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This is a pretty good read and explains that it's not a supply issue.
https://pluralistic.net/2024/10/24/i-dream-of-gini/
A paradox: in 1970, everyday Americans found it relatively easy to afford a house, and the average American house cost 5.9x the average American income. In 2024, Americans find it nearly impossible to afford a house, and the average American house costs…5.9x the average American income.
Here's the nested article, i.e. the article your article is talking about: October 23, 2024, By Blair Fix; The American Housing Crisis: A Theft, Not a Shortage
Reads very well, really puts this in perspective. Extreme income inequality is the root of most Americans problems.
I like that the line you quoted from the article is pretty much a bait and switch.
*I kinda dig the layout of that website.
Maybe because with Airbnb instead of renting out a house for $2000 a month to someone looking to live there they can rent it out for $1000 a week to tourists and double their profit.
a home I bought in 2010 for around 300k is now 600k+, I couldn't afford it now, even though it's exactly the same. we upgraded and expanded the kitchen while living there, added a bathroom. so... yeah, wtf.
I think you elude to it, but just to clarify...VC's and companies have been buying homes like crazy, thus reducing an already anemic inventory.
AirBnBs are one reason. My wife’s home town is trying to pass a law regarding short term rentals because close to half of the houses in town are airbnbs. A developer started to build a new housing development specifically to be bnbs.
Another reason is corporations are buying property as investments.
Also private investors from around the world are buying US property. Americans think of their homes as wealth building investments and it turns out that they are not the only ones thinking that. Housing markets elsewhere are too regulated or volatile or stagnant but snapping up US housing has in a way created its own motivation. The more people do it, the better the returns are on doing it. It’s a bubble, in other words. However that bubble has resisted popping because historically, housing has never been priced according to its true value. These days we’re seeing prices rise on things like food and housing because shit, what are you going to do, not live and eat?
The biggest reason that is often overlooked is wealth inequality. The rich keep accumulating wealth, and real estate is a scarce form of wealth that holds value, produces a return, and can be accumulated. It probably accelerated recently because of the large amount of money that was dumped into the system around covid; that was yet another opportunity for the wealthy to grab a bigger share of the pie.
If things keep going this way, we're going to get into a situation where regular people don't own houses anymore, and rent is a much larger percentage of your income.
Greed. And the genuine belief that "the world is not enough"
Land is the only commodity that's actual worth anything, perpetually.
True but not the cause of this massive change in real estate values.
True, it's not the only thing, But a big part of it.
Investors.
China's entire modern "economic miracle" is founded on housing as an investment vehicle.
You can in part blame Canadian Conservatives in BC, specifically Bill Vanderzam, Christy Clark, Gordon Campbell and Kevin Falcon; as well as federally, Brian Mulroney and Stephen Harper, for importing this behaviour and concept from Asia and its rise here. Initially in the late 1980s and early 1990s it was about attracting the elite of Hong Kong, who were afraid of what the handover of Hong Kong to the CCP would mean. (And rightly so, as it turns out.)
Vancouver BC is infamously unaffordable, and its entirely because of investors, both national and international using its real estate as a ridiculously effective investment vehicle. If you had purchased a home in the suburbs for 500k in 2006, that home would be worth well over 2 to even 3 million dollars today.
When Vancouver started capping out and hitting limits investors moved on to apply the same practices all over the continent.
The answer is always speculation investment. People are on average richer and real estate is the only trully limited economic resource as we have limited land especially in desired locations.
Seriously lookup how much of real estate is uninhabitable.
People are richer, the tech is better and everything we know about economy would indicate that real estate should be more accessible but that's not the case because the market is manipulated.
The best part? If you invest in a stock index you'll almost always out do real estate ownership almost anywhere in developed world. So people are hustling this stupid game while they could just sit back and watch money do money things.
The commercial real estate market has taken a big hit since COVID and RTO is generally unpopular. In North America this has led to a shift to buying residential housing for rental or resale.
I get roasted for this every time I mention it because I think people on sites like this generally fit in this category and feel personally attacked, but I honestly believe a large part of it is from WFH becoming more widespread during COVID. People were able to leave the large cities where their jobs were all located and could move wherever they wanted to so that competition for housing drives prices way way up. The few friends I do have all work in software development and all moved during COVID away from their offices and into houses. They all had a similar story "the realtor told me any house that's on the market for more than 5 days (that's crazy crazy short) has a major issue, stay away from those."
Tie that into the expansion of investment companies buying houses with the intent of renting them forever and the NIMBYism that keeps new construction from being made because "My PrOpErTy VaLuE!" and it's just a recipe for disaster...
I hate that I'm going to be stuck renting someone's garage or basement and paying their mortgage in rent prices for the rest of my life...
You get roasted because it's at least not entirely making sense. Prices in cities went up a lot as well. That's not due to people moving away. I'm staying in my apartment that's too big for one person because I would have to pick one half the size to at least keep my rent at the same level. And I'm one of those software dudes.
Yeah, it has more to do with huge corpos like Blackrock and Zillow buying up every piece of property they can physically get their hands on than the WFH crowd ever could drive the prices naturally. Here's a link about How wall street put homes for rent.
Except the rapid real estate inflation started years before COVID. WFH may play a part but it’s hardly a major reason.
Yes, people from cities moving to rural towns does impact housing prices which should be a net benefit for the town as it bring in income from outside. It could be a negative when the volume of outsiders is high enough to displace long term residents, but in a vacuum people moving into an area that isn't overpopulated already should be a good thing.
Now outsiders moving in, then buying up homes to make into BnBs, plus companies buying up homes combined is probably going to cause problems for existing residents and maybe that is what people are pushing back on. Being one part of a larger problem that wouldn't be a problem if only their part was happening.
Yes, people from cities moving to rural towns does impact housing prices which should be a net benefit for the town as it bring in income from outside. It could be a negative when the volume of outsiders is high enough to displace long term residents, but in a vacuum people moving into an area that isn’t overpopulated already should be a good thing.
It's absolutely a negative for those in the area. I'm literally priced out of the entirety of long Island now. There is literally nowhere I can afford that isn't in an uninsurable flood zone and I'm too "worthless" to move. Anywhere with work for someone like me is just a shithole city so I just move from renting to renting in a worse environment. :/
TIL Long Island is a rural town.
The east end actually is considered rural, at least according to ups/postal deliveries lol
I remember back before 2020 there was tons of mountain and cabins and homes and stuff like that anywhere from 2:50 to 500K. Now you won’t find a single one less than 800k…
WFH and good satellite internet were a bit of a game changer here. You could now live in a remote place and work a job with a high income.
Regular homes are just as bad. I’m seeing homes in my area that sold for around $200 to 300K in 2019, now they are 500k and above.
Supply and demand here. There aren't enough houses being build for people (and private investors) that want to buy them. The price rises.
I don’t understand how this makes any sense? Salaries were not doubled, but somehow the price of all homes are now twice as much.
Lots to unpack with this one. First, some people's salaries were doubled. There has been some niche sectors of industry that have seen large year over year increases in income, specifically some STEM fields. Second, housing price rises are not linear across all pricepoints. The cheaper house are going up significantly faster than more expensive homes. Why? Because there are more people shopping at the lower pricepoints. When we bought our new-to-us house a few years ago buying a house $150k more expensive than the house were were living in got us very little more house. However, buying a house $250k more expensive got a lot more house (larger, better neighborhood, more outside space, etc).
Because houses past your primary residence are not taxed enough. Houses you own should be taxed at an exponential rate. Primary residence means you live there >80pct of the year.
Is there a limit to the size of your primary residence?
One million square kilometer!
It varies by region and country but the big underlying factor is not enough new homes are being built. It's creating an artificial scarcity which is driving up prices. Some other factors come into play depending on where you live. For example, I've read in America that a lot of the homes are being bought by trust funds and big corporations that can just overbid everyone. Now there are even less viable homes to sell. Here in Canada, we have a big problem where our federal government brought in a large amount of immigrants for its Temporary Foreign Worker program and its foreign student programs which created a big spike in population, especially in the major cities. The local governments are responsible for house building and didn't do anything about accommodating a bigger population despite them knowing it was coming.
Corrected, thank you person with the best and most relevant username :).
Housing shortage - not building enough homes. More people. Costs to build rising.
mixture of housing supply shortage, empty homes, fucked investments, a bit of zoning laws, and nimbyism, and airbnb
housing supply shortage
younger generations want to live in cities because thats where both employment and "fun" is reletively speaking. the demand is very high for limited space.
empty homes
in some areas, there are homes that are completely empty, some due to negligence, inheritance and some just to artificially decrease supply. to put an example, San Jose, CA legitimately has more empty homes than it does homeless.
fucked investments/nimbyism
some people see housing as an investment instead of putting it into stocks. the investments keeps proces high because its seen as profit rather than a basic necessity to live. people who own houses will use all their power to prevent more houses to be built because more home lowers procing because of more supply.
zoning laws
some places, they restrict building to strictly residential or strictly commercial building. as WFH becomes more mainstream more land needs to be made as residential land. or remove the zoning alltogether
airbnb
airbnb gets you more money in popular areas. it takes away a potenial home for a local worker in favor for maximum investments, which is bad for the city, because it circumvents hotel taxes, and takes away potential income tax from someone who would have lived and worked in the area.
My guess is that as the need for housing has increased (population growth, short term rentals taking up supply, etc), we haven't been building the right kind of homes to fill the void.
Nobody is out there using land to build "starter homes". It's either large, expensive houses or apartment complexes, so the demand for home ownership is high, but the ones available to buy aren't cheap.
It would be like if nobody made affordable cars, so most drivers were stuck either leasing or saving up for a Lamborghini. (Hyperbole, but you get the idea)
Because population is increasing faster than new housing is being built. There is a supply problem and demand is in elastic. The supply problem is the result of government’s continual suppression of new construction, via permitting red tape and overeager density zoning.
I guess it's by country basis. A lot of places have negative population growth yet the prices skyrocket. It does make me think what is the actual reason in those places
I was listening to the radio and they had said to keep up with housing demand in my area they would need to create 35,000 homes per year for 30 years. Meanwhile we get maybe 25 houses at most. In 6 years the typical rent has quadrupled.
Horrible world we live in.
The answer is very location dependent, and often multifaceted. However here in Canada it’s a combination of neglecting affordable housing construction for decades, a huge uptick in immigration raising demand in some areas, a total lack of political willpower (most of our MPs report housing income, many actual landlords), and an economy that’s over-leveraged on real estate in general.
In my area:
Source: Used to work for a company that did this sort of buy/selling of properties.
I feel the main reason is corporate entry into the market. Foreign and domestic. The ROI is larger on real estate than any other investment.
Prices are falling in Florida, and inventory is stacking up.
My home value hasn't started falling yet, according to Zillow, but the appreciation seems to have leveled off.