The Daily episode on the housing crisis

[Anonymous]

Anonymous wrote:

Anonymous wrote:

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.

Agree with many of the points made here but strong disagree with the conclusion. There is a long literature in economics demonstrating that agglomeration happens because people are more productive when they are in proximity to each other. The evidence also suggests that, on net, they prefer the amenities of large high cost metro areas. For example, some of the latest research shows not only that educated workers are more productive in cities, but also that the increase in housing costs more than swallows up their wage gains. This is another way of saying "even with lower salaries in <lower cost smaller city>, I could buy a nicer house there, but I choose to live in <high cost city> because I like _____." Lots of ways people fill in that blank: things to do, places to eat, hobbies, professional networks, larger dating pools, etc.

Pushing firms and industries to de-agglomerate would be very costly, because we would lose the productivity gains from clustering people together. And, even if de-agglomerating successfully reduced housing costs as a % of income, many people would be worse off, because they would lose all the things that they were filling in the blank above with before.

We need to build more housing in our high-wage metro areas, and that's only going to happen when we either find better ways to incentivize municipalities to pull their weight in the housing market, or when we take some amount of control from them altogether.

Disagree. Strongly.

That premise assumes everyone must live near a Tier 1 city.

The reality is we now have ghost towns surrounding Tier 2 and 3 cities that desperately need revitalization.

I’m looking at this through the lens of the greater good and the people living in under-resourced communities.

Yes, people obviously prefer to live in places like the dc metro area where we have access to perhaps the best healthcare in the nation… but the solution isn’t to build more housing here. Rather, the solution is to revitalize and invest in other areas to make them more desirable. The Dallas metro area is a prime example…look at Frisco. If you build it, they will come. Now do that in Detroit, Kalamazoo, Knoxville, etc.

[Anonymous]

Anonymous wrote:So do we really think there would be no encampments in DC if there were multiple homes that costs under $250,000? $150,000? $75,000?

There would absolutely be far fewer...however, homelessness in DC is not homelessness in Kalamazoo or Missoula, MT (or the entire state of Montana) which also now has a homeless problem because R/E has increased so much. Montana actually leads the nation in the increase in homelessness over the last 10 years.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

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.

Even just banning all foreign-owned rentals and limiting the amount of rentals any owner/company can own (except for apartment buildings) would be a great start.

What is the mechanism to pass laws such as these, when land ownership in the US is generally regulated at the city/county level?

At the federal level the mechanism will always be taxes. Creating onerous taxes on foreign-owned residential investment properties would effectively kill this market -- many foreign investors are buying these properties explicitly for the tax benefits (a lot of write-offs available to landlords).

What percentage of real estate in the US do you think is foreign owned?

Supposedly it is between 2-3% and clustered in cities like NYC, LA, SFO.

Right, so marginal. People want to believe there are magic bullets other than "build a lot of new housing", for various reasons. Beyond pure NIMBYism, I think it's the long time frames involved. One thing to note- rents in DC have not gone up that much the last 5 years because of the number of new buildings that have come on line and added to supply. Problem is that there will be a donut hole in a couple of years as all the deals stopped from 2022-2024 because of financing and construction costs don't keep filling the supply.

I am the person who suggested taxing foreign-owned residential investment properties more heavily and I just want to note that I agree with you -- the primary solution is building more housing especially in and near major cities. I just think you can also address the issue of foreign-investment at the same time. While the total amount of foreign-owned residential investment properties is only 2-3% it is a larger share within these large city and it absolutely HAS had a negative impact on housing markets in these cities (it's also just inefficient -- a lot of these foreign-owned units sit empty for much of the year which is frustrating in places like NYC and SF where space is at a premium).

I also look at the activity of hedge funds and I do think we should be worried about HFs invading the real estate space in ways that could be very bad for the overall market. Changing the rules on the way we tax investment properties now could be a useful way to keep HFs from screwing with the market later. If you have any experience with HFs mucking around in your industry you'd understand why this is something we need to be very concerned with. For them it's all just dollars on a page and the negative externalities of their choices are irrelevant even when they are very bad for both people who work in these industries and people who rely on them (see i.e. healthcare and elder care and veterinarians and dentists).

[Anonymous]

Anonymous wrote:Has anyone looked at the impact of all of the boomers passing on in the next 10-20 years. Won't that free up a ton of housing?

The boomers are easy targets for the corporations, hedge funds, flippers, and investors who can throw down cash, waive inspection, etc.

^^^
That’s the problem.

Nobody is looking out for the little guy.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

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.

Agree with many of the points made here but strong disagree with the conclusion. There is a long literature in economics demonstrating that agglomeration happens because people are more productive when they are in proximity to each other. The evidence also suggests that, on net, they prefer the amenities of large high cost metro areas. For example, some of the latest research shows not only that educated workers are more productive in cities, but also that the increase in housing costs more than swallows up their wage gains. This is another way of saying "even with lower salaries in <lower cost smaller city>, I could buy a nicer house there, but I choose to live in <high cost city> because I like _____." Lots of ways people fill in that blank: things to do, places to eat, hobbies, professional networks, larger dating pools, etc.

Pushing firms and industries to de-agglomerate would be very costly, because we would lose the productivity gains from clustering people together. And, even if de-agglomerating successfully reduced housing costs as a % of income, many people would be worse off, because they would lose all the things that they were filling in the blank above with before.

We need to build more housing in our high-wage metro areas, and that's only going to happen when we either find better ways to incentivize municipalities to pull their weight in the housing market, or when we take some amount of control from them altogether.

Disagree. Strongly.

That premise assumes everyone must live near a Tier 1 city.

The reality is we now have ghost towns surrounding Tier 2 and 3 cities that desperately need revitalization.

I’m looking at this through the lens of the greater good and the people living in under-resourced communities.

Yes, people obviously prefer to live in places like the dc metro area where we have access to perhaps the best healthcare in the nation… but the solution isn’t to build more housing here. Rather, the solution is to revitalize and invest in other areas to make them more desirable. The Dallas metro area is a prime example…look at Frisco. If you build it, they will come. Now do that in Detroit, Kalamazoo, Knoxville, etc.

So, your solution is to make it easier to build more housing. Not sure why it shouldn't be easier to increase the supply everywhere vs. specific locations.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

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.

Even just banning all foreign-owned rentals and limiting the amount of rentals any owner/company can own (except for apartment buildings) would be a great start.

What is the mechanism to pass laws such as these, when land ownership in the US is generally regulated at the city/county level?

At the federal level the mechanism will always be taxes. Creating onerous taxes on foreign-owned residential investment properties would effectively kill this market -- many foreign investors are buying these properties explicitly for the tax benefits (a lot of write-offs available to landlords).

What percentage of real estate in the US do you think is foreign owned?

It’s hard to tell since first generation Americans or other proxies are bankrolled by foreign investors.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

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.

Agree with many of the points made here but strong disagree with the conclusion. There is a long literature in economics demonstrating that agglomeration happens because people are more productive when they are in proximity to each other. The evidence also suggests that, on net, they prefer the amenities of large high cost metro areas. For example, some of the latest research shows not only that educated workers are more productive in cities, but also that the increase in housing costs more than swallows up their wage gains. This is another way of saying "even with lower salaries in <lower cost smaller city>, I could buy a nicer house there, but I choose to live in <high cost city> because I like _____." Lots of ways people fill in that blank: things to do, places to eat, hobbies, professional networks, larger dating pools, etc.

Pushing firms and industries to de-agglomerate would be very costly, because we would lose the productivity gains from clustering people together. And, even if de-agglomerating successfully reduced housing costs as a % of income, many people would be worse off, because they would lose all the things that they were filling in the blank above with before.

We need to build more housing in our high-wage metro areas, and that's only going to happen when we either find better ways to incentivize municipalities to pull their weight in the housing market, or when we take some amount of control from them altogether.

Disagree. Strongly.

That premise assumes everyone must live near a Tier 1 city.

The reality is we now have ghost towns surrounding Tier 2 and 3 cities that desperately need revitalization.

I’m looking at this through the lens of the greater good and the people living in under-resourced communities.

Yes, people obviously prefer to live in places like the dc metro area where we have access to perhaps the best healthcare in the nation… but the solution isn’t to build more housing here. Rather, the solution is to revitalize and invest in other areas to make them more desirable. The Dallas metro area is a prime example…look at Frisco. If you build it, they will come. Now do that in Detroit, Kalamazoo, Knoxville, etc.

You think you understand the issue, but you have it backwards, and your examples are wild. Dallas area has been growing like wildfire for 70 years because people like warm weather areas, and zoning controls in Texas are weak compared to most other places. It was also driven by oil/gas money for a generation. People didn't just go there for no reason- it was because there were jobs.

The article is literally about Kalamazoo and how even there they are having issues because of limited supply. Knoxville is kind of a wild example- it's a booming college town that has a huge jobs magnet that is already pushing up the cost of housing considerably.

Developers want to make money and decrease risk. They follow job growth, not the other way around. The reason rural areas are depopulating is because agricultural work has been becoming more mechanized for the last 130 years.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

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.

Even just banning all foreign-owned rentals and limiting the amount of rentals any owner/company can own (except for apartment buildings) would be a great start.

What is the mechanism to pass laws such as these, when land ownership in the US is generally regulated at the city/county level?

At the federal level the mechanism will always be taxes. Creating onerous taxes on foreign-owned residential investment properties would effectively kill this market -- many foreign investors are buying these properties explicitly for the tax benefits (a lot of write-offs available to landlords).

What percentage of real estate in the US do you think is foreign owned?

Supposedly it is between 2-3% and clustered in cities like NYC, LA, SFO.

Right, so marginal. People want to believe there are magic bullets other than "build a lot of new housing", for various reasons. Beyond pure NIMBYism, I think it's the long time frames involved. One thing to note- rents in DC have not gone up that much the last 5 years because of the number of new buildings that have come on line and added to supply. Problem is that there will be a donut hole in a couple of years as all the deals stopped from 2022-2024 because of financing and construction costs don't keep filling the supply.

I am the person who suggested taxing foreign-owned residential investment properties more heavily and I just want to note that I agree with you -- the primary solution is building more housing especially in and near major cities. I just think you can also address the issue of foreign-investment at the same time. While the total amount of foreign-owned residential investment properties is only 2-3% it is a larger share within these large city and it absolutely HAS had a negative impact on housing markets in these cities (it's also just inefficient -- a lot of these foreign-owned units sit empty for much of the year which is frustrating in places like NYC and SF where space is at a premium).

I also look at the activity of hedge funds and I do think we should be worried about HFs invading the real estate space in ways that could be very bad for the overall market. Changing the rules on the way we tax investment properties now could be a useful way to keep HFs from screwing with the market later. If you have any experience with HFs mucking around in your industry you'd understand why this is something we need to be very concerned with. For them it's all just dollars on a page and the negative externalities of their choices are irrelevant even when they are very bad for both people who work in these industries and people who rely on them (see i.e. healthcare and elder care and veterinarians and dentists).

This I do agree with, and I have zero problem with revising the tax code significantly to deal with these issues generally, not just in real estate. But good luck with that with the structure and incentives of the US Senate.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

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.

Agree with many of the points made here but strong disagree with the conclusion. There is a long literature in economics demonstrating that agglomeration happens because people are more productive when they are in proximity to each other. The evidence also suggests that, on net, they prefer the amenities of large high cost metro areas. For example, some of the latest research shows not only that educated workers are more productive in cities, but also that the increase in housing costs more than swallows up their wage gains. This is another way of saying "even with lower salaries in <lower cost smaller city>, I could buy a nicer house there, but I choose to live in <high cost city> because I like _____." Lots of ways people fill in that blank: things to do, places to eat, hobbies, professional networks, larger dating pools, etc.

Pushing firms and industries to de-agglomerate would be very costly, because we would lose the productivity gains from clustering people together. And, even if de-agglomerating successfully reduced housing costs as a % of income, many people would be worse off, because they would lose all the things that they were filling in the blank above with before.

We need to build more housing in our high-wage metro areas, and that's only going to happen when we either find better ways to incentivize municipalities to pull their weight in the housing market, or when we take some amount of control from them altogether.

Disagree. Strongly.

That premise assumes everyone must live near a Tier 1 city.

The reality is we now have ghost towns surrounding Tier 2 and 3 cities that desperately need revitalization.

I’m looking at this through the lens of the greater good and the people living in under-resourced communities.

Yes, people obviously prefer to live in places like the dc metro area where we have access to perhaps the best healthcare in the nation… but the solution isn’t to build more housing here. Rather, the solution is to revitalize and invest in other areas to make them more desirable. The Dallas metro area is a prime example…look at Frisco. If you build it, they will come. Now do that in Detroit, Kalamazoo, Knoxville, etc.

You think you understand the issue, but you have it backwards, and your examples are wild. Dallas area has been growing like wildfire for 70 years because people like warm weather areas, and zoning controls in Texas are weak compared to most other places. It was also driven by oil/gas money for a generation. People didn't just go there for no reason- it was because there were jobs.

The article is literally about Kalamazoo and how even there they are having issues because of limited supply. Knoxville is kind of a wild example- it's a booming college town that has a huge jobs magnet that is already pushing up the cost of housing considerably.

Developers want to make money and decrease risk. They follow job growth, not the other way around. The reason rural areas are depopulating is because agricultural work has been becoming more mechanized for the last 130 years.

The explosion in Dallas (and Frisco and random even far out burbs) is most certainly not oil related—or warm weather related. The housing prices in far flung burbs have exploded in the last few years. Success breeds success, but entire new sfh neighborhoods are being snatched up by private equity investors, etc.

I’m not fixated on developers; rather, I’m focused on the investors who have destroyed housing markets across the country. More housing doesn’t fix the problem precisely because individual buyers can’t compete with private equity firms, hedge funds, and even regular investors who operate in cash.

Speculators skewed the housing market in the RGV, betting on Elon Musk’s venture bringing jobs. The jobs never came but the housing market was screwed up nonetheless.

[Anonymous]

Anonymous wrote:

Anonymous wrote:So do we really think there would be no encampments in DC if there were multiple homes that costs under $250,000? $150,000? $75,000?

There would absolutely be far fewer...however, homelessness in DC is not homelessness in Kalamazoo or Missoula, MT (or the entire state of Montana) which also now has a homeless problem because R/E has increased so much. Montana actually leads the nation in the increase in homelessness over the last 10 years.

The 'housing crisis' is much bigger than homelessness.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:There are plenty of affordable areas of the country to live.

I think you are missing the point. There was an article recently about some random town in Michigan…probably an affordable area in your eyes.

Well, the median price has doubled in just the last 5 years because of people selling from high cost area and moving there. Great for them, but now the locals are priced out.

Now they have a homeless problem…mainly due to local jobs not paying enough and rents increasing as much as owning.

It cascades.

Yes this is precisely what the episode talks about. People get priced out of DC and move to Kalamazoo and then Kalamazoo winds up with a homelessness issue because the extra demand pushes prices up. But it starts with the lack of affordable housing in DC -- if we could build WAY more affordable housing in and near these major cities where most of the jobs are then you wouldn't see people fleeing for these places elsewhere in order to access affordable housing.

I did like that the episode focuses on how trends in real estate buying and investing directly impact rents (as opposed to the cost of buying). Because I think a lot of people don't understand that's where the pinch is coming. It's not about people who are mad they can't afford to buy a house in AU Park and have to settle for Rockville. It's about how renters (who do not and likely will never have the capital to buy anything) can't afford to rent an apartment either place. And that's when you see the externalities that people complain about but don't seem to understand the causes of -- homeless encampments and the difficulty of finding employees for lower paying work. These are a direct result of not having enough affordable housing units at a rent working class people can afford.

Fwiw, Kalamazoo didn’t “wind up with a homelessness issue.” They had one for decades before this recent “housing crisis.”

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

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.

Agree with many of the points made here but strong disagree with the conclusion. There is a long literature in economics demonstrating that agglomeration happens because people are more productive when they are in proximity to each other. The evidence also suggests that, on net, they prefer the amenities of large high cost metro areas. For example, some of the latest research shows not only that educated workers are more productive in cities, but also that the increase in housing costs more than swallows up their wage gains. This is another way of saying "even with lower salaries in <lower cost smaller city>, I could buy a nicer house there, but I choose to live in <high cost city> because I like _____." Lots of ways people fill in that blank: things to do, places to eat, hobbies, professional networks, larger dating pools, etc.

Pushing firms and industries to de-agglomerate would be very costly, because we would lose the productivity gains from clustering people together. And, even if de-agglomerating successfully reduced housing costs as a % of income, many people would be worse off, because they would lose all the things that they were filling in the blank above with before.

We need to build more housing in our high-wage metro areas, and that's only going to happen when we either find better ways to incentivize municipalities to pull their weight in the housing market, or when we take some amount of control from them altogether.

Disagree. Strongly.

That premise assumes everyone must live near a Tier 1 city.

The reality is we now have ghost towns surrounding Tier 2 and 3 cities that desperately need revitalization.

I’m looking at this through the lens of the greater good and the people living in under-resourced communities.

Yes, people obviously prefer to live in places like the dc metro area where we have access to perhaps the best healthcare in the nation… but the solution isn’t to build more housing here. Rather, the solution is to revitalize and invest in other areas to make them more desirable. The Dallas metro area is a prime example…look at Frisco. If you build it, they will come. Now do that in Detroit, Kalamazoo, Knoxville, etc.

You think you understand the issue, but you have it backwards, and your examples are wild. Dallas area has been growing like wildfire for 70 years because people like warm weather areas, and zoning controls in Texas are weak compared to most other places. It was also driven by oil/gas money for a generation. People didn't just go there for no reason- it was because there were jobs.

The article is literally about Kalamazoo and how even there they are having issues because of limited supply. Knoxville is kind of a wild example- it's a booming college town that has a huge jobs magnet that is already pushing up the cost of housing considerably.

Developers want to make money and decrease risk. They follow job growth, not the other way around. The reason rural areas are depopulating is because agricultural work has been becoming more mechanized for the last 130 years.

The explosion in Dallas (and Frisco and random even far out burbs) is most certainly not oil related—or warm weather related. The housing prices in far flung burbs have exploded in the last few years. Success breeds success, but entire new sfh neighborhoods are being snatched up by private equity investors, etc.

I’m not fixated on developers; rather, I’m focused on the investors who have destroyed housing markets across the country. More housing doesn’t fix the problem precisely because individual buyers can’t compete with private equity firms, hedge funds, and even regular investors who operate in cash.

Speculators skewed the housing market in the RGV, betting on Elon Musk’s venture bringing jobs. The jobs never came but the housing market was screwed up nonetheless.

This. ^^

[Anonymous]

I listened and while I like and respect Michael, I cannot believe they didn't mention:

1) NIMBYism - anti housing building sentiment that runs rampant throughout US citizens who already own homes

and

2) Impact fees that raise housing prices

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

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.

Agree with many of the points made here but strong disagree with the conclusion. There is a long literature in economics demonstrating that agglomeration happens because people are more productive when they are in proximity to each other. The evidence also suggests that, on net, they prefer the amenities of large high cost metro areas. For example, some of the latest research shows not only that educated workers are more productive in cities, but also that the increase in housing costs more than swallows up their wage gains. This is another way of saying "even with lower salaries in <lower cost smaller city>, I could buy a nicer house there, but I choose to live in <high cost city> because I like _____." Lots of ways people fill in that blank: things to do, places to eat, hobbies, professional networks, larger dating pools, etc.

Pushing firms and industries to de-agglomerate would be very costly, because we would lose the productivity gains from clustering people together. And, even if de-agglomerating successfully reduced housing costs as a % of income, many people would be worse off, because they would lose all the things that they were filling in the blank above with before.

We need to build more housing in our high-wage metro areas, and that's only going to happen when we either find better ways to incentivize municipalities to pull their weight in the housing market, or when we take some amount of control from them altogether.

Disagree. Strongly.

That premise assumes everyone must live near a Tier 1 city.

The reality is we now have ghost towns surrounding Tier 2 and 3 cities that desperately need revitalization.

I’m looking at this through the lens of the greater good and the people living in under-resourced communities.

Yes, people obviously prefer to live in places like the dc metro area where we have access to perhaps the best healthcare in the nation… but the solution isn’t to build more housing here. Rather, the solution is to revitalize and invest in other areas to make them more desirable. The Dallas metro area is a prime example…look at Frisco. If you build it, they will come. Now do that in Detroit, Kalamazoo, Knoxville, etc.

You think you understand the issue, but you have it backwards, and your examples are wild. Dallas area has been growing like wildfire for 70 years because people like warm weather areas, and zoning controls in Texas are weak compared to most other places. It was also driven by oil/gas money for a generation. People didn't just go there for no reason- it was because there were jobs.

The article is literally about Kalamazoo and how even there they are having issues because of limited supply. Knoxville is kind of a wild example- it's a booming college town that has a huge jobs magnet that is already pushing up the cost of housing considerably.

Developers want to make money and decrease risk. They follow job growth, not the other way around. The reason rural areas are depopulating is because agricultural work has been becoming more mechanized for the last 130 years.

The explosion in Dallas (and Frisco and random even far out burbs) is most certainly not oil related—or warm weather related. The housing prices in far flung burbs have exploded in the last few years. Success breeds success, but entire new sfh neighborhoods are being snatched up by private equity investors, etc.

I’m not fixated on developers; rather, I’m focused on the investors who have destroyed housing markets across the country. More housing doesn’t fix the problem precisely because individual buyers can’t compete with private equity firms, hedge funds, and even regular investors who operate in cash.

Speculators skewed the housing market in the RGV, betting on Elon Musk’s venture bringing jobs. The jobs never came but the housing market was screwed up nonetheless.

I know these large investors are easy bogeymen, but they are not driving the market anywhere.

https://www.rentalincomeadvisors.com/blog/hedge-funds-single-family-homes

[Anonymous]

Anonymous wrote:So do we really think there would be no encampments in DC if there were multiple homes that costs under $250,000? $150,000? $75,000?

No, of course not. Homeownership is not possible for many. However, living in unneeded office buildings and sharing a bathroom for very reasonable rent would indeed shrink the encampments.