Where can you afford a home on your income?

[Ken]

I didn't claim it was a paragon of good government. I said that housing is relatively affordable because the government largely stays out of the way compared to in west coast cities that have put up so many barriers to new housing that prices have gone out of sight.

But you just told us earlier:

The more expensive places are the ones that are most productive. They are the place with a vastly wider variety of jobs and opportunities. Sure one can find cheap housing in places like rural West Virginia or western Nebraska. Then what? Those places are depopulating for a reason.

Doesn't this mean Houston is less productive and has a narrower range of jobs and opportunities? (Perhaps Houston has fewer daycares and bank branches, to use a recent definition of "opportunity" from this august forum.)

By your statement above, any place that is "productive" with good jobs, etc. is going to have expensive housing.

What are your answers to the housing crisis? Do you have any? Other than moving to rural Ohio? Which I promise you is not any sort of answer. Invite 10 million Californians to move to rural Ohio and you'll see what I mean.

The answer to the housing crisis is to stop moving millions of people into America, mostly from places where housing is quite affordable and cheap, into America which lacks the housing to hold millions of new arrivals who don't have any money nor the ability, skills, or resources to build themselves a house.

As I've told you countless times, I live in a place with absolutely no zoning and very, very few restrictions on building - none whatsoever on single family homes or duplexes, and minimal restrictions on larger buildings. You could move here, buy a 5 acre piece of land that sold for $35,000, and put up high rise apartment buildings and go as dense as you want. There are also plenty of job opportunities nearby (and, believe it or not, daycares and bank branches, including a bank headquarters, so I guess opportunity really does bound here).

Yet surprisingly the most in-demand construction here is single-family homes, not "dense" apartments, duplexes, and so forth.

Houston is one of the exceptions. There are perhaps a few others. But for the vast majority of America including most of the east and west coasts, yes economic productivity comes with high housing costs. You can find a map of the most economically productive parts of the US and overlay it onto a map of housing costs and the two maps will largely overlap. Go ahead and try it.

So your only solution to the housing crisis is to crack down on immigration? That's it?

Connect the dots. How will that make housing cheaper in say Seattle.

[Josh]

Connect the dots. Nearly every “economically productive” area in America has restrictive zoning.

Most of America by land area has no zoning at all. But according to you, nobody wants to live there, is moving away, and it lacks economic opportunity and isn’t productive.

[Ken]

Connect the dots. Nearly every “economically productive” area in America has restrictive zoning.

Most of America by land area has no zoning at all. But according to you, nobody wants to live there, is moving away, and it lacks economic opportunity and isn’t productive.

The solution you proposed to the housing crisis upstream is to restrict immigration.

Connect the dots to explain how restricting immigration will reduce the price of a house in say Seattle or Silicon Valley.

[Bootstrap]

Back to the topic, please?

Ken, looking at Chetty's map, I think there are some places where you can do much better on an average local income than others, wouldn't you agree?And some places where the wages that teachers or janitors or fast food restaurant workers get are going to make it very very difficult to live at all?

And other places where that is much easier?

[Ken]

Back to the topic, please?

Ken, looking at Chetty's map, I think there are some places where you can do much better on an average local income than others, wouldn't you agree?And some places where the wages that teachers or janitors or fast food restaurant workers get are going to make it very very difficult to live at all?

And other places where that is much easier?

Which map is that? The "opportunity index map?" It doesn't actually tell you want kind of opportunities are available. For example, Casper Wyoming rates high on opportunity. What are those opportunities? Mostly oil and gas and mining. Not something that is going to interest my daughter or most people frankly.

Here is a map showing where the economic productivity and jobs actually are.



And here is a map of housing rents



and a similar one showing home prices



Notice any overlaps?

The real question is whether or not home prices are simply an act of nature or the predictable consequence of government policy. And if so, how can those policies be changed to address the problem?

[Josh]

Connect the dots. Nearly every “economically productive” area in America has restrictive zoning.

Most of America by land area has no zoning at all. But according to you, nobody wants to live there, is moving away, and it lacks economic opportunity and isn’t productive.

The solution you proposed to the housing crisis upstream is to restrict immigration.

Connect the dots to explain how restricting immigration will reduce the price of a house in say Seattle or Silicon Valley.

I don’t really care at all about reducing the price of a house in Silicon Valley, or the price of a house at a country club/backyard golf private neighbourhood a 35 minute drive from me. They are playgrounds for rich people.

Less immigration means fewer people trying to find housing (and right now many immigrants can’t find any place to live at all and are facing homelessness - alongside millions of Americans already here). There simply isn’t any place to put more people. More demand means higher prices for everyone. Landlords win, everyone else loses.

[Ken]

Connect the dots. Nearly every “economically productive” area in America has restrictive zoning.

Most of America by land area has no zoning at all. But according to you, nobody wants to live there, is moving away, and it lacks economic opportunity and isn’t productive.

The solution you proposed to the housing crisis upstream is to restrict immigration.

Connect the dots to explain how restricting immigration will reduce the price of a house in say Seattle or Silicon Valley.

I don’t really care at all about reducing the price of a house in Silicon Valley, or the price of a house at a country club/backyard golf private neighbourhood a 35 minute drive from me. They are playgrounds for rich people.

Less immigration means fewer people trying to find housing (and right now many immigrants can’t find any place to live at all and are facing homelessness - alongside millions of Americans already here). There simply isn’t any place to put more people. More demand means higher prices for everyone. Landlords win, everyone else loses.

You may not care about the cost of housing in cities. But some of us do. And cities aren't just the playground of the rich. Although without housing growth they eventually will be.

So you actually do accept that the laws of supply and demand do apply to housing as well? I guess we are making progress there. I would suggest that if we don't find creative ways to increase the supply of housing in cities they will, in fact, become nothing more than a playground for the rich. No matter how much we try to restrict immigration. And that isn't good for our society. And it certainly isn't good for the next generation of young families who don't come from wealth and who want to make their start in life.

Since you do accept that housing prices are subject to the laws of supply and demand, I'm not sure why you are so opposed to measures intended to increase the supply of housing. That is actually the more conservative approach to the problem. Cutting regulation and red tape and letting the market decide rather than bureaucrats. Who in big cities mostly answer to older wealthy liberals who want to obstruct any change.

[Josh]

Hey, if you want to turn Seattle and Silicon Valley into Cairo-style slums or favelas, be my guest. As I’ve explained to you over and over, most of America has no zoning at all. Demand is high to live in places with zoning. Demand is low to live in places with no zoning.

Demand is high to live in “nice” places. There isn’t much demand to live in places without zoning in (for example) Central America.

[JayP]

I am late to this party but a major factor in homes becoming unaffordable for the middle class is the basic supply and demand curves have been skewed.

Real estate and tax laws give unfair advantage to those, especially corporations and PE firms buying houses, over “real people” for rental purposes.

If you buy a home, you pay taxes, a mortgage, etc. upkeep comes out of your pocket.

But a PE firm buying the same house for a rental gets to write off upkeep as expenses subtracted from the income, but most importantly gets to depreciate the property. The get cash flow and a paper loss. Who can compete.

This creates more demand with no increase in supply as well.

We need to take away the tax advantages of both companies and individuals that use houses as rental properties.

[Ken]

I am late to this party but a major factor in homes becoming unaffordable for the middle class is the basic supply and demand curves have been skewed.

Real estate and tax laws give unfair advantage to those, especially corporations and PE firms buying houses, over “real people” for rental purposes.

If you buy a home, you pay taxes, a mortgage, etc. upkeep comes out of your pocket.

But a PE firm buying the same house for a rental gets to write off upkeep as expenses subtracted from the income, but most importantly gets to depreciate the property. The get cash flow and a paper loss. Who can compete.

This creates more demand with no increase in supply as well.

We need to take away the tax advantages of both companies and individuals that use houses as rental properties.

The houses are still occupied by families one way or another. Private equity companies aren’t buying homes to let them sit empty. And they are still paying all the same local property taxes. More in fact since they don’t qualify for homestead exemptions. All the write-offs you are talking about are Federal income and corporate taxes. Which yes, are an issue but they aren’t a local issue.

The difference between a neighborhood that is all owner-occupied and one that has a significant portion of corporate-owned rental homes is that the later is more economically diverse which also often means more ethnically diverse. Converting homes into rental doesn’t actually remove them from the housing pool, it just converts them from owner-occupied to rentals.

Now it is most definitely the case that a lot of homeowners do not want to see rentals in their neighborhoods. Because they see it as declining the property values, bringing the “wrong” sort of people into the local schools. And the homes don’t get as well maintained, at least in theory. I get that.

So I am actually of mixed mind when it comes to corporations buying up single family homes. What it mainly does is break open the economic homogeneity of neighborhoods and allow people who couldn’t afford to buy into those neighborhoods to still live in them, put their children in the local schools and so forth.

The main thing we need in many parts of this country is MORE housing whether it is rentals or owner-occupied housing. The market is all inter-connected so more supply (whether it is rentals or owner-occupied housing) still increases and supply and brings down prices across the board.

Honestly, from the point of view of Christians, we shouldn’t be so attached to our homes and our fancy exclusive neighborhoods. That is contrary to fundamental Christian teachings such as the Ten Commandments. Otherwise what does it mean to say “thou shall not covet thy neighbor’s house?”