The Daily episode on the housing crisis

[Anonymous]

Anonymous wrote:Solutions to "crisis":

-- Ban foreign ownership of real estate
-- Eliminate all federal tax deductions on homes that aren't people's primary residences

Once you realize that our country is set up to benefit corporations and the wealthy, you'll realize that the "crisis" is intentional and works to their benefit.

Yes one thing they mention in the episode is that the US government has been heavily subsidizing the housing market for years via tax incentives that benefit corporations and investors and people who own expensive housing and all of these things have actually greatly contributed to the rising costs of housing at all levels.

But there is no political will to change those incentives because all the wealthy people who benefit from them are too powerful. But then if you say "well the government should subsidize building of affordable housing and offer tax incentives and benefits to renters" people flip out and complain it's a give away to people who haven't earned it. But we've been giving it away to people who haven't earned it for years! It's just that the giveaways have mostly benefited people at the top.

[Anonymous]

I am an academic researcher in this area. He is generally correct that we need to build more homes in the middle to low price-range. We need more supply. Yes, to some extent these homes are/have been purchased by institutions and STR but the percentages are low and impact overblown.

These types of homes are not being built because they are less profitable.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Did they bother to address the fact that housing has become commoditized thanks to corporations, hedge funds, and regular people like you and me buying multiple homes and renting them out (whether as airbnbs or more traditional rental properties)? Because that’s the real culprit. Hedge funds and corporations own entire neighborhoods in certain areas. They literally come in a buy up nearly an entire new development and then have the power to set the new fair market value.

What about immigration?

What about foreign nationals who live abroad but buy homes in the US for investment purposes? ICYMI: Canada realized this was ruining their housing market and has taken steps to address it. Too little too late once people and corporations own property, but at least they got the memo.

Building more affordable housing is important, but it’s an exercise in futility unless there are strict restrictions on who can buy the housing and who must actually live there. The MoCo MPDU approach is one example (not perfect, but better than nothing).

They touched on the commoditization issue but it wasn't the focus. I agree I would have liked to hear more on this. Especially because their focus was on markets that recently had very affordable housing (they do a deep dive into Kalamazoo) but have recently seen a huge run up in housing costs as people from other places have started entering those housing markets. The show makes it sound like it's mostly people moving to these markets but as someone who knows a lot of people who work in real estate development I'm pretty confident that a lot of the people buying up housing in this market are investors who do not and will never live there.

Like they interview a couple in Kalamazoo who were displaced when the duplex where they were renting a unit was sold. They ultimately find housing but it is more than double what they'd been paying because they are forced into a new build rental (modular home I think) and they can't find anything like the older rental they'd been living in. This was a dual-income couple with decent working class jobs and now most of their income is going to housing and they can't save and have to watch every penny. It's depressing.

But they don't talk about who bought the duplex. Sure it might have been a family moving from Detroit who bought it to live in and rent the extra unit. But I think odds are good it's a real estate investor who bought it and will do a cheap flip with "luxury look" finishes and then rent it out for 3-4x the prior rent. Or turn it into an Airbnb. Because you see that a lot.

I think most people are aware that speculators and investors started buying up properties in the Dallas metro area before it became hot. They bought multiple SFHs and practically entire neighborhoods @$200k and now thanks to their “investments” they drove the housing market to a frenzy where you must be an all cash buyer prepared to pay $600-800k+ for the basic 3 bdrm sfh. Entire neighborhoods have been flipped to rentals mostly owned by corporations, hedge funds, and foreign investors (mostly Asian).

Once the system has been commoditized, it’s broken and nearly impossible to fix. Building more housing won’t fix the problem since the same investors are best positioned to pay cash immediately.

The pp who said we need to ban foreign investors and dump the tax credits isn’t going far enough. It won’t work. The foreigners will set up shell companies and the reality is the tax credits aren’t fueling the individual investors—it’s quite lucrative to generate income from rentals and periodic flips or sales.

Switching gears: plopping duplexes into established neighborhoods like MoCo is proposing won’t fix the problem either.

The Feds are perhaps the only employer equipped to move the needle by shifting offices to lower-density cities/states to attract people away from the major metro areas. Better yet: force the Amazon’s of the world to plant roots in Kalamazoo instead of NoVA.

[Anonymous]

Anonymous wrote:I am an academic researcher in this area. He is generally correct that we need to build more homes in the middle to low price-range. We need more supply. Yes, to some extent these homes are/have been purchased by institutions and STR but the percentages are low and impact overblown.

These types of homes are not being built because they are less profitable.

Tell them why.

Explain how well intentioned environmental fees and local taxes/fees drive up production costs.

And don’t pay short shrift to the impact of commoditizing housing. The reality is investors (including regular people) have the necessary cash on hand to snatch up housing and convert it to a rental—whether on the books or not.

My friend went down a rabbit hole after discovering the rental homes they rented in 4 different metro areas were all owned by the same company. East coast, Midwest, and Deep South sfh neighborhoods were all owned by the same company. That’s why the housing markets changed so dramatically in those areas.

And another friend’s elderly relative lives in a desirable DC area where every sale has gone to a hedge fund.

[Anonymous]

I've wondered this. Most big cities have these massive, ugly, concrete apartments right on the outskirts for low income housing (think Paris or London). We could do this, but...it would tank any school that it's districted to. And then we'd have to throw massive amounts of money at that school to try to raise scores and it would still fail. And then both teachers as well as the county government would be blamed for having these failing schools. Also, when you have that much poverty centralized, it has that section 8 housing effect where a lot of crime moves in (the reason most US cities moved away from housing like that and give vouchers instead).

Instead they should move to more micro housing projects. Like every 10th lot is a low income apartment (and don't permit more than 1 car per apartment to be registered in the state or parked). Every school would get a certain percentage of failing students and would have more resources to help them. Cap it at 25 or 30%.

Or maybe we could have low income apartment housing but only allow people without children to move in to limit any effect on schools. Massive complexes for those without kids. It would help those with kids too because it would free up other housing for them.

[Anonymous]

Anonymous wrote:I've wondered this. Most big cities have these massive, ugly, concrete apartments right on the outskirts for low income housing (think Paris or London). We could do this, but...it would tank any school that it's districted to. And then we'd have to throw massive amounts of money at that school to try to raise scores and it would still fail. And then both teachers as well as the county government would be blamed for having these failing schools. Also, when you have that much poverty centralized, it has that section 8 housing effect where a lot of crime moves in (the reason most US cities moved away from housing like that and give vouchers instead).

Instead they should move to more micro housing projects. Like every 10th lot is a low income apartment (and don't permit more than 1 car per apartment to be registered in the state or parked). Every school would get a certain percentage of failing students and would have more resources to help them. Cap it at 25 or 30%.

Or maybe we could have low income apartment housing but only allow people without children to move in to limit any effect on schools. Massive complexes for those without kids. It would help those with kids too because it would free up other housing for them.

Some of these are pretty good ideas. The issue is that land use/zoning is controlled as such local levels in the US, and housing is a regional issue (and somewhat national, as discussed above). You have a prisoners dilemma problem when trying to coordinate across jurisdictions.

[Anonymous]

Anonymous wrote:

Anonymous wrote:I've wondered this. Most big cities have these massive, ugly, concrete apartments right on the outskirts for low income housing (think Paris or London). We could do this, but...it would tank any school that it's districted to. And then we'd have to throw massive amounts of money at that school to try to raise scores and it would still fail. And then both teachers as well as the county government would be blamed for having these failing schools. Also, when you have that much poverty centralized, it has that section 8 housing effect where a lot of crime moves in (the reason most US cities moved away from housing like that and give vouchers instead).

Instead they should move to more micro housing projects. Like every 10th lot is a low income apartment (and don't permit more than 1 car per apartment to be registered in the state or parked). Every school would get a certain percentage of failing students and would have more resources to help them. Cap it at 25 or 30%.

Or maybe we could have low income apartment housing but only allow people without children to move in to limit any effect on schools. Massive complexes for those without kids. It would help those with kids too because it would free up other housing for them.

Some of these are pretty good ideas. The issue is that land use/zoning is controlled as such local levels in the US, and housing is a regional issue (and somewhat national, as discussed above). You have a prisoners dilemma problem when trying to coordinate across jurisdictions.

Researcher here. The bolded is exactly right.

[Anonymous]

There are simply not enough units. I saw many buildings in small suburban and rural areas being bought up by people from big cities who saw they could buy low and rent high, and due to demand they can get by with making little to no improvements. Imagine living in a 10 or 20 story building without a working elevator and being disabled, elderly, or with a young child….It’s now the norm.
The competition for the available units is fierce. 3x monthly income of rent and very good credit score, and that is still not enough.
The old mom and pop owners can’t keep up, and often turn to property management firms that charge more than expected and force them to raise rents.
We need more housing. Period. Especially centrally located urban area where people can walk to stores and transit. I know it’s not easy to convert office buildings, but it must be seriously considered to alleviate the problems.

[Anonymous]

Anonymous wrote:I've wondered this. Most big cities have these massive, ugly, concrete apartments right on the outskirts for low income housing (think Paris or London). We could do this, but...it would tank any school that it's districted to. And then we'd have to throw massive amounts of money at that school to try to raise scores and it would still fail. And then both teachers as well as the county government would be blamed for having these failing schools. Also, when you have that much poverty centralized, it has that section 8 housing effect where a lot of crime moves in (the reason most US cities moved away from housing like that and give vouchers instead).

Instead they should move to more micro housing projects. Like every 10th lot is a low income apartment (and don't permit more than 1 car per apartment to be registered in the state or parked). Every school would get a certain percentage of failing students and would have more resources to help them. Cap it at 25 or 30%.

Or maybe we could have low income apartment housing but only allow people without children to move in to limit any effect on schools. Massive complexes for those without kids. It would help those with kids too because it would free up other housing for them.

No county would ever allow it. Depending on the specific metro area, that suburb may be in a different state with a legislature responsive to suburban residents that does not care about the city's housing problems.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I've wondered this. Most big cities have these massive, ugly, concrete apartments right on the outskirts for low income housing (think Paris or London). We could do this, but...it would tank any school that it's districted to. And then we'd have to throw massive amounts of money at that school to try to raise scores and it would still fail. And then both teachers as well as the county government would be blamed for having these failing schools. Also, when you have that much poverty centralized, it has that section 8 housing effect where a lot of crime moves in (the reason most US cities moved away from housing like that and give vouchers instead).

Instead they should move to more micro housing projects. Like every 10th lot is a low income apartment (and don't permit more than 1 car per apartment to be registered in the state or parked). Every school would get a certain percentage of failing students and would have more resources to help them. Cap it at 25 or 30%.

Or maybe we could have low income apartment housing but only allow people without children to move in to limit any effect on schools. Massive complexes for those without kids. It would help those with kids too because it would free up other housing for them.

Some of these are pretty good ideas. The issue is that land use/zoning is controlled as such local levels in the US, and housing is a regional issue (and somewhat national, as discussed above). You have a prisoners dilemma problem when trying to coordinate across jurisdictions.

Researcher here. The bolded is exactly right.

Ha well a couple of us commenting here are clearly "in the business"

The other thing I don't see discussed enough is household formation/shrinking household size. That's what is driving the demand for more units (in addition to immigration, which is relatively low from an historic standpoint, and basically keeping the population stable now that the birthrate is below replacement rate).

The average household size in 1961 was 3.36. In 2023 it was 2.51. That may not seem like a lot, but for a stable population of 330 million people (which of course was not the US population size in 1960), that's a difference of 33 million housing units needed. This change is happening mostly because of demographic shifts- fewer children per family, fewer marriages, more people living on their own. In a lot of places you will hear calls for "larger family units", but in actuality that's not where the demand is. But that is why when new apartment buildings get built, they are mostly 1 bedroom and studio apartments- because that's where the actual demand is. Larger apartments lease up slower and you can't charge nearly as much on a square foot basis.

[Anonymous]

Anonymous wrote: There are simply not enough units. I saw many buildings in small suburban and rural areas being bought up by people from big cities who saw they could buy low and rent high, and due to demand they can get by with making little to no improvements. Imagine living in a 10 or 20 story building without a working elevator and being disabled, elderly, or with a young child….It’s now the norm.
The competition for the available units is fierce. 3x monthly income of rent and very good credit score, and that is still not enough.
The old mom and pop owners can’t keep up, and often turn to property management firms that charge more than expected and force them to raise rents.
We need more housing. Period. Especially centrally located urban area where people can walk to stores and transit. I know it’s not easy to convert office buildings, but it must be seriously considered to alleviate the problems.

It's being seriously considered everywhere because its an easy idea that doesn't piss off people already living in residential areas. It basically doesn't work unless you can charge super high end rents. The conversion costs are so high that the vast majority of office buildings don't work economically to convert to apartments. Not saying it isn't part of the solution, but it's like 5% of it.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I've wondered this. Most big cities have these massive, ugly, concrete apartments right on the outskirts for low income housing (think Paris or London). We could do this, but...it would tank any school that it's districted to. And then we'd have to throw massive amounts of money at that school to try to raise scores and it would still fail. And then both teachers as well as the county government would be blamed for having these failing schools. Also, when you have that much poverty centralized, it has that section 8 housing effect where a lot of crime moves in (the reason most US cities moved away from housing like that and give vouchers instead).

Instead they should move to more micro housing projects. Like every 10th lot is a low income apartment (and don't permit more than 1 car per apartment to be registered in the state or parked). Every school would get a certain percentage of failing students and would have more resources to help them. Cap it at 25 or 30%.

Or maybe we could have low income apartment housing but only allow people without children to move in to limit any effect on schools. Massive complexes for those without kids. It would help those with kids too because it would free up other housing for them.

Some of these are pretty good ideas. The issue is that land use/zoning is controlled as such local levels in the US, and housing is a regional issue (and somewhat national, as discussed above). You have a prisoners dilemma problem when trying to coordinate across jurisdictions.

Researcher here. The bolded is exactly right.

Ha well a couple of us commenting here are clearly "in the business"

The other thing I don't see discussed enough is household formation/shrinking household size. That's what is driving the demand for more units (in addition to immigration, which is relatively low from an historic standpoint, and basically keeping the population stable now that the birthrate is below replacement rate).

The average household size in 1961 was 3.36. In 2023 it was 2.51. That may not seem like a lot, but for a stable population of 330 million people (which of course was not the US population size in 1960), that's a difference of 33 million housing units needed. This change is happening mostly because of demographic shifts- fewer children per family, fewer marriages, more people living on their own. In a lot of places you will hear calls for "larger family units", but in actuality that's not where the demand is. But that is why when new apartment buildings get built, they are mostly 1 bedroom and studio apartments- because that's where the actual demand is. Larger apartments lease up slower and you can't charge nearly as much on a square foot basis.

It is specifically discussed in the Daily episode-- how household trends have increased demand for housing because more people are delaying or skipping marriage (and kids) and people want to live alone. Very different from previous trends where people lived with families of origin until marriage or had a Friends-style roommate/co-housing period before getting married. Adulthood just looks different than it used to.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I've wondered this. Most big cities have these massive, ugly, concrete apartments right on the outskirts for low income housing (think Paris or London). We could do this, but...it would tank any school that it's districted to. And then we'd have to throw massive amounts of money at that school to try to raise scores and it would still fail. And then both teachers as well as the county government would be blamed for having these failing schools. Also, when you have that much poverty centralized, it has that section 8 housing effect where a lot of crime moves in (the reason most US cities moved away from housing like that and give vouchers instead).

Instead they should move to more micro housing projects. Like every 10th lot is a low income apartment (and don't permit more than 1 car per apartment to be registered in the state or parked). Every school would get a certain percentage of failing students and would have more resources to help them. Cap it at 25 or 30%.

Or maybe we could have low income apartment housing but only allow people without children to move in to limit any effect on schools. Massive complexes for those without kids. It would help those with kids too because it would free up other housing for them.

Some of these are pretty good ideas. The issue is that land use/zoning is controlled as such local levels in the US, and housing is a regional issue (and somewhat national, as discussed above). You have a prisoners dilemma problem when trying to coordinate across jurisdictions.

Researcher here. The bolded is exactly right.

Ha well a couple of us commenting here are clearly "in the business"

The other thing I don't see discussed enough is household formation/shrinking household size. That's what is driving the demand for more units (in addition to immigration, which is relatively low from an historic standpoint, and basically keeping the population stable now that the birthrate is below replacement rate).

The average household size in 1961 was 3.36. In 2023 it was 2.51. That may not seem like a lot, but for a stable population of 330 million people (which of course was not the US population size in 1960), that's a difference of 33 million housing units needed. This change is happening mostly because of demographic shifts- fewer children per family, fewer marriages, more people living on their own. In a lot of places you will hear calls for "larger family units", but in actuality that's not where the demand is. But that is why when new apartment buildings get built, they are mostly 1 bedroom and studio apartments- because that's where the actual demand is. Larger apartments lease up slower and you can't charge nearly as much on a square foot basis.

It is specifically discussed in the Daily episode-- how household trends have increased demand for housing because more people are delaying or skipping marriage (and kids) and people want to live alone. Very different from previous trends where people lived with families of origin until marriage or had a Friends-style roommate/co-housing period before getting married. Adulthood just looks different than it used to.

That's good to hear- first time I have seen this discussed at length in a mainstream piece. Not surprised, actually- Dougherty is excellent.

[Anonymous]

Anonymous wrote:

Anonymous wrote: There are simply not enough units. I saw many buildings in small suburban and rural areas being bought up by people from big cities who saw they could buy low and rent high, and due to demand they can get by with making little to no improvements. Imagine living in a 10 or 20 story building without a working elevator and being disabled, elderly, or with a young child….It’s now the norm.
The competition for the available units is fierce. 3x monthly income of rent and very good credit score, and that is still not enough.
The old mom and pop owners can’t keep up, and often turn to property management firms that charge more than expected and force them to raise rents.
We need more housing. Period. Especially centrally located urban area where people can walk to stores and transit. I know it’s not easy to convert office buildings, but it must be seriously considered to alleviate the problems.

It's being seriously considered everywhere because its an easy idea that doesn't piss off people already living in residential areas. It basically doesn't work unless you can charge super high end rents. The conversion costs are so high that the vast majority of office buildings don't work economically to convert to apartments. Not saying it isn't part of the solution, but it's like 5% of it.

To add, it also becomes the easy answer for NIMBYs- "why do you need to build here when there are all these almost empty offices 2 miles away? Just convert those to apartments". So it just becomes another "reason" for existing residents to limit supply (and thus increase the value of their existing homes, which is the underlying unspoken motivation). And of course the future residents have no say.

[Anonymous]

Anonymous wrote:

Anonymous wrote: There are simply not enough units. I saw many buildings in small suburban and rural areas being bought up by people from big cities who saw they could buy low and rent high, and due to demand they can get by with making little to no improvements. Imagine living in a 10 or 20 story building without a working elevator and being disabled, elderly, or with a young child….It’s now the norm.
The competition for the available units is fierce. 3x monthly income of rent and very good credit score, and that is still not enough.
The old mom and pop owners can’t keep up, and often turn to property management firms that charge more than expected and force them to raise rents.
We need more housing. Period. Especially centrally located urban area where people can walk to stores and transit. I know it’s not easy to convert office buildings, but it must be seriously considered to alleviate the problems.

It's being seriously considered everywhere because its an easy idea that doesn't piss off people already living in residential areas. It basically doesn't work unless you can charge super high end rents. The conversion costs are so high that the vast majority of office buildings don't work economically to convert to apartments. Not saying it isn't part of the solution, but it's like 5% of it.

I think it's also just a longer term solution that is evolving. I do think ultimately if work trends hold that it will fundamentally transform what urban cores look like with fewer office buildings and more housing and tourism. I think in DC for instance people would love to waive a magic wand and change the composition of downtown to tilt more heavily toward apartment units and hotels because with WFH these uses would produce more people on the streets and thus more business for restaurants and retail. The loss of daily office workers has had a brutal ripple effect on all the businesses who who used to serve the office workers and it creates a downward spiral.

However as you said converting office buildings to housing (or hotels) si not a quick or inexpensive fix. In most cases it involves a total gut and rebuild and some buildings will never be suitable for housing because of the structure itself. This is a project that could take 20 years. But people want solutions to both the housing shortage AND the impact of remote work on urban centers right now. It sounds good but unless we develop better methods for conversion it's not a right now solution.

There is also the risk that remote trends aren't as permanent as some think and that demand for those downtown office buildings could return sooner than people think. I work in strategy consulting within several private industries and there's not a consensus on this -- you would be surprised at how many people (including younger people who were previously a lot more enthusiastic about remote work) are souring on how it's impact workplace culture and morale and think it greatly diminishes the quality and enjoyment people take in their work. For some industries I think remote work is here to stay but for a surprising number of people in industries like law and finance there is a growing unhappiness with it as it currently functions.