Waiting 100 years for a home isn't a housing crisis, it's a moral collapse

The key here is incremental development.

So, I'm really into municipal finance and fixing the housing crisis, which got me into Strong Towns. There is a solution, but it's not one that is going to make everyone happy (obviously), it is the state facilitating or even gently subsidizing incremental development.

If everyone is, by right, allowed to build the next larger "unit" of housing (for simplicity's sake, suppose 2x sqft[m2], height, and housing units of the median residential building within a half-mile radius), but not allow to massively build piles of housing on one site, then we effectively solve both problems.

Firstly, this allows for a massive amount of housing construction, with market incentives driving it. Out of the gate, you have the potential to easily double the housing supply. Secondly, the profits from the housing must be more-or-less distributed to the existing homeowners, and the potential to lower property values by building non-like for like housing doesn't exist. Neighborhoods slowly evolve, they don't rapidly change. Third, it incentivizes homeowners to build-to-last with the next stage of growth built in, because it's much cheaper in the long run to build a structure with the capacity to stack another unit on top than it is to tear down a building and rebuild the unit at double the capacity. Finally... and this is the thing that most people miss. It's fast. Smaller-scale developments need a much smaller planning phase, and there are many, many more of them to be constructed. This supports economies of scale, instead of the existing system, with all it's red tape that only allows a few actors to wade through the legal system for large developments. This should create a wide construction industry instead of a narrow one.

I really think the housing crisis is solvable with the top level government insisting that incremental development be allow by right, and that larger scale developments be put up for local review. This allows a city to grow organically, instead of all at once, but only at specific sites.

100%, and it’s not clear there’s any solution to that, because voters will punish anyone who tries to fix it.

This is the problem with housing in general. Everywhere housing becomes an investment we see rampant NIMBY-ism and self-destructive local legislation.

This is the thing I never see addressed. Wouldn't fixing the housing crisis necessarily involve slashing down property values? Which are for a lot of people their only form of savings?

Genuine question by the way, I would like an answer.

"Now", it is 2025, not 2021, and there are one billion empty apartments in China, and the local government selling land to developers magic money tree ponzi scheme is running out of road.

Not fully, but a sizeable part of this problem is due to NIMBY-ism and power that local councillors have

Be specific - what restrictions are these and how do they affect building?

If they put 1M into a house, then sell it and buy a 500k bungalow at retirement age, that unlocks 500k living/care money.

If they put 1M into a house, prices fall, they sell it for 100k and buy a bungalow for 50k, that unlocks only 50k to live on.

They lose decades of saving/investment money even though they can still sidestep one house to another.

Germany here, I have a fixed rate for 30 years.

I would assume it would be because the poster would find themselves in negative equity (depending on how much was left to repay on the mortgage) with all the potential pitfalls that come with it, such as if you want to borrow further money against the value of the property or if you want to sell up and move.

Let's say you buy a house at 500K with a 400K mortgage. House prices fall 50%, you owe 400K on a 250K house. Banks would repossess as the loan value can't be guaranteed by the asset. Separately, you could default on the loan if laws allow it, losing much of your wealth and making it impossible for you to get a loan for the 150K to move to another house. You could keep paying the loan, spending many years of income for exactly nothing in return. People tend to buy another house immediately, so there isn't that much "freed" money. So either banks lose a huge lot of money, or people do. Either way, massive financial crisis. That's an extreme case, adjust for lower fluctuations. I can be, and probably am, completely wrong about this.

No idea how it works in other countries but in the UK there are fixed-rate mortgages and variable-rate mortgages. Fixed rate ones are where the interest rate is locked in at the time the mortgage is taken out so any changes to the national base rate (positive or negative) do not change how much you have to repay, variable-rate mortgages are when the interest rate will fluctuate as the national base rate rises and falls.

Fixed-rate mortgages are time-limited (typically between 2-5 years) and after that you either switch to a variable rate mortgage or you take out a new fixed-rate mortgage based on the interest rates at the time.

People that bought properties just before COVID got dirt-cheap fixed-rate mortgages as the Bank of England base rate was 0.5%. Anyone sensible locked it in for 5 years which is typically the maximum available. After those 5 years were up, the base rate was about 5% which is a huge jump. I think most people have locked theirs in for 2 years now in the hopes that in a couple of years the base rate will be much lower.

Most(?) UK loans are fixed for a 5 years or so and then revert to the standard variable rate of the bank. Variable rates can make financial planning uncertain. But the bigger issue is often just the standard variable rate you get put on isn't the best rate, so you are generally advantaged to review and move.

US loans on the other hand are government backed to allow for longer fixed terms (30 years etc.)

You can keep the loan without refinancing it, but you move to what's known as the "standard variable rate" which is generally unfavourable. Most people therefore remortgage to a new "introductory" offer which will be fixed for 2, 3 or 5 years. This is expensive, time-consuming and inconvenient, like much of the UK housing system. A few years ago interest rates shot up, and some people had to stay on the SVR as fewer banks were offering new fixes.

A bank would be mental to commit to a fixed interest rate on a mortgage for 30 years. Economic conditions change.

Housing is a huge cut of your salary. If housing were affordable, that money could be saved for retirement. Instead, it's paid toward a mortgage by necessity. So there is little room for savings other than hoping the house sells when you retire.

> Uhh, why? Unless you were planning on selling up and spending it all on a cruise or something house prices are immaterial to home owners.

I don't know how it is in the UK, but in Paris, I hear from a lot of people that their retirement plan is to sell their Parisian apartment and move to a lower cost area with what they've gained. Doesn't work out if your "investment" is underwater.

Interest rates for individuals buying homes should be near zero. This needs to be subsidized by higher interest rates or taxes-on-businesses elsewhere.

> Uhh, why? Unless you were planning on selling up and spending it all on a cruise or something house prices are immaterial to home owners.

No, it's not immaterial. If you paid $1M for something and next year that something is worth $500K, it's a problem, regardless of whether you own it or it's mortgaged, regardless of whether you plan to sell it or live in it. You lost $500K, it's as simple as that.

my mortgage doesn't decrease if my house loses half its value.

Austria too - https://www.bloomberg.com/news/features/2023-11-08/the-desig...

Ya I don't want it to be cheap, rather super solid and built for 100 years, but run on that type of time frame. I have some friends who build for universities and that is how they think when they build a project versus a cheap throw up that is barely expected to last 20 years.

Even if they are built, the entire insurance system post-Grenfell is causing absolutely insane service charges for residents.

Mine are up >50% since 2018, that’s despite gaining no new services and work on the building being put on hold due to it not being essential. The fact that it’s a relatively new build (about 12 years old) is almost irrelevant as construction is shoddy.

Putting new buildings up is only part of the problem, the entire system is fucked.

if that is SF then that sounds like the discretionary review process for entitlements, are you familiar with any of those words?

what country is that?

> when people feel safe, supported, and optimistic, they have kids.

I actually thought that wasn't the case. Across the entire world, people in more precarious circumstances have more kids. I don't know why.

My understanding of human geography and population pyramids is that it's the opposite - when a nation is developing but not developed, birth rates are the highest. Developed nations have lower birth rate.

Nordic countries have the lowest birth rates outside east asia and they rank among the top on surveys of happiness, optimism and the like. I think you need to revisit your thesis. Some cultures just dont prioritize having kids.

Ugh, that made me look at literacy rates in the USA at the 6th grade or below.

Ya good point, I see those all the time in Serbia. We need some kinda of base building for supply, and the rest of the bit where they can override local zoning, speed up permits, override reviews, etc.

Par of Khrushchev's legacy was switching away from the earlier focus on higher quality housing that largely favoured the elite in favour of throwing up cheap housing fast to alleviate the severe housing crisis.

But as a result, a more enduring part of his legacy became that due to economic stagnation, a large proportion of this really poor quality housing that was indeded as a stopgap to meet desperate short-term housing need, survived not just Khrushchev, but the Soviet Union...

And that's kind of the dream TBH. Every private dollar that goes into housing is a dollar taken away from people who could be building businesses themselves or investing. Having cheap, plentiful housing provides a base that people can build from. There's other benefits too, say your relationships explodes and you need a new place, the last thing you want to do is be living with your ex, or couch surfing with friends.

Just medium-to-high density by UK standards around existing larger train stations would do an immense amount to alleviate the UK housing crisis.

I used to live on a road with ~660 houses. The road, the houses, and the yards combined took up ca. 40,000 m^2. Near the local well-connected train station, a few new-builds in the 20~ floor range added more homes than that entire road took up in ~2,000 m^2.

On top of that, because of its location, the strain added on transport was far less - most people would be a short walking distance from both shops and commuter trains to the centre.

There are hundreds of major transit hubs like that in the UK where you could easily add do relatively modest hubs of higher-density housing and add a massive amount of capacity.

What's lacking is the political will to solve the massive problem of house owners who have been trained to see rising house prices as financially beneficial to them.

When most of those house owners are in an older demographic more likely to vote, it's a huge challenge to fix.

I interpreted that comment as not meaning density but instead geographical concentration.

WFH was an opportunity to escape from geographical concentration which is the main cause of the high cost of housing.

Why is it supposed to be good? Having lived in a (relatively small) city and in the countryside, I vastly prefer the countryside and actually find it more convenient in a lot of ways. An example would be the shops are a lot bigger as the land is cheap, so a 20m drive in the country gets me to a massive shop, but in the city half an hour on a bus or a 15m drive gets me to a much smaller one.

Density itself is good for infrastructure, but empirically it seems that we cannot exceed some level. Singapore or Hong Kong for example desperately need more density but it seems impossible to do so.

Then there is the question of wasted resources. We spent all of these resources to build up Detroit. Now what?

Paris, where I live, is three times as dense as Tokyo... The entire city is mixed-used 6 storey buildings.

> And density of European cities is still nowhere near what people have in East Asia

And thankfully, because of that our suicide rates are lower than in East Asia.

People aren't chicken and hell even poultry will show signs of aggression, depression and other mental health conditions when cramped in too tight conditions.

Near-slave labor from Bangladesh has downsides too (moral ones, at the very least)

Yep. The shortage is overblown. Just look at past crashes (e.g. Ireland, Spain, etc). The crashes weren't caused by oversupply of housing, but a credit shortage. After the crash the so-called 'shortage' magically disappeared and people stopped talking about it (until the next boom).

I don’t know your particular area, but I have experience buying and selling raw land and it’s a much more unique and niche area of real estate that fewer people are competing in. Are you sure it’s actually zoned correctly and doesn’t have latent disputes?

I can give you plenty of stories of people who bought an empty chunk of land for $350k and then 20 years later sold it for around $350k. They would’ve done better investing in Pokémon cards (or anything).

Add on the flip side developers usually want to move fast and cash in now, in my experience, not do what you’re describing.

The situation is significantly more complicated for Paris and Berlin which are touristic hot spots on top of being big cities.

For exemple, the 19% you quote in Paris include occasional occupation which is partially driven up by the insane price of hotel for which people who need to spend time in Paris regularly have to compete with tourists.

But I disagree with you on the absence of policy to adjust the situation. Paris has been doing a lot in the past few years.

The city severely limited the ability of owners to turn their property into short term rentals to try to increase the long term rental offering.

Then there was the rent cap but its impact is more difficult to estimate. On the one hand, it made renting properties less interesting and probably incitated some owners to keep their appartments empty. On the other hand, it severely limited the possibility of borrowing money for buy to rent project as it doesn't make much sense financially and therefore lowered the market pressure for people buying to live.

Last year, they significantly increased the vacant property tax. It's calculated on the rental value and quickly raise to 34% of it so it rapidely doesn't make sense to keep an appartment empty if you are not going to be in Paris very frequently.

Heavily subsidised rent