It's not price gouging (as the article references) if it's a competitive market and there's no supply shock. It's just the bid up price of the good.<p>Landlords and owners will be able to command high fractions of average incomes as long as there is no slack in the housing market. If you nationalize housing and hold prices low, then there will be supply shortages where some folks will not be able to get housing who would happily pay your price. (This is a fact, not conjecture, and is easily observed in any affordable housing lottery in the United States.)<p>The only way to have low prices and also to satisfy the demand for housing (i.e. have each person who is willing to pay be allocated a unit) is to have slack in the market. No other solution will do it.
Give every home owner 30-year locked interest rate mortgages at <3%, then immediately raise the rates again, and no one wants to sell...ever.<p>It makes no financial sense to sell a property locked into such a low interest rate while rates are moving up.<p>Combine this situation with fairly stringent housing code requirements that make new housing difficult and expensive to build, and you have a recipe for low supply. Housing prices are exploding, and will continue to do so until one of the above situations change.<p>At the current rate, we will have an entire generation of renters unless they inherit property.
If building codes took externalities into account, housing prices would go down.<p>Boarding houses filled a need, but modern safety codes say every bedroom needs a window. I bet people would rather have a roof over their heads, without a window, than sleep outdoors.<p>Want to do work on your house in Seattle? Touch the roofline and you'll need obscene amounts of rework and basically a band new roof. There is a serious shortage of space, so let's make increasing the # of bedrooms in the city as expensive as possible!<p>We need regulation, but regulations need to be created balancing out real world needs.
I am really curious where this whole situation with housing will end up.<p>I am 30 years old, lived in more than a few cities/countries now and since I was a child, the cost of rents/houses have always been increasing, literally everywhere.<p>At what point it is too much? What happens then?
The last time we had a prolonged period of high inflation was in the 1970s. At that time not only did housing prices reach historic lows, but it became common knowledge that houses were depreciating assets. That is, without ongoing maintenance replacing the roof and plumbing as needed the house fails and becomes unlivable and useless as an asset. In the current environment blowing a bunch of loose capital or taking out a funny money loan to upgrade a kitchen or bathroom is common, but when interest rates go up and capital is not flowing freely that level of ongoing investment becomes a real burden.<p>But now we have had asset values rising out of control during a prolonged period of low inflation and effectively zero interest rates therefore it will be different this time? More likely we will again see the usual. House prices will stagnate while inflation does its work and people will come to understand that housing is not an endless free money game but in fact a depreciating asset that is difficult and expensive to transfer especially when it is transformed into a boat anchor.
If you live in California, property tax is assessed at purchase price + inflation rather than at current market price. Rent control basically extends this same (enormous) benefit to renters. You still miss out on goodies such as being able to transfer the cost basis to your children, but it seems like a minimally invasive way to level the playing field.<p>Repealing prop 13 is basically impossible because you have to deal with sob stories about seniors getting priced out of their homes. We should double down and enact rent control on the same principle.
Americans don’t want to live in small apartments, and large portion haven’t had to do so for 50 years. Building more small units with no yard to replace the housing that is most desirable is not something Americans will be willing to accept.<p>HN is biased towards tearing down beautiful old high quality of life neighborhoods for more multifamily housing.<p>I think that’s fundamentally the wrong approach, because that isn’t what the market wants. What we should be asking is:<p>* how can we construct new neighborhoods similar to early 1900s single family neighborhoods? Walkable urban cores surrounded by houses in small lots?<p>* can we decentralize jobs over more area to enable less dense housing options for more people—Why aren’t we building new cities?<p>* How can we make housing construction cheaper? Low density housing is generally the cheapest to construct by square foot excluding the land (see above on decentralization of jobs). Still, what makes new construction so expensive is extremely high labor and material costs. Why did a new house cost a few years’ average salary in the early 1900s, and 6-10x the average salary now?
Once all the bad actors get evicted (renters who abused the eviction moratorium and decided to not pay rent), and courts get caught up on landlord-tenant cases, prices will stabilize.<p>A lot of what we're seeing with COVID is a temporary overshoot in the other direction. Houses and apartment buildings didn't disappear during COVID. And you don't need a long elaborate logistic chain to be able to rent or lease a space.
> Likewise, the current bout of inflation operated as a propaganda for my friend’s landlord. And this isn’t the only sector where increased attention on inflation may be enabling further inflationary price increases.<p>I have seen in countless areas of the economy the prices only jumped up AFTER it was news.