Who's responsible for affordable housing?

[Corgski]

There are places with complex property markets with high demand and genuine land shortages and legitimate conflicting interests. There just seems to be more and more places which are pretending they are under the same constraints as Aspen or the Boston or Toronto CBD when the only thing that is going on is blatant price manipulation by the local authorities.

The permit cost in the article is not necessarily town permit fees, this is often misunderstood. I'll use a New Zealand example as it is the most extreme example I can easily identify but the principle is the same everywhere.
Here are four 0.2 acre building lots listed for US250 000 each in Pukekohe, a small rural town on the outskirts of the Auckland region. Land listed for over a million US$ per acre in a not particularly wealthy farming town with Auckland commuters.
https://rwwaiuku.co.nz/properties/residential-for-sale/franklin/pukekohe-2120/section/1925197

Just for comparison, one can get at least a couple of acres for less than that in Windham, NH, a high income commuting town in the Greater Boston area (median family income about $120 000).
https://www.trulia.com/for_sale/Windham,NH/LOT|LAND_type/

The paradox is that in the Auckland area, farmland is about $10 000 per acre. Even if location got one to Windham prices of maybe $100 000 per acre, those 0.2 acre lots would only cost around $20 000 each. The point is, one is not so much buying a piece of land which is cheap, you are buying the permit or "Right to Build" that comes with the land. Permits have been restricted to create a desperate bidding war to get a piece of land one is allowed to build on. In this case this the more abstract permit cost is at least US$200 000 for each of those otherwise low value lots.

Leads to some interesting theoretical situations. Imagine in a market like that you buy your 100 acre farm plus house for a 1.5 million US$ (or less) and convince your local council to give you permits to subdivide 1 or 2 acres of that into small lots. You have just paid for your farm and lost only an acre or two acre. Sacrifice a couple more acres, time to shop for a small yacht. Big money being made, without any actual work like development being done. These guys love the fact that people like beating up on developers. Got to ration building permits, can't have mean developers building houses and destroying the countryside. Destroying farmland is another bogeyman in NZ which is bigger than the UK but with less than 5 million people - only 1% of New Zealand land is developed.

I can't say whether rural Colorado has this specific issue but in a much milder form. It is a pretty classic game though and always something to keep in mind.

 

[geepers]

They just need to work harder...

More likely what they really need to do is vote better. Or in those countries with voluntary voting, go vote.

 

[geepers]

And smarter.

Vote smarter too.

 

[Corgski]

Vote smarter too.

Not that familiar with Australia housing markets (been a very long time since I visited) but haven't your prices become pretty crazy? Not surprised to see a city like Sydney get so expensive but my impression is that it seems to be everywhere. Whereas the USA has places where prices have gone crazy but most of it is still OK (relatively speaking).

 

[scott43]

Not that familiar with Australia housing markets (been a very long time since I visited) but haven't your prices become pretty crazy? Not surprised to see a city like Sydney get so expensive but my impression is that it seems to be everywhere. Whereas the USA has places where prices have gone crazy but most of it is still OK (relatively speaking).

That blip in 2007 cooled things down a bit..

Sydney is in the tank right now..

 

[Ross Biff]

Not that familiar with Australia housing markets (been a very long time since I visited) but haven't your prices become pretty crazy? Not surprised to see a city like Sydney get so expensive but my impression is that it seems to be everywhere. Whereas the USA has places where prices have gone crazy but most of it is still OK (relatively speaking).

There is an elephant in the room in Oz regarding the ability of first home buyers to afford anything reasonable within a reasonable distance from work. The current real estate slowdown from an unsustainable level would seem to have the potential to make things a little more affordable but anyone who already owns a home is stressing out over the fact that a place they bought 10 years ago for $175000 and last month was priced at, say, $750000 is now worth " only" $625000! There is little incentive to build affordable housing when short term gains and a quick buck come in to the picture. Long term planning and vision are in short supply as much as affordable housing is.

 

[geepers]

Not that familiar with Australia housing markets (been a very long time since I visited) but haven't your prices become pretty crazy? Not surprised to see a city like Sydney get so expensive but my impression is that it seems to be everywhere. Whereas the USA has places where prices have gone crazy but most of it is still OK (relatively speaking).

Most of our state capital cities had big housing price increases from around 2019. Some of 'em came off the boil early (e.g. Perth) as our mining boom wound up. Some a little later (e.g. Sydney) which has fallen back from the high point about 12 months ago.

That blip in 2007 cooled things down a bit..

Sydney is in the tank right now..

House prices didn't take much of as hit down here from the GFC. We never had the sub prime mortgage problems of the USA and the debt stays with the borrower so people tend to dig in and try to tough it out. Also our Govt of the time did a pretty good job going in early and hard with a stimulus package. So there was impact but a great deal less than the rest of the developed world. We didn't even officially go into recession.

Tank is a relative term. Still cost big enough $$$ to get into the market and housing affordability remains a concern.

We've had and will continue to have a large immigration program - it's good for business. The jobs are in the cities so it helps keep a floor under prices.

 

[Corgski]

That blip in 2007 cooled things down a bit..

Sydney is in the tank right now..

Yikes, you are right, I have not been keeping up to date. Anyway playing with this:
https://infographics.economist.com/2017/HPI/index.html

From 1980 to 2016, Australia up 235% in real terms (before current slump, which is big but still small relative to the total gain), New Zealand up 352.6%, Canada up 163.6% (your land speculators must be a little frustrated). USA only up 35.6%. Lot of price manipulation in health care and higher education in the USA, not nearly so much on housing.

 

[scott43]

So ran across this today..this thread isn't locked so I'll add some fuel to the fire and leave you to make your own conclusions on the spectacular job our gov't is doing in setting priorities historically on the left coast...

How slow retail sales would hurt economy if B.C. reins in money laundering
https://biv.com/article/2019/05/how...uld-hurt-economy-if-bc-reins-money-laundering

 

[Wilhelmson]

So ran across this today..this thread isn't locked so I'll add some fuel to the fire and leave you to make your own conclusions on the spectacular job our gov't is doing in setting priorities historically on the left coast...

How slow retail sales would hurt economy if B.C. reins in money laundering
https://biv.com/article/2019/05/how...uld-hurt-economy-if-bc-reins-money-laundering

Are these people moving clean money out of countries with currency controls or is it money from illegal activities?

 

[scott43]

Are these people moving clean money out of countries with currency controls or is it money from illegal activities?

Both...they don't actually know how much of each because they've ignored it for 20 years... There's just so much wrong with the headline..much like the Chamber of Commerce guy arguing for lower dev costs to enable affordable housing... It's like saying if you stop people from shooting each other all these cleaning businesses will really suffer...

 

[Goose]

Who's responsible for affordable housing? Adam Smith

The developers/owners control the supply, the renters control the demand. The consequence is the price.

All housing is affordable. To someone. At some price.

Cost of housing like most any product is supply/demand based. And nowadays (unlike the decades of the past) where most families have two working parents, it has lead to the cost of homes increases. The days of a large majority of woman staying home (housewife if you will) are over. The cost of living and also corporate greed beginning in the 80's and progressing rapidly through the 90's and into the 2000's has lead to both mom and dad having to work. But its become the norm and grandma and grandpa often spend their golden years helping raise the kids instead of truly and freely enjoying their golden years. Not that having the grandkids around isn't enjoyable but I think you all know what I mean. And so.....because both parents working is the norm the cost of housing reflects the ability of two primary incomes being able to make the purchases instead of what use to mostly be one primary income per family.

The way of life now for the average family is for both parents to go to college and both have careers. Or the one income isnt enough without college and both have to work.. heck even college cost imo is a scam in its own right but that's another subject..lol.
If grandma and grandpa cant take care of the kids, they go to daycare or a nanny is hired. Some do it out of necessity and others do it in order to have more money. Its a ctach-22 when it comes to cost of homes because if we ever go back to one income families as being a norm then the cost of housing would drop by default. It wiuld have to because the purchase would be based on one family income instead of two. In a strange way the fact that so many woman nowadays (vs decades of the past) have careers and also peruse them its actually worked towards causing the housing market to rise and stay high. The average family actually needs both incomes to make a purchase but the purchase is high because they have two incomes. Its a catch-22 situation.

Of course affordable housing would relatively still be something of existence either way. It is not at all something relative to CO or anywhere but is something of concern and debate in most every state (that I know of) and of course townships. I really don't get how the average young couple nowadays can afford to get married and by a home especially if they have to pay rent first.

 

[mdf]

Unfortunately, once having both parents work became common, it was only natural for costs to rise so that both parents had to work.

The answer to "How much does it cost?" is often "How much do you have?"

 

[Eleeski]

If prices of houses decrease to "affordable" levels (50% drop in price?) won't the people who own real estate be hurt? That's a large part of the population (over 60%). Those most affected will be the people who have been diligently paying off their houses for years (so they can't just walk away like a recent buyer). Older and retired people will get most of the burden. Is that fair?

Oh, the last time that real estate dropped significantly, we had a "great recession".

Eric

 

[Kneale Brownson]

Cost of housing like most any product is supply/demand based. And nowadays (unlike the decades of the past) where most families have two working parents, it has lead to the cost of homes increases. The days of a large majority of woman staying home (housewife if you will) are over. The cost of living and also corporate greed beginning in the 80's and progressing rapidly through the 90's and into the 2000's has lead to both mom and dad having to work..

I think this is backward. Both parents working is the result of WANTING housing of a certain sort. When mom was a housewife, the housing was pretty basic. There was little "keeping up with the Jonses" in housing. When we wanted four bedrooms for a family with two kids so visitors could have one, housing costs increased.

Resort area housing cost issues come from lack of land (gummament owns most of the land), second home development (like 60 per cent of dwelling spaces at some resorts), and the expense of getting building m.aterials to the resort areas

 

[scott43]

Oh, the last time that real estate dropped significantly, we had a "great recession".

Eric

Is that a bad thing?

 

[scott43]

I think this is backward. Both parents working is the result of WANTING housing of a certain sort. When mom was a housewife, the housing was pretty basic. There was little "keeping up with the Jonses" in housing. When we wanted four bedrooms for a family with two kids so visitors could have one, housing costs increased.

I mean, you can say that..and part of that may be true..but the reality is, if people can borrow more to get more, they will...and all the boats go up. So even if you wanted your crap 2 bedroom shack, you still have to pay more for it. You want your kids to go to good school districts, which means you have to buy in decent neighbourhoods. I think the other problem, in some places anyway, is foreign capital flow..the shift of housing to global commodity. Good luck trying to compete against the world on that nice house..

 

[mdf]

Unfortunately, once having both parents work became common, it was only natural for costs to rise so that both parents had to work.

The answer to "How much does it cost?" is often "How much do you have?"

To address Kneale's, point, I should have said, "costs and expectations".

 

[fatbob]

If prices of houses decrease to "affordable" levels (50% drop in price?) won't the people who own real estate be hurt? That's a large part of the population (over 60%). Those most affected will be the people who have been diligently paying off their houses for years (so they can't just walk away like a recent buyer). Older and retired people will get most of the burden. Is that fair?

Oh, the last time that real estate dropped significantly, we had a "great recession".

Eric

Only if you are looking at real estate from an investment perspective - for someone who simply needs a "home" price falls don't change anything other than on paper. It's only because people start to look at their home as a source of cash and capital that there begin to be problems perceived from a housing price crash. Arguably even a price crash aids essential moves up the ladder as the cost to change becomes less, though equally it also means a bigger pool of people have the capacity to meet that cost to change.

 

[Goose]

I think this is backward. Both parents working is the result of WANTING housing of a certain sort. When mom was a housewife, the housing was pretty basic. There was little "keeping up with the Jonses" in housing. When we wanted four bedrooms for a family with two kids so visitors could have one, housing costs increased.

Resort area housing cost issues come from lack of land (gummament owns most of the land), second home development (like 60 per cent of dwelling spaces at some resorts), and the expense of getting building m.aterials to the resort areas

But both working allowed for the pricing to rise. And then it also affected the smaller market homes too. Its also why renting is so darn expensive too. Most average folks now cant buy a home in a non depressed neighborhood unless both parents pool the two incomes together or mom and dad were able to help provide the financial foundation to the young folks. Just think for a moment if majority of woman dint enter the professional workforce (like was the case decades ago) houses couldnt sell for the prices they do because most average family wouldnt be able to buy them.at these prices.