords do not manage properties. Property managers do that. Property managers should get more reward for managing properties and landlords should get less.
Sometimes these are the same individuals and they lump their fees into a single check, but these are not the same jobs and they should not be treated the same.
From who? Someone has to pay them to do the development, right?
Like if a landlord wants to sell their building and someone comes along with an offer for $500k then the current tenants have an option to buy it at that price.
Certainly would be annoying for investors looking to buy quickly but potentially life changing for long term tenants about to get a new landlord.
That sounds like a great place to live. Good weather, quiet, Italian food & culture, safe & stable, public transit to the city…and you can work remotely.
The grim reality is that over-financialization of markets combined with a lack of regulations against predatory practices (like surveillance pricing and algorithmic rent setting) added gasoline to the bonfire that was a fundamental housing shortage brought about chiefly from treating housing itself as an appreciating asset rather than the land housing sits on and taxing accordingly (don’t even get me started on residential property tax schemes popularized by the Baby Boomers and the associated gap between sale price and tax assessed values dictated by law). Growing wages won’t fix this, nor will cutting interest rates. Building more housing is the only way out, but existing homeowners don’t want their assets to decline in value, so that’s generally not happening. Rent control is becoming increasingly popular, and I think it’s a good idea to protect existing renters and force landlords to side with wanna-be homebuyers instead of homeowners by forcing revenue growth through volume creation (new housing) instead of rent hikes.
This has been a key factor in my fiancée's and my decision to move away, as it's simply unsustainable for families with children.
Ed: obviously the 50/30/20 rule sums to 100% so would need to be net - although the US is weirdly treating health insurance as a "premium service" that go into the 50% here, not into taxes like in a modern society.
There is a crazy amount of land in the world, but either it's too expensive or you're not allowed to build over it, or a combination of both. Houses have been built for millennia but somehow in the most advanced period of humanity you're supposed to pay hundreds of thousands of dollars for a roof over your head.
I think that low key the ruling class + landlords are not interested that housing be an affordable thing, so the whole system works to create artificial scarcity. How's the population going to be forced to work unpleasant and low paid jobs if not by controlling their access to housing? You have to be too naive if you think that a few minds in your country's parliament haven't thought of this.
If someday economic activity gets automated enough, and the majority of people are not needed anymore for regular jobs, and this populace gets violent with their ruling class, then I think a lot of housing will be built outside of cities, and the supply of houses will no longer be a problem.
And those laws were passed with the political will of who?
Now with the benefit of hindsight what causes that seemed legitimate were used to hoodwink those people?
Have those causes and their peddlers lost credibility or legitimacy?
Western society is basically slowly recreating old world landless peasantry because we have adopted bad world views or bad morals or bad ideologies (or whatever else you want to call them) that allow us to be manipulated into incrementally creating the system that produces that outcome.
Complaints about NIMBYism and "ship it overseas and forget about it environmentalism" are sniffing around the right neighborhood, but there's a more general problem here.
This is true, to a degree. There is another factor and thats WHAT kind of housing we build.
> ruling class + landlords are not interested that housing be an affordable thing
Off the mark, the real people pinning housing prices where they are, are home owners. Home ownership is the leading predictor of voting, and issues that maintain or raise current home prices will drive that up. https://www.gsb.stanford.edu/insights/if-you-lived-here-you-...
Furthermore home ownership is a functionally unmovable number: https://fred.stlouisfed.org/series/RHORUSQ156N (that fed data is interesting and says a lot, capturing the 2008 financial crisis, bad lending hardly moved the needle in real terms).
> controlling their access to housing?
The reality is that this is a social problem.
Boomers are living longer (higher quality of life) and alone. They either took their parents in (cohabitation) or put them in homes. I know plenty of elderly people who are living in large houses, by themselves, who had their parents, at that same age living with them. You're not going to see a bunch of retirees moving in together to save on bills - The TV show "Golden Girls" would not make sense today.
On that note, cohabitation among younger generations is down. Fewer people have roommates, and lots of them "want to live alone" - sharing a house with 4 friends is much cheaper than living in a studio or one bedroom. And there are whole categories of housing, like boarding houses, that have disappeared. Again this is a cultural problem, look at the TV show "Bosom Buddies" - this is something that would be lost on a modern audience for so many reasons.
Part of the cohabitation issue is "renters rights" have gone way too far. There are plenty of people with space, who will not cohabitate because the risk, cost and pain of a renter turning into a squatter is WAY too high. The rules to protect good renters from bad landlords have only served to push out good landlords because of bad tenants.
> If someday economic activity gets automated enough... This will never happen. If you dont think were going to find new things to keep busy and if you dont think were going to find new ways to compete for "dominance" I have news for you.
"Map showing the affordability decline by state as costs of living outpaced wages"
so a + is an increase in affordability as the title indicates (wages outpacing COL), or + is a decrease in affordability aka an increase in non-affordability (COL outpacing wages)
https://na.rdcpix.com/a19175a2a7e40c2a2272c013b8b3458aw-c174...
Immigration creates more jobs than it takes away and generates net wage growth. Immigrants don't just work. They also consume and they also start their own businesses. This has all been measured to death. There's no reason to ignore the research on this.
https://www.brookings.edu/articles/what-immigration-means-fo...
https://insight.kellogg.northwestern.edu/article/immigrants-...
> "Because of these factors, economists have found that immigrants slightly raise the average wages of all U.S.-born workers."
> "Ironically, the result is exactly the opposite of the usual narrative. It seems like immigrants actually improve the economic outcomes for native-born workers."
We’ve seen where feds sweet for illegal immigrate plants up their wages to attract locals who then enter the job market.
Poorly educated immigrants are not the bulk creators of jobs that’s higher ed immigrants. Not the same pool of people.
Large shortages of labor across all sectors may raise some wages but also causes inflation and leaves us worse off.
Do you have evidence of this claim?
https://web.archive.org/web/19980610100009/http://www.redher...
> By 2005 or so, it will become clear that the Internet's impact on the economy has been no greater than the fax machine's.
Not the latest date at which the Internet was still on par with the fax machine.
My bad, it was 2006.
That doesn't sound like the claim you made. It is also a prima facie reasonable claim to make.
But lacks any direct evidence that he actually did so. It misquotes things and really grasps at straws to make a point, holy moly.
It's so disingenuous lmao.
Never the less, without corporations hiring people to undermine wages there would be pressure to pay higher wages for low skill low education workers, no doubt.
But this isn't just about "low skill low education workers". Higher skilled and educated workers are making less too.
There is a systemic effort to gut the middle class. And once this effort is complete and 3rd world status has been achieved, the upper class will slowly start to realize that they have also gutted the market for the goods and services that they monopolize.
Supply and demand. If you increase labor supply, prices go down.
More workers will in fact depress labor prices.
> Higher skilled and educated workers are making less too.
This is outright false. Skilled trades are suffering from an inability to fill vacancies and salaries are going up.
> There is a systemic effort to gut the middle class
The middle class is shrinking.. because the middle class is becoming upper class.
https://www.cbsnews.com/news/upper-middle-class-income-us-wh...
The middle class earners are earning enough to become upper class.
Heck, in 2000 the median household income in Canada was around US$32K [0] compared to US$42K in the US [1] despite CoL being roughly the same or higher.
If you want a boogeyman for why Canada stagnated, ask why your political class (both Conservatives and Liberals) turned energy in what is a de facto petrostate into an ideological war while American governers on both sides of the aisle backed both fossil and green energy projects (eg. Rick Perry and wind, Jerry Brown and oil in Bakersfield).
[0] - https://www150.statcan.gc.ca/n1/pub/82-221-x/2006001/t/41506...
[1] - https://www.census.gov/library/publications/2001/demo/p60-21...
How about blame wealth extraction by the 0.01% before going after the out group that’s clearly working more than the average and paying taxes?
Additionally it doesn't appear to reference the actual HUD report from 2025 https://www.huduser.gov/portal//portal/sites/default/files/p...
This at least has AFAICT the 100% figure, but the causal link seems unsubstantiated. The exact, unreferenced quote from the document is "Immigration accounts for up to 100 percent of housing demand growth in some regions, and for two-thirds of rental demand growth nationwide. In California and New York, immigrants have accounted for 100 percent of all rental growth and over one-half of all growth in owner-occupied housing in recent years." p45 with no further citation to back that up. I know its not an academic paper, but some citation would be good to back this up.
Id be interested in more information on causal data, or at least a more nuanced stance on such a strong statement. Or a less politically charged comment.
Full disclosure, i (obviously from my comment) dont lean right, but one thing i appreciate about HN is a more nuanced comment, and i think this is a chance for that.
Actually just one particular group. Minorities aren’t homogenous. And the war that ended that was almost 200 years ago. So that was far before any “good old day” talk,
You want to try clarifying what you want to argue?
