But if you look at many cities you'll see that population has not grown significantly. What has happened is Airbnb which has made it viable to take a significant portion of the housing stock off the regular market. Just look at the inner cities of many places (e.g. Nice) in the off season, they are completely empty. The other thing is that rents going up dramatically is a global phenomenon, e.g. Australia's building industry is relatively unregulated and it experienced a housing boom (as did many places in Europe btw), and still rents shot through he roof.
The argument that high rents are mainly due to large regulations and lack of building is largely not supported by the evidence. I mean, in most Europe there was such a building boom (due to low interest rates) that sand for concrete was getting scarce.
> What has happened is Airbnb which has made it viable to take a significant portion of the housing stock off the regular market.
Suppose this is true. Then you replace that portion of the housing stock with new construction, and what problem is there? The problem is only if you're constrained from doing that.
> The other thing is that rents going up dramatically is a global phenomenon
There have been two major recent drivers of housing demand. One, the interest rates that until COVID were near-zero (which is a global phenomenon because capital markets are global). Two, since COVID, work from home causing people to move around and shift where the demand is. Also a global phenomenon.
Both of these can drive short-term increases in rents on the order of a few years, but they should also drive new construction, and then once the construction has caught up to the demand the rents would go back down.
Unless the construction isn't allowed to happen.
> The argument that high rents are mainly due to large regulations and lack of building is largely not supported by the evidence.
It very much is. You can take any two cities and account for things like median income and population density and when you're done you'll consistently find that the one with more restrictive zoning has higher rent.
The real question is do we want historical city centers to become attraction parks only for tourists or do we still want people to live there.
AirBnB and the boom of private tourism rental is transforming city centers in the former. New housing is constructed, just on the outskirts of these cities and push people off the city. This is bad for the dymamic of the city, this is bad for the environment when people pushed outside of city centers usually have to resort to drive to go to work...where they used to live, this is bad for kids and becomes a health issue when kids can't walk to school anynore and this is even ultimately bad for tourism itself as these places lose their soul and every single restaurant becomes a shitty tourist trap where no effort is needed or made in term of quality and service.
You can build real high density urban places outside an old city center and they can function quite a bit better in terms of neighborhood restaurants, schools, markets, etc..
There are plenty of places where the old city is not all that vibrant or interesting (and where a family is so rare the question is how to get the few kids to a lively district every morning) and I don't have a fiddle small enough for the owner's opportunity loss.
> Suppose this is true. Then you replace that portion of the housing stock with new construction, and what problem is there? The problem is only if you're constrained from doing that.
The problem is, as it can be observed in Budapest for example, that the new constructions focus on flats suitable for single people, or the short term renters, or the luxury segment, and the middle segment of the market is pretty much non-existent. Flats suitable for families are not being built, in the sizes and number of rooms where it would be useful you only have condos with rooftop terraces and such thins that unnecessarily inflate the prices.
The middle segment of the market 10 years from now is the same as the high end segment today.
Obviously when people construct buildings, they put in the nicest viable finishes and decor. No profit-seeking entity goes through all the effort of raising a structure only to finish it off with linoleum and shitty cabinets.
The lack of housing for families is a consequence of 4 roommates preferring cheaper rent in a 4bd than to rent 4 singles.
The difference between "social housing" and "luxury housing" is literally whether or not anyone is making a profit on it. A new apartment tends to be nice regardless of how its construction was funded.
In places where social housing works, the government builds enough new, shiny apartment buildings to keep the market rent low. Obviously, the construction of apartment buildings MUST FIRST BE EASY AND LEGAL for the government to do this.
It appears to me like we did manage to build from-scratch cheap housing at a profit in the 50s-80s in Europe. The key were cheap, dense, ~5 story prefabricated buildings, with some greenery around them. What is now known as commie blocks in the anglosphere.
Turns out that when you build something that's not particularly nice when it's new it becomes unattractive as it ages, which creates unattractive high-crime neighborhoods. Great to solve housing, but very unattractive for anyone else in the area. We basically stopped building them
I would actually say it's very rare for a building type to be in tip-top shape constantly and not fall into some dereliction if anybody but upper-middle income people live there.
At least in the US, a lot of the popular "historic" building types like the New York brownstone had a midlife period where they were deeply unpopular and ill-maintained.
I think this has more to do with the ownership/residence situation. There was a study done of a redlined neighborhood, mid-century, that was slated for razing as part of an urban renewal initiative. The residents were all working-class black families. The houses that were owned by the residents were well-maintained; the ones that were owned by landlords and rented out were of a condition stereotypically associated with urban decay.
This makes sense. Owners, even poor ones, will do their best to maintain their housing; less wealthy owners especially would know that they're likely stuck with their unit and should do their best to keep it comfortable. Renters have no incentive to (it might even be illegal for them to make improvements), and landlords are unlikely to cut into their profits if they can avoid it.
I would say that policy which encourages long-term renting - per-property, as well as per-renter - is deleterious to the socioeconomic fabric. The majority of a housing unit's life should be spent inhabited by its owners, and the majority of a person's life should be spent in a house owned by themselves or their family.
this is really dependent of the type of housing. midlife is when you start needing to replace things and the downsides of the housing become way more apparent.
To give the example, brownstones became unpopular as it became apparent their designs resulted in high heating and AC bills since they were pretty drafty and poorly insulated. Only when they blossomed into being "historic" did people start valuing them enough to start fixing the problems and restoring them.
I think the question is, the people who are a bit bad, but not really bad, like the graffiti tagger, the shoplifter, the guy who gets really loud when he drinks maybe throws a punch once in a blue moon, the drug addict that can hold down a simple job most of the time - do you want them to be homeless or do you want to build cheap housing for them?
This is Hacker News, where the rich must be taxed and penalized, CEOs, politicians and management thrown into prison for malfeasance, and there oughta be laws about everything, and HOAs are harshing our mellow.
So a "crime-ridden" neighborhood or "slightly bad" people perhaps relies on defining crime narrowly as things that poor people do
You can maintain that housing just fine, the market generally chose not to.
Further it’s not housing that creates poverty, and thus crime ridden neighborhoods. Somewhere is going to be relatively poor and thus both poorly maintained and crime ridden. Cities have seen the exact same building go through cycles of poverty to prosperity and back.
I recognize this is enormously frustrating for people with families, but the reason this is happening is because there's a shortage of housing for single people, and so while there is demand from families, it makes more sense for builders to meet the unsatisfied demand for single people first.
We have more demand for single apartments than ever before because of changing household size dynamics. People are staying single longer and also living longer and thus more likely to become widowed.
The only way out of this problem is to enable more building of housing to more balance the demand of single unit apts with larger unit apartments.
It's also worth pointing out in crowded cities like San Francisco that large numbers of single people band together as roommates and rent family sized units in order to afford rent, and due to a general shortage overall.
When those single individuals are able to move out into a smaller apartment, it starts freeing up the shared family size units.
Banning single units is extremely counterproductive and overall raises prices for families in situations like these.
So what happens if you don't build those flats suitable for single people. Where are they supposed to go? Are not worthy of housing? I really don't understand what the problem is.
The proposal seems to be to not build anything, because it's a problem if apartments for single people are built.
I think we all also agree that it's a problem if housing for families is not built. But the route to more housing is rarely through problematizing other types of housing.
The proposal is definitely not that. The route to more housing for locals is definitely by "problematizing" empty flats build for store of wealth by foreign investors, that I see locally.
The construction will focus on whatever is in demand. Moreover, expensive luxury units often make more family units available, because then the new occupants of those luxury units vacate the existing family units they'd have otherwise occupied.
The price they can sell the unit for is determined by demand. Profit is then the difference between that and their costs. But selling units with lower demand would then only be more profitable if those units also had lower construction costs. Which isn't really consistent with the practice of making luxury units.
No, at least not in the sense as what is in demand by the population, they focus on what is in demand by the investors. All new construction projects advertise themselves either as luxury or as investments. The fact that hosing is usable as investment is what has ruined the market, and the demographics of the west.
And if they use those units for that then the demand for new units from people who want to live in them will still exist and it will continue to be profitable to build even more units.
FWIW this is also very true in the United States, layouts of new units are generally completely unsuitable for families and that's why upper middle class but not rich enough folks in San Francisco tend to rent/buy condos in older buildings.
Different problem than in France I guess, where the square meterage is just too low, here in the US it's just wasted.
US flats generally have a lot more due to different social standards; the in-unit washer/dryer is not common globally, for example. Or apartments with double vanity bathrooms.
The families thing is also because all other things being equal, more bedrooms will lower the price per sq ft of a unit due to weaker demand; and right now studio and one-bedroom demand is so high that you could reasonably build a building full of them and generate profits.
> It very much is. You can take any two cities and account for things like median income and population density and when you're done you'll consistently find that the one with more restrictive zoning has higher rent.
If it were that simple can you give some good examples? Hong Kong has little regulation and crazy high prices, Tokyo is expensive for people on local salaries even if it looks cheap to us (and having structures depreciate to zero value over 20 years makes the market weird).
If it were that simple can you give some good examples? Hong Kong has little regulation and crazy high prices, Tokyo is expensive for people on local salaries even if it looks cheap to us (and having structures depreciate to zero value over 20 years makes the market weird).
Tokyo is considered to have relatively affordable housing.
Hong Kong's lack of regulation is not particularly relevant to the situation. It is mainly a political issue. Much of the land in Hong Kong remains unused.
Much of the land in Hong Kong remains unused because they are mountains. You already have pockets of urbanity, then a few mountains, then more urbanity, all connected via tunnels. Yes, you could always explode the mountains with a few nukes, but that sent very realistic.
I don’t know. I’ve been to the SAR many times and have never seen this available land for building. It might be hidden behind one of those mountains though?
Why don't the short-term rental enthusiasts just construct their own properties, instead of upending the regular rental market in pursuit of a quick buck?
To construct their own properties they would have to buy some existing land and build more units on it than there currently are. Which is the thing prohibited by zoning.
You clearly haven't spent much time in Europe. Almost everybody wants to live in city centers where work is, especially the loudest complainers. Nobody ain't got no time for 1h commute to work each way, thats a bad situation by European standards and measurably lowers quality of life.
Then there is the fact that city centers are choke full, no further place to build, what is there is often so old its protected from major changes by various rules and laws, and very expensive without exception. So where new stuff can be built is relatively remote. But then young folks complain how far that is from city center and their jobs, that they don't want to spend their lives commuting. Construction is certainly allowed, I haven't heard about single country banning it in any way, but folks want those central places for peanuts. Almost everybody wants them, still for peanuts. The fact is that even in proper communism stuff that was important, scarce and everybody wanted it was a prized treasure with hard competition and few winners.
Thats one of the things I see is changing with new generations - wanting it all right now, never happy, not much humility or hard work to get to some desired place. Then hard disappointment when reality ain't some fabulated tiktok feed. Ie I am working on setting up my = my family modest wealth and even after moving to Switzerland with pretty good job it will take me till 60 at least, even with my wife being a doctor. Young consider this a failure, maybe my kids will do so too but I don't care. Then folks vote for trump since he keeps saying how everything is shit, thats so easy to identify with. But for every unhappy western kid there are 10 or 100 ones coming from rest of the world working hard, not complaining, with laser focus on their goals. A bit of discipline and focus can get one pretty far, especially with such competition.
> what is there is often so old its protected from major changes by various rules and laws
Construction being allowed on a field three hours outside of the city is irrelevant. The problem is that there are laws that de facto or de jure prohibit the replacement of most existing buildings with taller buildings that provide more housing.
> But if you look at many cities you'll see that population has not grown significantly.
You've got cause and effect backwards here. The population hasn't grown because the housing hasn't been built for them. The city population would have grown if more housing were available, but instead what happened is that the limited supply drive rents up and kept some people out.
Separately, there's also too few hotels in the city to accommodate tourists, so some housing was converted to that more profitable use. It all can be traced back to not building enough to satisfy increasing demand.
Short term rentals fulfil important function. There is real demand for it. The problem is that it's expensive or just impossible to build anything and that it's very cheap to own.
The solution is known: significant land value tax and looser regulations to actually use the land. This will not happen though because of lobbying of property and land owners who enjoy their rent seeking. They will always manage to find another scape goat. One day it's flippers, next day it's Airbnb. Anything but land owners being forced to pay taxes to fund the area they own land on.
Average household size has declined due to changing social dynamics (longer times before marriage, fewer kids, etc.) so even if population is static you need more units. Spain went from 3 in 1990 to 2.5, which is a pretty drastic change.
I think the idea that Airbnb is to be blamed is not valid, or at least it doesn’t explain much. Keep in mind that property prices have been rising massively in many parts of the world including the oft-forgotten East/Southeast Asia in these discussions. Airbnb are not at all prevalent or even illegal there.
Correct. A phenomenon that IS global is the financialization or property (of which AirBNB is an aspect). Could it be as simple as, "Housing is now an investment, rent goes up because investors want returns, the solution is to limit or prohibit using housing as an investment"?
1) Housing is not land. Conflation of the two is incorrect, as any Georgist will tell you.
2) The commodification and securitization of housing as we know it today is absolutely new. This allows for new and exciting ways to distort valuations beyond intrinsic worth, which is the only way land and housing were assessed until recently. We did not have esoteric derivatives of insurance on mortgage tranches 100 years ago.
But thank you for the Orwellian insistence that we have always lived in this hell. Speaks to the scruples of those who would deny people dignified places to live because of how they're able to manipulate numbers on a screen.
Agreed that housing is not land, but when has housing not been traded, either for money or by favors? This is absolutely not new.
> This allows for new and exciting ways to distort valuations beyond intrinsic worth, which is the only way land and housing were assessed until recently.
Sure derivatives are new, and they caused a bubble in 2008 due to giving lots of people mortgages and hiding the risk of the mortgage default, raising prices. Are suggesting that's what's going on now? Because it sure doesn't look like that at all, it looks like lack of supply to meet people's needs, which is IMHO the fundamental immorality of the system as it stands right now.
The help we live in is because capitalists (ie homeowners and landlords) have control of the planning process which allocated how much housing there can be, and they have constrained the amount of housing. Yes, it is Orwellian and cruel. But it's also very important to realize that getting rid of derivatives will do nothing at all to bring down prices, unless there's a pricing bubble. Getting rid of the 30 year mortgage would bring down prices, but at the same time also reduce affordability of homes, so everybody would be in the same situation of a shortage.
The scrupleless housing deniers live in the homes next to us in cities, denying new housing because they are conservative and don't like seeing new things, and backforming reasoning like "it's only housing for people I don't like or can demonize." Sometimes these folks care about their asset price appreciation too (numbers on a screen) but a lot of it is simple fear of change.
>Because it sure doesn't look like that at all, it looks like lack of supply to meet people's needs
That is certainly the propaganda line that is being pushed in order to eventually justify public subsidies for builders. The shortage of affordable housing is commonly conflated with a mythical shortage of physical housing. There is a shortage of affordable housing because residential valuations have risen out-of-step with everything (including wage growth and inflation) except the desired ROI of the securities that they underlie. This is what we get when homes are more valuable as assets than domiciles, which, again, is emphatically not what they were in the modern past (even at the top end; robber baron palaces were not built as wealth stores so much as prestige amplifiers; they were not the investment (i.e., meant to be aold or borrowed against), but multipliers for the actual investment (one's social standing and influence). They often only left the family at a loss.).
We don't need a massive amount of new housing. But I agree that the solution will involve, for once, throwing homeowners rather than homeseekers under the bus.
The housing stock (HS) was taken off the regular market not for free. Travelers paid through the nose for this HS and for other services catering to travelers. That money should have been used to replenish the HS.
My very much European country has been building like crazy for the past two decades. Real estate still shot up in lockstep with the rest of the world because you can't and you won't build faster than people who see homes chiefly as an investment buy property.
It got to a point where construction isn't even really providing housing, because the units are unusable for regular people. There's an apartment block of just studios in my neighborhood which are not up to code (too small) but were grandfathered in as construction started before it changed. The change was enacted so that developers would stop making such useless buildings.
China built enough to house its entire population twice over. Didn't help them keep housing affordable just how the price of gold goes up and down despite a steady increase in supply.
We're well past the point where naive supply and demand is effective. There's infinite, induced demand.
If those buildings are “useless”, how is the developer going to make money on it? That doesn’t pass a basic smell test.
Your example about China is pretty bad. They moved most of their population into cities over the past 50 years by massively building housing and making it affordable to their middle class.
Young people struggling to afford their own place in a tier 1 city in China is not evidence of it failing, it’s evidence of tenants being picky.
China’s housing has also had several bust cycles where the prices came down. Government intervention and bailouts prevented it from being as obvious, but supply and demand most certainly work.
> If those buildings are “useless”, how is the developer going to make money on it? That doesn’t pass a basic smell test.
By selling them to someone else who intends to sell them to someone else, just like every other commodity on the market. Real estate as an investment is less a bet on rents and more a bet on land value.
If they expect the rate of return to exceed what they could get elsewhere, of course they will. Depending on what the investor expects to happen to land pricing, the math can pencil out just fine on letting an asset sit until someone's willing to pay enough for it. There's no deeper story here - invest X on the assumption it turns into Y, where Y is sufficiently larger than X to make it worthwhile. The fact that it's housing, as opposed to bonds, futures, paintings, crypto, whatever, is an interesting fact, but not really one that's relevant from a finance standpoint.
How do people make money on crypto? Just sell it to another sucker. I've seen listings titled "Sale! Ten studio apartments!" - someone was literally selling all of them in one go.
Among the upper middle class around here it has become fashionable to have real estate investments - interestingly since recently also in Spain - because it's seen as a safe bet and, gradually, the default.
As for China: over 70% of household wealth there is tied to real estate. Compare that to the US, where it's less than half of that and even if you assume pension funds pour all their money into real estate, it's still less.
All those busts didn't decrease prices long term. Someone holding on to their housecoin through these cycles would still stand to gain.
> As for China: over 70% of household wealth there is tied to real estate. Compare that to the US, where it's less than half of that and even if you assume pension funds pour all their money into real estate, it's still less.
That feels wrong. For most households, their biggest investment by far is their house. Few households which do not own a house have any kind of investment.
So if only 35% of all household wealth is in real estate, I would wager you have some outliers skewing the numbers (i.e. billionaires).
(This is not a criticism, just trying to reconcile the numbers)
If those buildings are “useless”, how is the developer going to make money on it?
>Build for $1 mil.
>"This building is worth $2 mil! Give me a loan with it as collateral."
>Use the $2 mil to invest in something else.
Rinse and repeat. This is also the reason why CRE valuations have hardly fallen despite WFH et al. Everyone involved understands that valuations cannot fall, because more than the value of the buildings in question hangs in the balance.
I don’t think you thought this through. The building is only worth $2 mil if there are people paying rents for the cumulative similar units.
A bank will absolutely not give you a loan for $2 mil on a regular residential building unless there is supporting evidence for the market bearing in that. It’s far too much of a risk for the bank otherwise.
I think the gap in your mental model is that you think banks agree to owner valuations and fork money over without a second thought.
I think the gap in your mental model is that you think that these businesses have any scruples whatsoever. Banks will absolutely agree to improper valuations if it's to their strategic advantage. Realize that collateral has to keep its value over the length of the loan, but banks are lending based on the current/projected value of that collateral during the time that they expect to hold the loan. If they can clear the loan from their books before the collateral value drops, their risk is low; they will make that loan.
And I just explained how the risk is "low". The loan is not upside down when they sell it; they have nominal proof that it's "worth" $2 million (through dubious valuations, because it's in everyone's interests to pretend that that that valuation is solid (this is where scruples come in).
You also do not have to take my word for it since I cited one example of many where this actually happened.
Update your previously inaccurate world view, please.
The entity purchasing it has to think they can get the asking price for it.
The bank will not take the risk acquiring it unless they think they can actually sell it for that.
So if the bank thinks they can actually sell it for $2 million and it is selling for $2 million, you’ve just described a $2 million property.
What I’m telling you is that those buyers disappear at any large scale because buyers of buildings like that need ROI. It’s only in really hot markets where deep wallet flippers will tolerate taking a bet on a building that cannot generate revenue to support the note.
What you linked to is a rare case. It doesn’t happen at scale because the system doesn’t close.
Chinese housing does not become cheaper during bust cycles. Instead, sales volume falls via sellers reluctant to sell and real estate companies (mostly owned by red families) reluctant to advise lower prices and less motivated to show property that is priced less. It’s an incredibly distorted market for sure, and it’s not just first tier cities that are expensive (my partner owns a villa in a tier 88 that’s supposed to be half a mil).
Unrenovated flats are mostly there for speculation purposes, think of them as gold to be traded rather than something to live in.
> There's an apartment block of just studios in my neighborhood which are not up to code (too small) but were grandfathered in as construction started before it changed. The change was enacted so that developers would stop making such useless buildings.
Apartments are expensive. Small apartments are great. How many square meters are you calling "too small"?
> Real estate still shot up in lockstep with the rest of the world because you can't and you won't build faster than people who see homes chiefly as an investment buy property.
Yep. There is no way Europe can cope with the real estate bloat introduced by the American money escaping the US investment market because of the 'less than optimal' returns there. We are just ending up with gigantic bloat because the American investors are bringing in their bloated cash and parking it on European housing. Doing a quick arbitration at the cost of pushing Europeans to homelessness - not unlike what they did to the Americans in the US.
> Real estate still shot up in lockstep with the rest of the world because you can't and you won't build faster than people who see homes chiefly as an investment buy property.
Excellent put. The bitter pill underneath that though, would seem to be that we may need to reconsider to what extent real estate should be assumed to be an investment that always appreciates in value.
Reconciling that with families very reasonably expecting to be able to build or maintain wealth through their largest lifetime purchases is... never going to be a pleasant discussion.
The catch here is that the people who first get to buy that property usually already have tons of money and just use it as an investment, either to resell, rent it out, or use it for AirBnB & such. Solving that problem isn't very straightforward.
Where I live, for example, the government has been debating taxing non-first properties up to 50% (the yearly real-estate tax). The idea of the proponents is to make it so unaffordable to own more than one property that people would stop buying it as an investment or sell off existing ones. But the issue is that the people who already own that estate (or have the money for more) would still be better off by just raising the rent to cover the increased tax instead of selling it. So it once again fails those who end up paying the rent.
The only real solution seems to be government-funded developments with restrictions put in place on who can buy them, rent them out, etc. But to do that the government has to afford it somehow. They also need to put size minimums in place, otherwise we end up with the same just studios situation, which seems to be a thing with a lot of public-funded developments (perhaps because then the politicians can claim they "built X flats"?).
> Europe will do everything, except build more housing supply, to lower rents.
I recommend you open Google maps, google Barcelona, and look at it. The whole city is a dense urban area, surrounded by steep hills. The whole city is covered with >6 story apartment blocks. This isn't the US, where you need to drive 8h to the nearest town.
Barcelona is one of the densest cities in Europe, probably THE densest if you include L'Hospitalet. It would rank top 5 in density when compared to any US city
But it’s trending down (fairly dramatically) over time.
I couldn’t find stats quickly for Barcelona but in other places the amount of space per person takes up in housing has gone way up. People now simply won’t accept housing conditions that were normal in the past.
If more housing doesn’t get built but each person demands more space faster than the population declines the outcome seems obvious.
Yes. Because apparently, Europe has to meet the bloated housing demand that is being caused by American and foreign investors so that they can arbitrage and make $$$ by gentrifying the locals...
You're repeating propaganda from the people who want rents to stay high.
The highest demand areas are high density areas. If you convert a medium density neighborhood to a high density neighborhood, the demand increases in that neighborhood, but the supply increases city-wide.
The reason rents increase in that neighborhood is that even though rents in high density areas have gone down and rents in medium density areas have gone down, that specific neighborhood has gone from a medium density area to a high density area and that limited amount of construction by itself isn't enough to cause high density areas overall to cost less than medium density areas had.
But notice what effect you're having on rents. The medium-density area had been $3000 units and high density units had been $4000. Now it's high density units, high density units city-wide have fallen to $3500, medium density units city-wide have fallen to $2600, the amount of housing stock has increased by thousands of new units, and you have people telling you that you've done something bad because the new $3500 units are more than the old $3000 units.
Then you do it again in another neighborhood. $2600 medium density units get converted to high density units, high density units go from $3500 to $3000, medium density units fall to $2300. The high density units are now as cheap as the medium density units originally were, but you're again accused of increasing rents from $2600 to $3000.
By the third time the high density units are now less than the medium density units originally were -- if you haven't already been assailed by local landlords using these arguments to prevent this from continuing -- but once again you're replacing $2300 medium density units with $2700 high density units and the claim is that you must be stopped to prevent rents from going up.
> You're repeating propaganda from the people who want rents to stay high.
OK. Give me an example of a city that has:
1. Growing population.
2. New dense construction.
3. Decreasing sale prices (or at least flat prices).
I now have a real estate database for all the US real estate transactions since 1995, Japan since 2000, and for parts of Europe. I was not able to find such an example in this set for a city larger than 200k population.
And I'm sorry, I'm struggling to understand the logic in your post. In reality, rents are not a good indicator short-term. They are too mercurial and are affected by transient effects. For example, rents in SF fell by 30% during the pandemic. And not as a result of new construction.
If you want a more reliable indicator, you can look at 3-5 year sliding average for rents, or at sale prices.
There is no expectation that population growth would coincide with decreasing sale prices. The premise is that new construction could allow population growth without a large long-term increase in price. And a still-growing population would expect to see at least a temporary price increase as new construction lags behind population growth.
It isn't even expected that the long-term prices would be exactly flat, because higher density construction costs somewhat more (e.g. taller buildings have to be made of steel rather than wood), but you want that rather than demand permanently outstripping constrained supply to set the ceiling on the long-term price increase.
> For example, rents in SF fell by 30% during the pandemic. And not as a result of new construction.
SF had negative population growth during the pandemic. Prices reflect supply and demand, so you can also get them to go down by reducing demand, but that isn't typically the one you want.
> And I'm sorry, I'm struggling to understand the logic in your post
Suppose you have a method of alchemy that can convert an ounce of silver into a pound of gold and an ounce of bronze into a pound of silver. If you do it, the price of each ounce of the metal you converted has gone up, because it's now the more valuable type. People then say "why are you making the metal cost more when we want it to cost less"?
But if you do it a lot, the overall market price of silver and gold come down, because every time you do it you're creating more and reducing their scarcity.
> In reality, rents are not a good indicator short-term.
In reality, everything always has a lot of confounders. For example, rents and new construction aren't independent variables -- when rents increase it will tend to cause a corresponding increase in new construction unless it's inhibited by something, and indeed high rent (i.e. demand in excess of supply) is the primary driver of new construction. So if you look for the places with new construction, of course they'll be the places with higher rent. But the conclusion shouldn't be that wet streets cause rain.
Tokyo. It continually rebuilds, rents are affordable to people who work there.
Manhattan does not build anymore, but people still want to live there, so it gets ever more expensive.
Prices are merely an indication of how many people want something but can't get it.
Your observations on density only apply is building is highly restricted to keep people out. And if building is suppressed everywhere, dense places will just be the indicator of future rises to come in less-dense and less-desirable places. Just as we have seen recently.
All of what you said applies to only places like the US or, maybe Russia or China that has enormous amounts of space to build.
Europe is not like that. Texas is half the size of Entire Western Europe. Even worse, the Mediterranean is basically river basins that are squeezed in between mountain ranges and all the available space has already been built with at least 8-10 story buildings. There isn't more space to build even for the local population. Barcelona is one of the best examples. There is no way in hell there can be more space to build to meet the artificial demand that foreign investors are causing in their frenzy to make a quick buck.
First, the Mediterranean has scarce space and scarce reliable landscape that can support that kind of tall buildings, second, nobody has to turn their cities into Manhattan to be able to prevent American investors from gentrifying their own people.
> You're repeating propaganda from the people who want rents to stay high.
I think you need to take a break and look at the real world. OP is right, and you don't understand it because you are oblivious to how things work in practice.
The bulk of this sort of investment is focused on a gentrification strategy, where cheap residential buildings in low-income neighborhoods are bought to flip them to cater to a high-income market. Often, occupation density is also lowered as the number of apartments per floor is reduced so that the real estate investors can market larger, spacious apartments.
The end result is that many low-income families are priced out of the market to make room to fewer high-income households. That's the reality of it.
> The bulk of this sort of investment is focused on a gentrification strategy, where cheap residential buildings in low-income neighborhoods are bought to flip them to cater to a high-income market. Often, occupation density is also lowered as the number of apartments per floor is reduced so that the real estate investors can market larger, spacious apartments.
What you're referring to is the type of construction which is allowed under the existing regulations -- increasing density is prohibited so the only way to profitably operate a construction company is to make the same number of units into more expensive ones.
They don't convert a smaller number of units into a larger number of units because that's the thing they're not allowed to do, which is exactly the problem. Buying a 5-unit building and turning it into a 50-unit building would otherwise be quite profitable because you get to sell 10 times more units than you bought, which is profitable as long as the price of a unit is higher than the construction cost.
A lot of this stuff just comes off as highly abstract and ideological, banging the same one-note drum over and over and not listening. Have you ever been to Barcelona? It's a real place, not just an abstraction. Here's a good photo to get a sense:
A few things to point out is the city is already highly dense and meticulously planned (numbers suggest Barcelona has ~50% more people/sq km than NYC - it is far more densely populated than any city in the United States), and there's relatively a lot of property available for sale, but it's quite expensive if you're on a European salary. Arguably there's failed market clearing. And units are quite small by American standards, not at all something you can subdivide 5 units to 50 unless people are going to live in coffins. Final point is a large number of the cheaper properties will say "illegally occupied", because they have a (usually absentee/investor) owner who left the place empty and squatters have taken over who can't be evicted under Spanish law.
It's a complex situation and many more pages could be written about it by people who are on the ground and have ideas, but this one-size-fits-all "just build more density!" solution, while often reasonable in the (globally bizarre) American context with lots of land, car culture, deserted crime-ridden downtowns, etc, is out of touch with the complexity of what's going on in Barcelona/Spain/Europe more broadly.
And yes they could also just put up lots of 50 story steel skyscrapers to blot out Sagrada Familia, but then it would no longer be Barcelona.
> What you're referring to is the type of construction which is allowed under the existing regulations
No. I'm referring to the kind of gentrification that takes place in the real world.
Retrofitting a residential building is far cheaper and profitable than a full demolition followed by a rebuild. That's what real estate investors go for.
Also, there are limits to which you can increase the number of floors in a building. These are not whimsical, arbitrary, "oh it's just regulation" rules. They reflect real world constraints such as water supply, waste management, access to emergency response teams, even parking. Even the impact on environment and quality of life is considered. Rules like the 45 degree rule don't just happen. Why do you think the Dubai-type bullshit happened?
You guys talk a lot about regulation but you know nothing about it and worse don't even have the intellectual honesty to try to discover what you don't know. You just yap away about stuff you know nothing about, and come up with conspiracies to hand wave over your voluntary ignorance.
> No. I'm referring to the kind of gentrification that takes place in the real world.
Because that's what's permitted under the existing laws.
> Retrofitting a residential building is far cheaper and profitable than a full demolition followed by a rebuild. That's what real estate investors go for.
Suppose that it costs a million dollars to build a 5-story building with 20 units. Furthermore, a quality unit is going for $500,000, and there is an existing 2-story building with 8 dilapidated units that you can buy for three million dollars.
You can update the units cheap -- let's say it's even free -- so then you turn the $3M into $4M.
But if you spend another million dollars, you get 20 units instead of 8, and turn your $4M into $10M.
When the price of a unit is high compared to the cost of construction, that is obviously the more profitable thing to do. Unless it's prohibited by law.
> Also, there are limits to which you can increase the number of floors in a building. These are not whimsical, arbitrary, "oh it's just regulation" rules. They reflect real world constraints such as water supply, waste management, access to emergency response teams, even parking.
At the current growth rate, the water treatment plant will be at its design capacity in three years. Therefore, prohibit any additional growth to preserve the status quo forever.
That is a tyrannical attitude.
If the water treatment plant will be at its design capacity in three years then the government's role is to issue a bond to fund an upgrade and then use the property tax revenue from the new construction to pay for it.
Nope. Rents dropped because the _population_ in Austin dropped. It recovered to the 2019 level only the last year and is still below the peak 2020 level (stats are taken at Jan 1).
In some European countries population growth is only due to immigration. In Spain almost 19% of the population is foreign-born and annual population growth is >1%!
It's quite odd that everyone is concerned about the "housing crisis" but few people want to mention the biggest root cause, even here which is supposed to be about curiosity...
Housing problem comes from the job market. Cities with good jobs will attract people and the price of renting/buying will go as high as they can bear. Most of the benefit will go to landlords. Moving to a better job market will make you little benefit because your increased pay will be largely swallowed by the cost of housing.
The problem is that employers want their employees physically present at the office, and roads can only carry them so fast, so being closer to job opportunities will reflect on the housing cost. Maybe the solution would be to make workplaces more widespread, improve transportation to expand commute reach under 30-60 minutes, or support more remote work.
Population can't grow for ever. We'll need to learn to live with a constant population (and even decreasing for some time) at some point in any case...
European governments do not want to face this reality and prefer to try to convince people that immigration is good (polls show that the people increasingly disagree).
Nope. "Urbanist advocates" can create real estate bubbles even with a shrinking population.
Case in point: Tokyo. You just need to make sure you _have_ to live in The City, and that there are no other options for you. And a shrinking population makes that _easier_.
It's an HP Z8 G4 (dual-socket 18-core, 3 GHz Xeons, 24x32GB of DDR4-2666, and then a crappy GPU, 8TB HDD, 1TB SSD). It can accommodate 3 dual-slot GPUs, but I was mostly interested in playing with frontier models where holding all the weights in VRAM requires a ~$500k machine. It can run the full Deepseek R1, Llama3-405B, etc, usually around 1-2 tokens/sec.
Considering the trouble that more established insurance companies have with large natural disasters, I would be a bit wary of a startup for something catatostrophic like earthquakes
I just looked into it. Their max payout appears to be $10,000. That's not a lot. It's not to rebuild your house or anything, it's just to pay for a hotel for a while and maybe some new food.
I always considered earthquake insurance a waste of money. The premiums are high and deductibles are quite high so a quake would have to be very strong to do enough damage that cost of repair was more than the deductible. And if that was the case then there would be widespread damage and a huge amount in claims. Seems unlikely even a big insurance company could remain solvent and pay out.
Agreed. There is no way that a startup is capitalized enough to survive a payout. Their CEO and investors must be sweating bullets over the next few days, worrying if an earthquake hits closer to LA
I'm sure they're just reselling a real insurer's product with some marketing and a web 2.0 website. No way an undercapitalized startup is allowed to actually underwrite their own insurance contracts.
> Jumpstart is a surplus lines insurance broker working in full compliance with applicable insurance regulations. The insurance described here is effected with certain Underwriters at Lloyd's, London.
That is a popular myth but really the USSR military spending sloped up independent of external factors and while pervasive never moved the needle in terms of political problems.
Far more destructive we’re long term structural problems (inability to provide consumer goods, lack of various sorts of personal freedoms). These had been tolerable in extremis (post revolutionary fervor, rapid growth/modernization, a big war) but increasingly destroyed enthusiasm and then support formhe regime. Low oil prices were the trigger.
Also for perspective: Russia’s economy is about the same size as Australia’s (but has 6x the population). This doesn’t give them a lot of money to work with; asymmetric warfare is much more cost effective.
Russia has already signaled openly that they know they can't keep up on spending with the US and China. Their forward budgeting statements indicate a halt to the formerly rapid military spending growth. China is what this treaty withdrawal is all about.
Pretty soon the US will be adding a new Russia every year in new economic output. Russia is not a competitive threat with the US overall, only on select regional matters and on a few important weapons systems. The dumbest thing the US could do, is worry about bankrupting Russia.
And if the US wanted to do that, there's only one good option: tank the price of oil dramatically by pushing up the value of the dollar. That won't work very well here, because the dollar is already relatively high, the US is now vulnerable on oil as a huge industry (and will be more so in the near future), and inflation adjusted (eg back to 1995 or 2005) oil is almost cheap right now (and it's not tanking Russia, they can roughly hold their ground at current prices). The dollar is how the USSR was bankrupted, as they over-bet their economic security on oil output from 1970-1990. Russia is being far better run with regard to macro economic choices right now than the USSR was, which limits their exposure to bankrupting shocks (again, short of eg sustained $20 oil).
The primary hope on the containment front is probably that Russia's need to raise or at least maintain its social welfare output (against a zero growth economy) is checked by oil prices (held down by US shale output), forcing a choice between military spending and social welfare. That's happening right now and has badly soured Putin's popularity at home. Oil goes to $110 and Putin gets a lot more money to play with while also placating domestic demands.
Long and boring necropost, but still I want to add some PoV from inside.
By numbers provided by Rosstat Russia looks somewhat stable, but in reality internal economic there is going to break if it would be treated the same way as for now. Some of the problems:
The real inflation rate is way higher than salary grow, especially in 60-th percentile and below which means 60% of active workers who already have income lower comparable to China are become poorer each day.
Whooping 11+% rate for loans on housing: with quick calculations a family of two working parents who can't apply to a subsidized loan (less than 2 children or both are older than 35) would have to pay 61% of a single average net salary each month for a 2-room apartment outside of Moscow or St. Petersburg and 10% for housing expenditures, so they both have to live on $729 in current exchange rate, which would be not enough to raise a single child.
There was a historical event on the 3rd of December, 2018: average price for Regular Conventional gas in US went below the correspondent mark of gas in Russia and is still lower. Why? Russian oil companies (there are only 3 of them as of now) haven't heard of work efficiency and ROI, but can make citizen pay to them.
The two biggest expenditures in budget from 2017 are military (with other secret parts) and current pensions, the latter is a 20-year of fkups in pension reforms, currently each worker indirectly (employees pay these to government in addition to wages without any reports to employers) sends 22% of their salary to pay current pensions and that covers 30% of them.
Social welfare spending? Education and science fundings were cut twice last year.
Would provide sources if someone asks, I just don't have enough time to lurk back on them to get the links and most of them would show you texts in russian anyway.
The neocons assume the Russians can’t match the US for “tactical” nuclear capability and will stay put if, say, a small tactical nuke is used against an ally.
But the Ruskies have also been very clear that they are not going to spend insane amounts of money on an arms race. They’re stance is to go for the big fireworks early on in a potential conflict.
Also, don’t underestimate their arms industry. Their GDP is low, but their PPP GDP is not. They can build a twin engine fourth or fifth gen fighter at a fraction of the cost it takes us. A lot of the research for weapons has already been paid for by the USSR. They’re the second largest arms exporter brining in cash.
Also their weapons philosophy is to favor brutal efficiency. Their ABM over Moscow doesn’t try to hit a bullet with a bullet. It just set off a nuke in the skies over Lithuania.
Finally, weren’t the sanctions supposed to have bankrupt the Russians by now? They have very low debt, huge reserves (in Au, not their adversary’s paper).
Never mind balancing the budget; we can’t even pass a budget. The fed is forced to keep interests rates near zero because otherwise interest payments on a > 100% GDP debt become ruinous.
Who are you saying is accused? AT&T or the customers? I don't believe there is any legal proceedings related to any of this?
I think OP's point was that if this bothers you and the recent de-platforming of people and websites does not, maybe you should rethink your position. But maybe I misread OP?
