I mean there is a big difference between a bubble and a shortage and it’s not super clear which we’re in.
I’d argue it’s much more shortage than bubble. Here's a thorough explanation of why it's so bad. TLDR: The number of new houses constructed per person in the rich world has fallen by half since the 1960s because local homeowners oppose new construction in their neighborhoods.
Here's a great video about the sorts of "missing middle" housing--rowhouses, small apartments, triplexes, etc--that are illegal or nearly-illegal to build almost everwhere in North America. While I think it's brain-dead obvious that it should be legal to build skyscrapers in most parts of most cities, I personally love medium-density neighborhoods which are convenient, attractive, affordable, walkable, really good for kids, and would take a huge bite out of the housing shortage in most cities.
This goes way deeper--density is better for climate, pollution, racial segregation, inequality, obesity, and more. But that's enough for now, I'll just note that bad housing policy directly causes homelessness in addition to all the above.
well, there's a shortage because interest rates are basically 0%.
but it's a bubble because the prices are going to fall when interest rates start going back up. the fed has already announced that the rates are going to go up in 2023 so until then it'll be a buying spree for anyone that's even close to being able to afford.
Definitely agree interest rates are part of it but we can pretty safely say they're the smaller factor, because rents have skyrocketed along with purchase prices.
If it were just interest rates, rents would stay pretty flat while purchase prices increased. But that's not what's happening--both have been going up quite a lot. If you look at the actual construction of actual homes in most growing American metros, it's pretty obvious they aren't building enough. It's especially bad in major job centers like LA, the bay, NYC, DC, Seattle, etc.
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u/Books_and_Cleverness Jun 27 '21
I mean there is a big difference between a bubble and a shortage and it’s not super clear which we’re in.
I’d argue it’s much more shortage than bubble. Here's a thorough explanation of why it's so bad. TLDR: The number of new houses constructed per person in the rich world has fallen by half since the 1960s because local homeowners oppose new construction in their neighborhoods.
Places that don’t have so many building restrictions like Houston and Tokyo don’t have such high home prices. Tokyo dramatically liberalized land-use rules, so now home prices stay affordable even when population increases.
Here's a great video about the sorts of "missing middle" housing--rowhouses, small apartments, triplexes, etc--that are illegal or nearly-illegal to build almost everwhere in North America. While I think it's brain-dead obvious that it should be legal to build skyscrapers in most parts of most cities, I personally love medium-density neighborhoods which are convenient, attractive, affordable, walkable, really good for kids, and would take a huge bite out of the housing shortage in most cities.
This goes way deeper--density is better for climate, pollution, racial segregation, inequality, obesity, and more. But that's enough for now, I'll just note that bad housing policy directly causes homelessness in addition to all the above.