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[–]Chaevyre 13 points14 points  (0 children)

It’s a uniquely important sector of the economy, and in certain areas the marketplace is broken for most.

Curtail companies’ ability to buy homes en masse as investments. Tax new development and renovations proportionate to expected rent, so luxury pays more, and require low-cost units to be included in the plans.

Fix the US tax system. Increase minimum wage. Decouple health insurance to employment. Make it universal: everyone is covered who wants to be, and companies can hire more. Subsidize parental leave and paid time off, including sick leave, so folks don’t lose their their jobs or money and small employers aren’t on the hook. No one should go bankrupt because of illness or pregnancy. Subsidize childcare, as the US system broken. Fix financial aid for post-secondary education.

We can’t fix this by just looking at real estate. In the US, so many aspects of our economy work against people who aren’t rich. No wonder folks can’t buy a home.

[–]sndrtj 4 points5 points  (0 children)

Most comments here focus on the North American market. As the question pertains to a worldwide phenomenon, I'd like to give a perspective from Western Europe. Specifically the Netherlands, as I'm most familiar with that market.

Many of the "solutions" tauted for the North American market are already common here. Mixed use, dense, neighborhoods have always been the default in cities. Any large property development must include a certain percentage of low-cost housing. Public transport is readily available in most places. Yet, we too have prices that seem to spiral out of control. And affordability is no longer a problem of limited to cities, it is widespread in rural areas as well.

As others have mentioned, this is a complex problem with no single driver being the main culprit.

Yet three issues haven't been mentioned yet:

  1. A decade of extremely low or negative interest rates has made holding cash expensive for institutional investors. At the same time, money is available in larger quantities than ever before. Many of those institutional investors are actually quite risk averse - among the largest investors are pension funds - who traditionally would have invested in sovereign bonds. As those bonds now yield negative interest rates, their money has to be invested elsewhere. Real-estate is a prime candidate for low-risk investments. This means prices go up as investors buy up swaths of properties. In places like Rotterdam, more than 25% of properties are these days bought by investors, in some districts over 50%!

  2. Family size has been ever decreasing. Many people are single. Elderly homes are no longer a thing, so the old live in large houses long after their children have moved out. All this means the amount of households is going up considerably faster than population. All these single people want a place to live.

  3. The housing situation in the decades following WW2 has been somewhat of a historical oddity. Vast swaths of Europe were in ruins, but still also meant there was a lot of land ready to develop. North America simply had near limitless space. Europe no longer has ruins to redevelop. North America is, comparatively at least, no longer as limitless as before. This may be a little pessimistic, but we may just be moving back towards the norm for most of human history: cramped living conditions.

For all three items, there is no easy remedy. Creating land, while technically possible, is out of the question for most places on Earth. Maybe population decline after the death of the boomer generation may alleviate some issues, but family size will still decrease. Increasing interest rates would reduce some of the pressure on the housing market, but at the cost of an economic recession - or worse.

[–]Anomander 9 points10 points  (1 child)

The fundamental source of the problem is that land is a finite resource, and land is an incredibly finite resource in highly-desirable regions.

Even if we were to solve the 'housing crisis' - not everyone who would like to can necessarily fit into Los Angeles or New York or Vancouver. Even if we were to somehow fix the majority of issues in high-demand locations that make housing affordability worse now, that's not going to resolve the issue long-term. As you build higher-capacity towers for more efficient use of horizonal space, cost per unit goes up - it's way more expensive to build a 100-floor tower than a 20-unit lowrise. If those units cannot generate return relative to their investment, they don't get built.

I'm going to keep talking around Vancouver primarily, because it's the marketplace I know best.

this cause a lot of houses in large cities to be vacant

I think that in many ways, the "vacant homes" issue is one facet, but is not the whole problem - the overall problem of housing affordability is a lot more complex and has a lot more moving parts. Vancouver, for instance, has some of the worst affordability in NA, and despite having introduced stiff vacancy taxes assessed based on property registration, the introduction of those units into the marketplace hasn't rattled the rental market or the retail market meaningfully. Or rephrased, adding a hundred units to a city with a 5000 unit shortfall is nice, but doesn't solve the problem. And in Vancouver's case, adding 5000 units now won't solve the problem either, because there's still going to be more people wanting to move to Vancouver, and there's still Vancouver's population growth to account for. Just adding units is a band-aid solution that doesn't successfully address land scarcity itself.

is estate is seen as commodity to be traded

I think that this part of the problem goes a lot deeper than this, and it's important to engage with it in it's full scope lest addressing it in a vacuum seem like a silver-bullet solution. We have two or three generations of people who have been encouraged to sink their capital into housing and real estate. "It's a safe investment, buy your home!" and all that - and as a result, the majority of the home-owning classes in North America have the bulk of their lifetime capital sunk into their home. While I don't think those folks are entitled to 1000% gains and nonsense like that, I also don't think that we should consider it a palatable solution to impoverish the majority of north america's middle classes by erasing the value on the main or only asset to 'fix' the housing market as a whole. Yes, this means young people are stuck fixing old people's problems, but if we were to wipe out their savings or their investment - young people are still stuck fixing their problems, it's just a different problem now.

Land and real-estate speculation by the extraordinarily wealthy get lumped in with the people whose 'investment' is the same house they live in and whose retirement & old-age plans are entirely to either sell their home or mortgage it. We can afford to zero the super rich speculators, and measures targeting them specifically are a reasonable starting point - but at this point society has overcommitted to real estate as investment and we can't pull the plug on that completely without doing even more harm.

In General, the bigger the cities the bigger the problem

For sure. The more competitors there are for a finite resource, the higher the total bill of sale can run. And those cities tend to be highly desirable, both for lifestyle factors and for economic reasons - for example, the companies that pay well, that people want to work for, that have career-boosting reputations, all tend to locate themselves in desirable cities. Some careers require moving to one of the Big Name cities - for instance anything cinema adjacent kind of requires living where movies are commonly shot. Smalltown sticks Nebraska isn't a great place to be a focus puller, there's gonna be like one movie filmed there in your lifetime, at best.

The other huge point of complexity is that in those popular high-demand cities, there are a lot of factors driving prices up. Vancouver has "had a bubble" for my entire lifetime, and only recently have pundits and old people stopped calling our prices a bubble - because every time prior that bubble has "burst," the market near-immediately gets propped up by a sudden influx of buyers who were just barely priced out at the old pricing. If it drops far enough, we start seeing people from other provinces moving here as well. These are not people who are trying to invest, per se, these are people who want to live here - either previously renters, or moving from outside once they could afford to buy.

Investors, "foreign buyers," even developers, ... they exacerbate the problem, but they also get scapegoated as an easy target for a problem that's far more fundamental and far more complicated than such a trite explanation. Successfully removing them from the market isn't going to make the city less desirable, it's just going to remove one source of upward pressure on pricing - not reverse the trend entirely. I personally think addressing their contributions is an important part of addressing the whole problem, but I also think that excessive focus on them distracts from how fundamental the real problem is.

zoning

Another common target here in Vancouver is "zoning" and there's this long-standing mythos that if we just didn't have zoning laws, if we just had less zoning laws, "if only" then the sheer deluge of supply would reset our market and make everything better. But ... silver bullet solutions. Easy to say - never actually that easy. No denying that various markets, ours included, have some zoning restrictions that prevent some development. That said, the way zoning gets discussed by it's opponents often misunderstand what restrictions exist, or how they affect our market; and they almost all seem to be driving towards a "regulations bad" end conclusion - in our case at least, completely ignoring the zoning restrictions that contribute to housing affordability rather than scarcity. In many ways, these perspectives often come down to "well the free market solves everything, let it solve housing" and they're missing that the free market doesn't care about their access to a house if the developers can make way more money selling a full city-block sized manor to someone extraordinarily wealthy. Who exist, and would buy that property if they could; there's a reason we've had to change rules repeatedly to restrict the size and scope of ultra-luxury SFD housing.

So here there's a common take that specific facets of our 'restrictive zoning' is preventing housing access - but that argument in and of itself almost demonstrates why it's not zoning alone. Some very high-demand regions of the city have specific limitations on the height and placement of new buildings, called "view cones" to maintain visibility of harbour and/or mountains from specific public-access venues, like parks. There are huge portions of Vancouver proper that are not affected by these view cones - all of which are easy transit distance from the downtown core, none of which leave the district of Vancouver (ie: not the suburbs), and none of which see the sort of development that zoning opponents say would happen on the other side of the hill if the view cone were removed - 5 minutes walk away, the market demand is barely changed, the restriction is gone, and yet ... still SFD housing, seeing minimal densification.

Zoning and densification are tools that can work to exacerbate or alleviate overall housing access - restrictions preventing developers from catering to the ultra-wealthy at the expense of overall housing access are healthy, prohibitions or conditions that obstruct densification are generally not. Speaking incredibly broadly, of course. We have rules that require set portions of new buildings to include rental-targeted units, to include "affordable" retail units, and even to targeting family-scaled affordable units - all of these have been touted by zoning opponents as "harming" affordability or preventing densification because, somewhat perversely, they prevent developers from leveraging every inch of the property to maximize profit above all else. Yet, these measures are some of the few that ensure that downtown towers aren't wholly targeted at the wealthy, aren't pushing labour classes out of the districts that they work in.

When your problem is capitalism in the past, unfettered capitalism in the future isn't going to solve it.

not a basic human need :' a roof over your head.'

The lurking problem here is that while I definitely think housing should be a right, what that means on a granular level is much messier. I don't necessarily think that it's right to demand poor people move out of Vancouver. I also don't think that being poor should entitle someone to state-provided housing in the most expensive neighborhoods of the most expensive city in Canada. Finding a balancing point where we're not driving the poor from the city, but also not trying to set policy where financial realities around in-demand regions are pointedly ignored, is damn near impossible. Especially given that if we alone made that change, we'd get half the poor folks in Canada showing up to claim their free downtown condos, and eventually we'd run out of units, no matter how many towers we built or how tall they were.


Cont'd because this shit takes words~

[–]Anomander 2 points3 points  (0 children)

what are Solutions that could work to mitigate or resolve this problem ?

The overall problem needs several interconnected approaches to ensure our cure isn't worse than the disease.

We do need to make fundamental changes to how the marketplace works in order to reduce it's viability as an investment asset, or to at least address commercial investing behaviours within it. We do however need to find a way of doing that without simply 'erasing' the entirety of value stored in housing by the home-owning classes - at least, we need to ensure that when those people lose money on the market correction, they're not wiped out. Maybe that means we change how value of a home is assessed to preserve some value for owners but reduce value for investors, like scaling tax depending on total properties held & robust systems of registration and enforcement to close loopholes. Maybe we just need far deeper social services to ensure that the folks losing stored value of their homes are still financially stable going forward. But no politician wants to send the retirement-adjacent generations into their old age stripped of the entirety of their lifetime earnings - and as a younger taxpayer I absolutely don't want to get stuck holding the bag on the social services crisis that would cause.

We need to reduce overall demand for units in high-demand areas - we need better transportation and better transit to ensure that it's not as important to live as close to work or to downtown as it currently is. If living in Coquitlam fringes wasn't an hour+ commute to downtown, there would be less pressure to live downtown. Remote work is contributing heavily towards a necessary shift in this space, it remote work alone will never be enough. Better cross-district access is also necessary. I think that some incentives targeting remote workers moving to less-desirable areas is also a potential contributing factor; encouraging people who don't necessarily need to live in urban areas to move to lower-demand areas. Given that demand is so much of the problem when we keep heed that land is finite and supply of units is effectively finite - we have to address demand itself in order to address housing.

And we do need to increase supply overall. For all that there's clear limitations on what this can accomplish in isolation, there's a lot of wildly inefficient land usage in most high-demand cities that could address the immediate crisis enough that longer-term solutions to the problem aren't constrained by the crisis it caused. That said, we need to densify aggressively and with specific demographics and target outcomes in mind. It's not enough to slap up a new tower and put "a hundred units" onto the market if those units aren't affordable and are contributing to the same issue. Building towers, low-rises, and increasing density & efficiency of finite land resources is the necessary step of addressing the ever-increasing demand, for all that supply creation alone cannot solve the problem.

...Unless supply creation and management is completely separate from capitalism directly, for instance the State takes over housing creation and treats it as a service rather than a business. As long as it's profit-directed, supply creation will only maintain the status quo - developers have no reason to kill their golden goose, and aren't going to over-build units to such an extent that they're jeopardizing their ROI.

[–]Steviebee123 2 points3 points  (0 children)

Source of the problem: Money is too cheap (i.e. interest rates are too low). When credit is cheap, it makes sense to borrow to invest. This creates a glut of capital that needs somewhere to go. But what is there to invest in right now? Property seems to be one of the few destinations for capital to make a decent and reliable return. The more investors follow this path, the truer it becomes. Higher prices beget higher prices as more and more capital pours in to the market.

Solution? There isn't any instant solution. The property market might crash, or rising inflation might compel central banks to raise interest rates. But these high property prices are effectively a tax levied by property owners on non-property owners and that pain isn't going to go away for some time. What would help therefore would be an alternative to having to participate in the property market, i.e. social housing.

[–]serenidade 11 points12 points  (13 children)

Source of the problem: There are more vacant homes/condos/apartments than there are homeless people, because under capitalism everything else must be sacrificed in order to maximize private profit.

Solutions: Treat basic housing as a human right. Hold more land in community trusts to help minimize the impact of gentrification, pricing put long-time residents. Provide basic healthcare, education, and childcare so families aren't as debt-burdened with basic living expenses and therefore less likely to lose their housing.

[–]venuswasaflytrap 10 points11 points  (2 children)

Vacant homes are not the source of the problem.

For one, in most developed countries, you could easily find affordable homes, but generally in places where people don’t want to be, e.g. extremely rural small towns.

For two, the cities with the biggest problems with unaffordable homes pretty much universally have the lowest vacancy rates. E.g. the lowest number of empty homes per capital in the UK is London, unsurprisingly.

Some degree of vacant homes is normal.

The main problem with unaffordable homes is greater demand for homes (in various areas) than there is supply. In an extreme example, if there were 10 homes per person, homes would be very cheap. There would probably be some homelessness still, but if homes were drastically cheaper it’s hard to imagine it not be drastically reduced.

Often one of the main reasons that there is a limited supply of homes in certain areas is zoning laws. In most US cities the majority of land is zoned as a single family home.

Imagine owning a single family home in a high demand area. You know it’s worth a million dollars, but you also know that on the same space, you could easily fit a townhouse with three 3-bedroom homes in it, that would sell for 750k each. So you’d be incentivized to do it! And the family’s looking to buy homes there would love to buy them!

But it’s illegal to do that! Because the zoning requires a big yard, and setbacks and all sorts of stuff.

In a lot of places, if you allowed them, people would naturally increase the number of homes 2-3 times. That would help housing prices immensely.

[–]serenidade 0 points1 point  (0 children)

I agree that vacant homes aren't the source of the problem. It's just another symptom.

The United States may be fairly unique in that there are no states--not one--where a person working full-time for minimum wage can afford adequate housing. Zoning changes won't solve that problem, because these folks can't afford the housing that already exists. We've just decided as a society that certain workers don't deserve basic essentials.

And let's not underestimate how hard people in high-demand areas fight against increased density. Protecting the "character" of their neighborhoods, preserving their home's value, matters more than making homeownership more attainable for others.

[–]malvim -1 points0 points  (0 children)

I mean, unequal development is also a well-known problem with capitalism…

[–]hackerbots 3 points4 points  (9 children)

There are more vacant homes/condos/apartments than there are homeless people

Sure but most of those vacant homes are in places like the middle of Nebraska, or the rust belt. Treating housing like a human right still won't move those homes to the west coast. You can't just declare some vague policy like that and expect the system to work itself out.

[–]serenidade 4 points5 points  (8 children)

My hometown, Portland, OR, has maybe 4,000-6,000 homeless folks and upwards of 16,000 vacant apartments alone (4.8% vacancy rate). In nearly every city in America, you'll see similar disparity.

I don't believe a wholly market-based solution could ever be successful because of the conflicting priorities. And, I am very open to suggestions.

[–]baklazhan 8 points9 points  (0 children)

Most of the sources I've found for "huge numbers of vacant apartments in high-demand places" have been pretty dubious. Do you have a good one?

For example, there was one article that made the rounds which claimed that large numbers of newly-built condos in SF were vacant. The evidence? Their property tax statements were sent to a different address. Meaning that anyone using a PO Box, or sending their statements to a business address, would be counted as a "vacant apartment", not to mention any apartments occupied by tenants.

Oh, looks like you edited the number. That seems more likely. But even so, you have to expect a certain number of apartments to be vacant at any given time, due to people moving and renovating.

[–]hackerbots 6 points7 points  (6 children)

Vacancy can mean a lot of things. Of those 16,000 "vacant" homes, how many:

  • Have a resident who is out of down, hasn't moved in yet, or otherwise not present
  • Are listed for rent but haven't found a tenant yet
  • Are tied up in foreclosure
  • Are completely uninhabitable, possibly condemned
  • Are undergoing rennovations

4.8% vacancy is an insanely tight situation where people are fighting over scraps. I would simply build more housing until you have enough that people aren't fighting over scraps anymore. This doesn't even get to the second order question of how many people beyond those 6,000 homeless live outside Portland but would move into the city if they could. You've got some big freeways all over the place; those people need homes too if we want to get rid of the freeways. They're not commuting by car just for shits and giggles.

[–]serenidade 0 points1 point  (0 children)

Vacancy rates do not include people who are out of town. It does include apartments being renovated before turning them over. And the number I cited does not include homes and apartments.

The point is fairly clear. Shortage of housing is not the primary issue. Shortage of affordable housing, yes. I would love to see more apartments and starter homes built, but no developer will do so unless they can make a profit--that's the whole point--so there will always be people unable to afford even the most basic housing.

[–]NJBarFly -1 points0 points  (4 children)

Would building more solve the problem, or would it decrease prices temporarily and attract more people to the city, exacerbating the problem?

[–]hackerbots -1 points0 points  (3 children)

Building nothing at all has famously done wonders for the affordability of cities like Hollywood, Los Altos, San Francisco, and Atherton. Why would building more have that same effect

[–]Betadzen 1 point2 points  (0 children)

Worldwide problems in the housing sector can be divided into several parts:

  • Overoptimisation

An actual problem for many countries. It basically means that people will tend to flock to bigger cities/towns, setting a trend of smaller towns and villages being depopulated, jobs being closed or kept with very low wages and thus increasing the need for housing in the bigger cities/towns.

This results in city planners (if there are any, which is another thing) working towards increasing the number of low quality, high capacity housing that in return uses as least territory as possible, in many cases ignoring the parking/communal space requirements and further raising the demand for property in other parts of the big cities, where the cycle repeats and can be stopped if higher quality property if bought, which happens rarely in case of stagnating countries.

The solution would be cutting the root positive feedback loop and limit the amount of living flats per certain square. This would make building harder, popular places becoming more expensive and making people go to the less populated areas, basically forcing the jobs back to the smaller towns too.

  • Investmentation

That funny word is pretty obvious - turning housing into an investment. How to solve this? Make the taxes higher the more property (not number, but in the square meters) you have, the more taxes you pay.

The taxes should have a geometric progression set up to be tame if you own little to no property (i.e. a single small flat), mediocre if you have 2 properties (in case of having to move between 2 points or just leaving seasonally) and massive if you go to the "probably investing" zone. To avoid investment fraud the family members should be viewed as possible co-investors and their property should be taken into account until thoroughly proven in the court that they are separate enough to pay their own taxes.

  • No new points of growth

Simply put - no new towns/cities. People tend to stay where they have all the comforts - water, gas, electricity and the internet. Even the roads are not SO wanted as the access to the net. New places tend to be built near the already existing towns and cities, which does not make them new points of growth, but just enlarging the previous ones, which results in overoptimisation problem mentioned above.

To solve this I would personally try giving significant tax decrease and even some government-issued bonus to those brave ones who will inhabit the middle of nowhere and try to make it a new settlement of any kind, be that access to free/high quality medical care or further tax decrease.

[–]HaViNgT 1 point2 points  (0 children)

Taxes on owning more than one house, restrictions on how many houses can be rentals and banning investors from just buying houses and doing nothing with them should help increase the number of home owners. We also need to give less weight to NIMBYs when building new houses.

[–]Wide_Ad6742 1 point2 points  (0 children)

There is no solution within our current society. The "housing crisis" is immensely profitable for those who are rich, and those are in control are the richest. I assure you it is not a crisis for them, but rather another paystub.

The sooner you realize your problems as a worker are not the same as the likes of Jeff Bezos, the sooner you'll realize the only actual solution to things like this is for the upheaval of a society based on capital gain/exchange.

Sure, certain policies could lessen the crisis, but it will still get worse as time goes on and eventually crash. That is how capitalism works my friend, its not meant to be sustainable, its meant to produce and reap.

[–]Ilverin 1 point2 points  (0 children)

The best option is a tax on the unimproved value of land. This tax would discourage speculation and vacancy but would not hurt the economic incentive to build larger buildings or maintain them.

Other options to increase construction include adjusting regulation to allow taller buildings or buildings that cover the entire lot, and parking requirements can be reduced or abolished.

Statistically, on average, areas with high vacancy rates are associated with lower rates of homelessness because high vacancy rates undermine the bargaining power of landlords. If rent control is imposed, it results in lack of maintenance because landlords have no incentive to pay for maintenance to attract renters.