It's frustrating that the problem is acknowledged (Housing prices are too high) but the solution seems to evade the author and nearly everyone involved in setting housing policy; not because of a lack of rent control.
Housing is too expensive because it's illegal to build enough of it.
No, multi-generation households will not save us. We should not make it impossible for young people to move to cities where high-paying jobs are, or force anyone to stay in abusive homes because we have made it impossible to live on your own.
Housing is too expensive because it is an investment, full stop.
I live in Tokyo, famed for its "housing affordability".
Guess what, it's completely unaffordable for normal people now, because of people purchasing homes for investment purposes. Rent is still affordable but has a rapid upward trend as well.
I do always find it funny when people online bring up Japan as the leader of keeping housing affordable. Pretty sure the average income to house price ratio in Tokyo is much worse than it is in major US cities. (If I'm wrong on that data someone correct me, I'm basing it off of mental math of house prices I saw on a sign and salaries friends told me).
I think it was true for a long time, and home prices were a good deal. There is also a fair bit of distortion due to near zero interest rates, where banks are willing to loan higher multiples here with 0 down payment.
But house prices have exploded upwards since covid, and wages have not.
So it's an extremely similar situation to everywhere else in the world. And the underlying reason is the same: people buying because they think real estate will go up in value.
By the way, as a fun fact, the most common mortgage in Japan is a ARM. Last I checked, 70-80% of mortgages in Japan are variable rate. The BoJ is currently on a path of adjusting rates upwards. So we will see how this all shakes out. If a situation like the GFC happens, it will not be pretty.
This is very imprecise data that I have, but my understanding is that pre-covid Tokyo was around 8M yen median household income, and a median home was around 60M yen, so roughly 7-8x the median HHI. Now it's around 80M for a new home and wages are the same.
Seattle even right now is ~110k ish HHI, median home price is ~$800k, so that's 7-8x, before COVID I think it was around ~650k, so around 6x. Also Seattle is known for being pretty expensive, a lot of cities like Houston have an even better multiplier.
It just doesn't seem that different to me. Feels like a lot of people are unhappy with property prices and think it's uniquely a US problem, whereas the system in the US actually works decently well compared to a lot of places. (It would take many essays for me to list all the flaws, I'm not saying it's perfect I'm just looking at it relatively speaking).
The fundamental problem is that building quality housing is a society-level project - you don't just need to build a house/apt but supporting infrastructure, such as water, power, waste, public transport, supermarkets, and figure out how to connect it to the city's infrastructure.
There used to be political will to do this. Nowadays what I see around me, is that developers keep plopping down housing projects either in the middle of nowhere or in some highly undesirable area (like next to the train tracks, or some old industrial development) and sell the resulting apartments at crazy pricess. Zero infrastructure of course.
No, it's not. Society needs to back the F off and let anyone and everyone who owns property build what they can where they can as they want.
> just need to build a house/apt but supporting infrastructure, such as water, power, waste, public transport, supermarkets, and figure out how to connect it to the city's infrastructure.
No, you don't. 40yr ago, before you people <broadly gestures at HN with a certain finger on each hand> ruined it, it was common for even small time developers to build entire streets of houses on well and septic with 100a panels and pay the utility for a transformer at the end of the street. Obviously they weren't doing this downtown and obviously this doesn't work in all climates but there's no reason it can't be done everywhere east of the Mississippi.
No it isn't. We deliberately hobble home construction with zoning and permitting rules, which aren't based in any infrastructure carrying capacity concerns (in fact, dense housing has advantages for infrastructure and energy uses --- few things are as inefficient as a single-family home).
Fixing exclusionary zoning rules isn't a society-scale project.
There still is political will to do this, it happens all the time around the USA. Do you think all these neighborhoods with hundreds of new houses get built without water, power, waste, and supermarkets? See DR Horton/Lennar/Toll Brothers/etc websites, and they will all be connected to utilities and have retail mixed in or somewhere near.
If you spend enough time at city council meetings you’ll often discover that not only are those developments paying for their infrastructure; they’re also paying to modernize/maintain other supporting infrastructure - it’s literally often how they get the projects approved!
“You can build this 100 home development but it will need to pay for remodeling the school” type things happen all the time.
At least in Texas, I've seen this go both ways in practice. There is definitely some 'give something to get something' action that helps grease the wheels early on in the permitting or development process.
Years later, Some developments / developers will petition to annex themselves from the outer reaches of their adjacent jurisdictions to prevent the city from growing into these areas and 1) exerting control and 2) obtaining the roads, utilities and treatment facilities, and drainage facilities. Municipal Utility Districts (MUDs) are a popular avenue for this, and arguably works in some cases. Adjacent cities may not have the existing tax base, utility infrastructure and operations, and public works to support the type of growth in some areas. My experience is just in the past ~7 years working in the Civil field in Texas. Probably variations on this across the US at least.
Funny you mention schools, because on at least one project of mine, we've constructed a public middle & high school along with a charter school on-premise. No doubt that was a big selling pitch during the early development meetings.
Schools are really the big one - utilities are cheaper and simpler (for some value of simpler!) and existing cities really don't want that to get out of control.
(This is one of the reasons that senior developments slide through easier, as they don't impact the student base much but do provide tax revenue, which usually makes the city's job better.)
The political will disappeared as soon as we became a boomer society.
In the 1970s and 80s there were riots. Now most voters are old and own a house so they don't really give a shit. Hell they WANT prices to go up because it is their pension.
> Housing is too expensive because it's illegal to build enough of it.
This is a factor in some places, but a gross over-simplification in others.
There are neighborhoods full of affordable new construction houses not far from where I live. They sell slowly because people would rather live in the popular areas.
There are affordable high density housing options for rent here. They stay on the market because everyone wants their own house.
It's not even about remote work here, as the popular location for office builds and jobs is actually closer to those affordable housing neighborhoods few people want to live in. Being near the office buildings is actually a reason why they're undesirable.
There are some obvious broken housing situations like San Francisco, but I don't see permitting reform as a magic cure-all in every city.
Permitting reform made Austin, Texas the second-most affordable city in America by rent to income ratio.
>There are neighborhoods full of affordable new construction houses not far from where I live. They sell slowly because people would rather live in the popular areas.
Mortgage rates rose and property prices have not yet fallen to match reality. I would bet that this is a much stronger factor in preventing those new homes from selling rather than buyers simply having a preference for different neighborhoods.
The mortgage rate change has an insanely huge effect (which means that keeping them artificially low for 20 years has a similar effect the other way) - and it’s worse right now because anyone who owns a house with a mortgage would significantly increase their payment if they sold and bought an identical house next door. So people just aren’t moving.
> Housing is too expensive because it's illegal to build enough of it.
A lot of us are in the US, where (except for SF and handful of specific cities) housing is legal to build practically everywhere, municipalities are handing out free money for any form of development, so people do build tons of new housing all over...
...and the prices still rise anyway.
80% of the buildings within a 1 mile radius of me did not exist at all 20 years ago. There's almost 5,000 new units around. Half of the new apartment buildings are only at like 70% utilization. We barely hit 1% population growth year-over-year.
Prices are at 40 year record high prices anyway (yes, even after factoring for inflation).
> Housing is too expensive because it's illegal to build enough of it.
This is part of the problem, and one that many people actively want to avoid discussing so it is important to discuss it, but it is only part of the problem.
I think for real reform in this area you need to have the government strictly regulate rental properties.
That includes determining the rental price, and imposing fines for empty units.
Every time there is a stimulus check or an increase in minimum wage the detractors say "this will just be captured by the landlords".
We need to have clear stipulations for rental prices and ideally link it to another value that also changes over time.
I would argue a 1 bedroom apartment should have its rent capped at less than 40% of the monthly take home of someone on minimum wage.
Let the landlords and employers battle over who gets the bigger slice of that pie, while allowing the workers to survive their petty skirmish.
Here is Adam Smith talking about a minimum wage:
> A man must always live by his work, and his wages must at least be sufficient to maintain him. They must even upon most occasions be somewhat more, otherwise it would be impossible for him to bring up a family, and the race of such workmen could not last beyond the first generation. Mr Cantillon seems, upon this account, to suppose that the lowest species of common labourers must everywhere earn at least double their own maintenance, in order that, one with another, they may be enabled to bring up two children; the labour of the wife, on account of her necessary attendance on the children, being supposed no more than sufficient to provide for herself: But one half the children born, it is computed, die before the age of manhood. The poorest labourers, therefore, according to this account, must, one with another, attempt to rear at least four children, in order that two may have an equal chance of living to that age. But the necessary maintenance of four children, it is supposed, may be nearly equal to that of one man. The labour of an able-bodied slave, the same author adds, is computed to be worth double his maintenance; and that of the meanest labourer, he thinks, cannot be worth less than that of an able-bodied slave. Thus far at least seems certain, that, in order to bring up a family, the labour of the husband and wife together must, even in the lowest species of common labour, be able to earn something more than what is precisely necessary for their own maintenance; but in what proportion, whether in that above-mentioned, or any other, I shall not take upon me to determine.
Children aren't being produced. Birth rates are declining.
People conflate the carrying capacity of the economy with GDP, but these are different. The economy grows but requires fewer workers over time. As the carrying capacity decreases, the population decreases. On the ground, this manifests as the inability to afford child rearing.
The excerpt you cited assumes that this race of workers must afford to perpetuate itself in order to be viable. It cannot perpetuate itself, and it is not viable.
>That includes determining the rental price, and imposing fines for empty units.
We already have a fine for empty units. They're called property taxes, and they're the strongest and easiest-to-use tool that local governments have for reducing vacancies.
>I would argue a 1 bedroom apartment should have its rent capped at less than 40% of the monthly take home of someone on minimum wage.
Then you're making it de facto illegal to build new housing. No bank is going to lend money to anyone to build more housing if they can't charge enough rent to cover the loan.
>In what US city can someone on minimum wage raise two children? On the US federal minimum wage?!
Maybe not the US federal minimum wage, but Austin has become the second-most affordable city in America (median rent price to median household income ratio), just by permitting a huge number of apartments.
"Affordability" is more than just rental prices which is why I think building more units is insufficient.
You need to address wages as well.
> Then you're making it de facto illegal to build new housing. No bank is going to lend money to anyone to build more housing if they can't charge enough rent to cover the loan.
This implies you think landlords are trying their best to lower prices, only charging enough rent to just cover their loan payments, which is absurd.
> In what US city can someone on minimum wage raise two children? On the US federal minimum wage?!
Federal minimum wage is a strawman in large cities.
I'm in a medium cost of living city and I doubt I could find a minimum wage job listing if I tried. Fast food places and government buildings even advertise $15-20/hr jobs because they can't hire enough people.
Both assertions display an offensive level of detachment and ignorance.
> Federal minimum wage is a strawman in large cities.
I did first mention city minimum wage, and only referenced federal minimum wage after to drive the point that federally this discrepancy is even more grotesque.
States with "large cities" that use the federal minimum wage:
> Five states have not adopted a state minimum wage: Alabama, Louisiana, Mississippi, South Carolina and Tennessee. Three states, Georgia, Oklahoma and Wyoming, have a minimum wage below $7.25 per hour. In all eight of these states, the federal minimum wage of $7.25 per hour generally applies.
> Housing is too expensive because it's illegal to build enough of it.
A lot is being built. The problem is ruthless cost extraction, parasitic chain of agents and agencies, and oftentimes real estate is the only investment vehicle free of capital gains tax. Have you seen what is being built everywhere from Australia, through Europe, to America? 20-30 sqmt apartments where you walk in straight to the kitchen and sleep next to the oven and dishwasher, if the place is even large enough to fit the full kitchen.
Yes, per-adult, multi-generation family homes are even more cost-effective than for couples (even accounting for smaller pensions compared to salaries), and both are more cost-effective compared to singles.
Apart from growing prices, my experience (not in Canada though) is that living spaces are growing too, as we are not satisfied to live in the same cramped 20m2 studio as singles were 30 or 50 years ago.
> we are not satisfied to live in the same cramped 20m2 studio as singles were 30 or 50 years ago.
I conjecture that this is, at least partially, caused by modern people being more isolated and even when they do socialize there's less "third spaces" to get together with friends so someone ends up having to host the superbowl watch party in their apartment, for example.
Part of it is the economics of construction. Part of it is growing threshold for “bare minimum”. In unit laundry was optional in the 70s and I’ve heard people wanting a “laundry room”. Pandemic has pushed the need for an office. Larger kitchens and more storage space is also a big difference in newer units vs older ones.
In the '70s, in-unit laundry in a rental apartment was almost unheard of except at perhaps very top end. An on-premises shared laundry room was normal but having to go to a laundromat was not uncommon either.
I did not have laundry facilites of my own until I bought a house.
>Median home sizes have gone from 1400 sqft in the 70s to 2400 sqft in recent years.
Because you literally need more square footage to amortize all the regulatory required and industry checkbox required bullshit over. Ain't no different than General Motors saying "no more small cars from us in the US".
Some of us might be satisfied, but zoning and development approvals seems to have a hatred of small apartments. The ones that get proposed meet fierce opposition from locals who are afraid of having too many neighbors who aren’t rich people.
30 years ago I did not need to rent a 20m² studio. As a young college student I rented a spacious 750 sq. ft. 1-bedroom, furnished apartment that was more than affordable on my paycheck from driving a forklift at the pipe yard.
Currently it's impossible to rent 70 sqmt furnished apartment anywhere in the developed world from a warehouse, agriculture, or hospitality job. Maybe if you worked in Amsterdam and lived in Cambodia.
Furnished, at the time, cost almost nothing. It wasn't even furnished by the lessor, it was a separate local furniture company, their monthly was very low and they delivered when you moved in and hauled it off when you moved out, included in the fee.
Indeed. We need a lot more small apartments for individuals. It goes against conventional wisdom that we need more "family-sized homes" but in reality every jurisdiction just needs a ton of 1-bed units.
The book the two income trap describes this. It talks about better schools etc but if you are competing with people that have two incomes as an individual you better have two incomes worth of salary.
The issues starts to arise that people with two income households are more likely to lose one of those jobs and that puts a lot of pressure on the finances if you need both jobs for your house payment.
* landlords not wanting as much money (unlikely, although it happens at small scales)
* rent control-type policies
* competition
And as far as I know competition is the only thing that works at scale. Although, people tend to emphasize intralocal competition as where this gets fixed. But I tend to think that the even larger issue is that so many places suck to live in (due to schools, jobs, culture, lack of prosocial governance...) that everyone with options congregates in the good ones.
There's an effect every larger than all of those, though, which is wealth disparity. If incomes differ by fewer orders of magnitude then prices can't vary as much across markets. At the end of the day when rich people can and do buy 2-5 homes and everyone else can barely buy one of course you're going to have problems.
We had two types of competition in the past that are much less common now:
- competition from new builds
- competition from different locations
The first was killed by restrictive zoning. The second still exists but is no longer useful. You can move to West Virginia for cheap rent, but you'll have to move to a location without jobs.
The combination of far less people moving across states and of jobs concentrating in expensive places to live is what killed that second type of competition.
I’d be interested in a study of moves; it feels to me like everyone used to move much further and more often for work, now it seems things are quieter. But that could all just be feels.
This is an easy problem to solve, regulate the amount of profit you're legally allowed to make from renting land you did not create.
We do this in other industries all the time.
Health insurance is heavily regulated to ensure that there are profit caps (think 80/20 rule) this means that the company is legally compelled to actually spend a certain amount on customers of said product.
Imagine if landlords were compelled to spend 80% of their rent dollars in improving the space or helping the renters.
Which led to insurers to purchase PBMs, hospitals, and doctor groups. The law of unintended consequences.
Landlords will get around this by raising other fees but not calling them rent, like pest control, garbage pickup, coffee room supplies, pets...landlords could do this all day long.
> Health insurance is heavily regulated to ensure that there are profit caps (think 80/20 rule) this means that the company is legally compelled to actually spend a certain amount on customers of said product.
This notoriously does not work at all.
Look up pay-vider structure and the type of manipulation of medical loss ratio it enables.
How does this help young people who want to move to a new city, but can't because all apartments are already rented because rents are far below market rate? This is reality in cities like Berlin and Stockholm.
You need more housing. Rents in Austin have collapsed because the city made it legal to build a lot more housing.
You should look at Vienna public housing then, rents there are typically less than 20% of the median monthly salary. Socialized housing works for the people that want to live and make a community with the limited time on this Earth they have.
It doesn't work for landlords that just want to extract wealth from others.
Relying on private developers that only want to build luxury housing is kinda how we're in this current mess. Expecting them to solve the problem we know, build more housing, is just silly. They didn't do it when money was the cheapest it ever was the last 15 years, they aren't going to start building it now.
This is why the government needs to step in and build more/better public housing.
It works for Vienna, this young chap even speaks about it at great length:
I sure hope he goes into politics, we need people with this type of imagination to better our society and give us hope for a better future which we can create now, not later.
It makes more sense to me (both from a personal, and the bank's perspective), that a single person on double income goes to zero salary when he loses his job, thus its riskier lending to him with his monthly payment being 25% of his income, than say 2 people at half salary, in which case one person's income share of loans jumps from 25% to 50%, a financially difficult situation, but temporarily manageable.
I agree in principle but I would venture a guess that number of two-income families that can deal financially with a loss of one source of income is very low.
the very first financial discussion I had with my wife (fiance at the time) was that we will always live off a single salary and 2nd salary will always go into future bucket (we tap in for larger purchases or fancy vacation here and there). I don’t think many families are setup this way though - in my limited personal experiences a loss of one source of income leads to sale of the house/condo and move (rent or downsize)
Another thing that is often not considered is that two salary households are sometimes similar salaries (both nurses or warehouse loaders, say) but often you have one high-paying job and another quite low - I could rattle off a whole list of teachers married to doctors, etc. Losing the lower salary will be noticeable but not hurt anywhere as much as losing the larger.
absolutely… after I read your comment I started thinking about every two-income family I know and none of them have similar salaries, always one (significantly) higher earner
You need more than two incomes worth of salary in any country that does income tax bands. In the UK, two people earning 30k each will take home a combined 50k. A single person needs to earn almost 70k to take home the same. And for council tax you end up paying 75% of what an entire household would pay.
In the US, two moderate incomes see a similar federal tax bill to a single person, with things actually getting worse at higher incomes for the married couple. Is the UK tax code really that different?
Huh? In the US the married filing jointly tax brackets are exactly double the single tax brackets for every rate except the top 37% rate. A single person making 100k definitely pays a lot more in tax than than a married couple making 100k together. It's generally advantageous to be married filing jointly unless you're at the absolute top 37% rate, at the very bottom (where means tested benefits phase out), or both spouses make roughly equal incomes (in which case MFJ vs two single filers works out around the same).
In your $100K scenario, that single person pays about $6K more in taxes, but has $36K more in take home pay per person, so that additional tax bill seems reasonable in light of their ability to pay it and pay for their cost of living.
The housing affordability crisis only exists in places that are very desirable, which is to say if you only build homes, you won't solve the problem, because most people don't want to live in a huge belt of suburbia. You have to build 15 minute cities, and you have to connect them with clean, reliable, safe public transit.
This is a huge economic opportunity for exactly the people we've been shafting: build us millions of zero emissions buildings and infra. I have no idea why Democrats aren't making this the front page of their platform.
Adam Smith observed in his "wealth of the nations" that when people get more money they almost always spend it on better housing. There is a limit to how large a house people will want before they decide not to (many rich are living in mansions smaller than they could afford - and in some cases the size of their mansion seems to be set because they want to be the biggest not because they want/use the space), but I don't know where that limit is.
"The rent of land, therefore, considered as the price paid for the use of the land, is naturally a monopoly price. It is not at all proportioned to what the landlord may have laid out upon the improvement of the land, or to what he can afford to take; but to what the farmer can afford to give." — Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations, Book I, Chapter XI "Of the Rent of Land"
Ironically, the Argument just a few months ago ran a long and well-researched piece on how the housing market isn't for parents --- in many rental markets, there are policies that lock out parents, particularly through permitting processes that favor developments for seniors while icing out any other developments.
Meanwhile, a really important dynamic to keep in mind is that in most inner-ring suburbs in the US, the primary driver of home values (and of property taxes) are school systems. If you don't actively enact policies that work against the dynamic, you get trapped in a spiral of increasing prices, in part because parents can bid up prices and suffer them only for the span of time their kids are in school --- "renting the schools".
School choice works within municipalities. A huge part of the point of modern inner-ring suburbs is to allow wealthier people to exempt themselves from that system.
It's not a free market, so it's hard to appeal to market purity arguments. The market is deeply distorted by zoning rules. Most popular/expensive locales would look differently if the market was actually allowed to function.
Even more so it’s distorted by people only moving every seven years or longer. But when they do move, they take all changes into account; not just recent ones. So it can be hard to determine causal trends.
"Flophouses" or SROs used to provide affordable housing for young people new to a city, single people, workers, etc but they depend on density and transit to be cheap. They were largely made illegal in the mid-20th century. Land use/zoning laws are why we've built nothing but car-dependent suburbs for the last 50 years.
They are still around but less common. Some progressive cities like Austin calls them a "Boarding House"[0] I'm not sure if there is a unit cap where something like your historical tenement housing could happen like in Manhattan. It's the same idea just a different format.
Well, only because one of the household did a huge amount of unpaid labor. A lot of which now has been replaced with paid labor (child care, restaurants, house cleaners, and so on).
I meant it's been true forever that people with partners generally have a financial advantage over single people. (Even if they're not in a two-income household.)
Where I live you're pretty much screwed if you're single, or a family that needs extra bedrooms. Extra screwed if you're a single parent, obviously. People spending 50%-60% of their net pay on rent alone, basically stuck renting, because housing prices have increased 10% annually for almost 15 years.
It is also a town that has seen explosive growth in tourism, so the new trend is that people are only willing to rent 6-8 months to normal people. Rest of the year they'll rent out their unit on airbnb, where they can earn 3-5 times more.
Actually Airbnb received a firm push back, nowadays everything lands on Booking. There are virtually no places in developed world cheaper than 100EUR/USD/GBP per night, the standard price is closer to 200. Why bother with long term rental if full month rent can be fetched within a week, or within two days if there is a concert or event nearby.
Some of the people I studied with become landlords, and during peak tourist season they can earn close €5000-€7000 / month renting to tourists. Long-term rent for equivalent apartment would be around €1500-€2000 / month.
So what happens, is as I wrote, they only rent short-term during tourism season, and then find regular renters that are willing to live 6-8 months in the apartment.
This fact makes the high levels of singledom in recent years even more remarkable and concerning. Even with strong economic incentives, a large fraction of people really don't want to pair up.
> a large fraction of people really don't want to pair up.
Don't want to pair up, or can't meet/find someone with which to pair up?
Because from your massive oversimplification, you're making it sound like everyone has 50 potential partners knocking on their door daily asking to hook up or get married, and they tell them to get lost so he/she can keep play videogames in peace.
Have you asked single people why they're single to better understand the issue? I think you'll find that most people actually WANT some sort of loving partner in their lives. Otherwise the pet industry wouldn't be so massive in the west if people were so happy living alone without any company.
In my experience, financially savvy/well-off young people usually get an apartment before they get married - they either get it (or a large downpayment) from their parents or they buy one some time in their 20s - but don't get married until their late 20s to 30s.
People of my parents' generation got married way earlier, typically in early to mid 20s, so it was natural for them to build a life together.
Have you seen the statistics? 20-somethings who own a house are super minority right now.
And plus, rich kids with properties from parents money, has nothing to with the growing loneliness epidemic I was discussing on why people don't pair up despite economic pressure to do so.
Forget being single, having a housemate/roommate is so painful that I refused to have one once I was in my late 20s. I’d rather pay a fat chunk of my salary to the landlord than have to deal with someone who created a mold problem by running a humidifier 24x7 because they wanted better skin.
The economic incentives for men are exactly backwards. They're on the hook for alimony/child support in the face of no fault divorce and despite the chants for equal pay, men are still expected to earn more than women if they want to attract a woman.
Marriage is basically economically obsolete at this point and is primarily done for the sake of tradition and tax breaks. In the context of having children, marriage has devolved to a business contract that lasts until the children have left the nest.
Marriage did not devolve, one of its facets has always been a “business” contract. What evolved is that one of parties gained bargaining power, and the other lost bargaining power.
Marriage also has other useful facets, such as a contract to deal with healthcare decisions in case of emergency.
There is no world where a 4 hour commute to work is reasonable. That said, Stockton and Tracy seem like they happen more often at an hour and a half (to San Mateo or San Jose)
But why are we building a world where that is necessary? That's an awful world.
That world isn’t necessarily until that four hour commute is driving past houses the whole way.
But it isn’t.
I think a big part of the problem is we’ve lost the shitholes; it used to be 20/30 years ago you could be making good money in the city and choose to live in a crappy apartment/house that others of your salary tier wouldn’t look at; that option is mostly gone. The shitholes are infinity dollars a month.
Travelling isn't, either, found that the ward way during the last few years. If anyone has a good-ish solution for how they've handled that, feel free to share.
You mean the costs? Travel is expensive but I don't think there's much of an argument that it's gotten more expensive like housing. International flights used to be quite a luxury, now it's so easy that the popular destinations are getting swamped.
Most of the relaxation-oriented holiday industry is definitely designed for couples and families, but backpacking, adventures, and cultural immersion are, in my opinion, better alone so that you don't have the easy escape of sitting around with your partner. And if you want to relax nothing's stopping you from booking a few nights alone at a Japanese onsen or one of those treehouse style resorts in a Central American rainforest. I've spent many nights at onsens in between more outdoorsy climbing and skiing legs of trips in Japan.
Hmm I think this depends alot on the individual and their particular life situation though. I've done a ton of travel solo over the years and the vast majority of the time it was really fun.
You need to provide more information about your specific problems. Last I checked, two seats on a plant cost twice as much as a single one. That can't be it.
A hotel room for one is not two times cheaper compared to a hotel room for two, and accommodation is a big part of the cost when travelling. Also, when travelling in two and going by car you can share the costs, not all travel is airplane-based.
All the justified complains about housing prices aside, I want to focus on this part
"Some people are fine with getting a roommate, but what if you’re not?[...]Usually, people get to a certain stage of life, and they like their independence.”"
No usually it's the other way around. You get to a certain stage of life, your household size grows. There's exogenous factors like lack of construction but all other things being equal, housing used to be more affordable because the entire nation didn't consist of single person households. Multi-generational homes and large families were the norm because it saves resources. People who decide to want to live independently are going to take a financial hit.
If you're not interested in a traditional family I'd strongly suggest societies think about cooperative housing collectively and having a flat mate or two individually.
We are missing the private bedroom, shared kitchen/dining/living space that a lot of single people want. There are people I couldn't live with, but for the most part people crave some human contact and having the ability to grab a meal with a random person who happens to want to eat at the same time is nice.
When you are married (or acting like married) a shared bedroom is good. However single people often want that personal/private space all to themselves.
There's probably a selection bias in that people who opt-out of dating/relationships probably just want to be left alone most of the time. I doubt there's a huge overlap between people who want to share meals with strangers and people who remain single.
In college in the university dorms I was logistically and emotionally fine day to day sharing a room with a friend and a hall bathroom with a hall of acquaintances, although in hindsight the price was absurdly inflated for that amount of real estate.
Yep, at the moment renting a room at UNC costs 2200 a month if you share it, nearly twice the mortgage on a 3 bedroom house. There's some disease in the american economy where cost cutting code actions magically inflate costs, and we buy it.
In the US at least having roommates carries massive risk. Sharing a place requires taking on full legal and financial responsibility for a total stranger. If your roomie ends up a drunk who trashes the place, that's 100% on you if they bail out. maybe you could hire a lawyer and take action, but more than likely you're going to be on the hook for any damages (and if you can't pay that debt, you are blacklisted from legitimate rentals until it's cleared.)
No, the modern ideas are fine for what they are. You can disagree with them if you want, but they are just ideas and for many people they are good.
The problem is we are setting government policy based on a one-size fits all idea of expectations and those who don't want those are forced to either follow anyway or live a worse life in other ways for not.
Not really, governments have been encouraging family formation because it brings up new taxpayers since, well, forever.
Which does not make single-living idea weird or dumb, ofc, but it makes it additionally expensive on top of the natural cost (just like multi-floor houses are cheaper per surface built).
yes thats how society works, you give up certain freedoms for structure, safety, and access to resources. This idea that society should conform for lifestyles that dont support the continue existence of the society is pretty dumb
It's frustrating that the problem is acknowledged (Housing prices are too high) but the solution seems to evade the author and nearly everyone involved in setting housing policy; not because of a lack of rent control.
Housing is too expensive because it's illegal to build enough of it.
No, multi-generation households will not save us. We should not make it impossible for young people to move to cities where high-paying jobs are, or force anyone to stay in abusive homes because we have made it impossible to live on your own.
Housing is too expensive because it is an investment, full stop.
I live in Tokyo, famed for its "housing affordability".
Guess what, it's completely unaffordable for normal people now, because of people purchasing homes for investment purposes. Rent is still affordable but has a rapid upward trend as well.
I do always find it funny when people online bring up Japan as the leader of keeping housing affordable. Pretty sure the average income to house price ratio in Tokyo is much worse than it is in major US cities. (If I'm wrong on that data someone correct me, I'm basing it off of mental math of house prices I saw on a sign and salaries friends told me).
I think it was true for a long time, and home prices were a good deal. There is also a fair bit of distortion due to near zero interest rates, where banks are willing to loan higher multiples here with 0 down payment.
But house prices have exploded upwards since covid, and wages have not.
So it's an extremely similar situation to everywhere else in the world. And the underlying reason is the same: people buying because they think real estate will go up in value.
By the way, as a fun fact, the most common mortgage in Japan is a ARM. Last I checked, 70-80% of mortgages in Japan are variable rate. The BoJ is currently on a path of adjusting rates upwards. So we will see how this all shakes out. If a situation like the GFC happens, it will not be pretty.
This is very imprecise data that I have, but my understanding is that pre-covid Tokyo was around 8M yen median household income, and a median home was around 60M yen, so roughly 7-8x the median HHI. Now it's around 80M for a new home and wages are the same.
Seattle even right now is ~110k ish HHI, median home price is ~$800k, so that's 7-8x, before COVID I think it was around ~650k, so around 6x. Also Seattle is known for being pretty expensive, a lot of cities like Houston have an even better multiplier.
It just doesn't seem that different to me. Feels like a lot of people are unhappy with property prices and think it's uniquely a US problem, whereas the system in the US actually works decently well compared to a lot of places. (It would take many essays for me to list all the flaws, I'm not saying it's perfect I'm just looking at it relatively speaking).
You should search based on Tokyo 23-wards or vs the greater metropolitan area. Most people when they refer to Tokyo are referring to the 23 wards.
In that case the numbers are far worse.
The fundamental problem is that building quality housing is a society-level project - you don't just need to build a house/apt but supporting infrastructure, such as water, power, waste, public transport, supermarkets, and figure out how to connect it to the city's infrastructure.
There used to be political will to do this. Nowadays what I see around me, is that developers keep plopping down housing projects either in the middle of nowhere or in some highly undesirable area (like next to the train tracks, or some old industrial development) and sell the resulting apartments at crazy pricess. Zero infrastructure of course.
No, it's not. Society needs to back the F off and let anyone and everyone who owns property build what they can where they can as they want.
> just need to build a house/apt but supporting infrastructure, such as water, power, waste, public transport, supermarkets, and figure out how to connect it to the city's infrastructure.
No, you don't. 40yr ago, before you people <broadly gestures at HN with a certain finger on each hand> ruined it, it was common for even small time developers to build entire streets of houses on well and septic with 100a panels and pay the utility for a transformer at the end of the street. Obviously they weren't doing this downtown and obviously this doesn't work in all climates but there's no reason it can't be done everywhere east of the Mississippi.
No it isn't. We deliberately hobble home construction with zoning and permitting rules, which aren't based in any infrastructure carrying capacity concerns (in fact, dense housing has advantages for infrastructure and energy uses --- few things are as inefficient as a single-family home).
Fixing exclusionary zoning rules isn't a society-scale project.
There still is political will to do this, it happens all the time around the USA. Do you think all these neighborhoods with hundreds of new houses get built without water, power, waste, and supermarkets? See DR Horton/Lennar/Toll Brothers/etc websites, and they will all be connected to utilities and have retail mixed in or somewhere near.
If you spend enough time at city council meetings you’ll often discover that not only are those developments paying for their infrastructure; they’re also paying to modernize/maintain other supporting infrastructure - it’s literally often how they get the projects approved!
“You can build this 100 home development but it will need to pay for remodeling the school” type things happen all the time.
At least in Texas, I've seen this go both ways in practice. There is definitely some 'give something to get something' action that helps grease the wheels early on in the permitting or development process.
Years later, Some developments / developers will petition to annex themselves from the outer reaches of their adjacent jurisdictions to prevent the city from growing into these areas and 1) exerting control and 2) obtaining the roads, utilities and treatment facilities, and drainage facilities. Municipal Utility Districts (MUDs) are a popular avenue for this, and arguably works in some cases. Adjacent cities may not have the existing tax base, utility infrastructure and operations, and public works to support the type of growth in some areas. My experience is just in the past ~7 years working in the Civil field in Texas. Probably variations on this across the US at least.
Funny you mention schools, because on at least one project of mine, we've constructed a public middle & high school along with a charter school on-premise. No doubt that was a big selling pitch during the early development meetings.
Schools are really the big one - utilities are cheaper and simpler (for some value of simpler!) and existing cities really don't want that to get out of control.
(This is one of the reasons that senior developments slide through easier, as they don't impact the student base much but do provide tax revenue, which usually makes the city's job better.)
Exactly. Funnily enough though, these city council requirements are a big part of the reason we aren't building enough housing around the US.
The political will disappeared as soon as we became a boomer society.
In the 1970s and 80s there were riots. Now most voters are old and own a house so they don't really give a shit. Hell they WANT prices to go up because it is their pension.
> Housing is too expensive because it's illegal to build enough of it.
This is a factor in some places, but a gross over-simplification in others.
There are neighborhoods full of affordable new construction houses not far from where I live. They sell slowly because people would rather live in the popular areas.
There are affordable high density housing options for rent here. They stay on the market because everyone wants their own house.
It's not even about remote work here, as the popular location for office builds and jobs is actually closer to those affordable housing neighborhoods few people want to live in. Being near the office buildings is actually a reason why they're undesirable.
There are some obvious broken housing situations like San Francisco, but I don't see permitting reform as a magic cure-all in every city.
https://x.com/nickgerli1/status/2006872715316121750
Permitting reform made Austin, Texas the second-most affordable city in America by rent to income ratio.
>There are neighborhoods full of affordable new construction houses not far from where I live. They sell slowly because people would rather live in the popular areas.
Mortgage rates rose and property prices have not yet fallen to match reality. I would bet that this is a much stronger factor in preventing those new homes from selling rather than buyers simply having a preference for different neighborhoods.
The mortgage rate change has an insanely huge effect (which means that keeping them artificially low for 20 years has a similar effect the other way) - and it’s worse right now because anyone who owns a house with a mortgage would significantly increase their payment if they sold and bought an identical house next door. So people just aren’t moving.
> Housing is too expensive because it's illegal to build enough of it.
A lot of us are in the US, where (except for SF and handful of specific cities) housing is legal to build practically everywhere, municipalities are handing out free money for any form of development, so people do build tons of new housing all over...
...and the prices still rise anyway.
80% of the buildings within a 1 mile radius of me did not exist at all 20 years ago. There's almost 5,000 new units around. Half of the new apartment buildings are only at like 70% utilization. We barely hit 1% population growth year-over-year.
Prices are at 40 year record high prices anyway (yes, even after factoring for inflation).
> Housing is too expensive because it's illegal to build enough of it.
This is part of the problem, and one that many people actively want to avoid discussing so it is important to discuss it, but it is only part of the problem.
I think for real reform in this area you need to have the government strictly regulate rental properties.
That includes determining the rental price, and imposing fines for empty units.
Every time there is a stimulus check or an increase in minimum wage the detractors say "this will just be captured by the landlords".
We need to have clear stipulations for rental prices and ideally link it to another value that also changes over time.
I would argue a 1 bedroom apartment should have its rent capped at less than 40% of the monthly take home of someone on minimum wage.
Let the landlords and employers battle over who gets the bigger slice of that pie, while allowing the workers to survive their petty skirmish.
Here is Adam Smith talking about a minimum wage:
> A man must always live by his work, and his wages must at least be sufficient to maintain him. They must even upon most occasions be somewhat more, otherwise it would be impossible for him to bring up a family, and the race of such workmen could not last beyond the first generation. Mr Cantillon seems, upon this account, to suppose that the lowest species of common labourers must everywhere earn at least double their own maintenance, in order that, one with another, they may be enabled to bring up two children; the labour of the wife, on account of her necessary attendance on the children, being supposed no more than sufficient to provide for herself: But one half the children born, it is computed, die before the age of manhood. The poorest labourers, therefore, according to this account, must, one with another, attempt to rear at least four children, in order that two may have an equal chance of living to that age. But the necessary maintenance of four children, it is supposed, may be nearly equal to that of one man. The labour of an able-bodied slave, the same author adds, is computed to be worth double his maintenance; and that of the meanest labourer, he thinks, cannot be worth less than that of an able-bodied slave. Thus far at least seems certain, that, in order to bring up a family, the labour of the husband and wife together must, even in the lowest species of common labour, be able to earn something more than what is precisely necessary for their own maintenance; but in what proportion, whether in that above-mentioned, or any other, I shall not take upon me to determine.
https://www.gutenberg.org/files/3300/3300-h/3300-h.htm#chap1...
In what US city can someone on minimum wage raise two children? On the US federal minimum wage?!
Children aren't being produced. Birth rates are declining.
People conflate the carrying capacity of the economy with GDP, but these are different. The economy grows but requires fewer workers over time. As the carrying capacity decreases, the population decreases. On the ground, this manifests as the inability to afford child rearing.
The excerpt you cited assumes that this race of workers must afford to perpetuate itself in order to be viable. It cannot perpetuate itself, and it is not viable.
I wish this site had a lot less ill conceived free market fan fiction woven into racially charge eugenics.
>That includes determining the rental price, and imposing fines for empty units.
We already have a fine for empty units. They're called property taxes, and they're the strongest and easiest-to-use tool that local governments have for reducing vacancies.
>I would argue a 1 bedroom apartment should have its rent capped at less than 40% of the monthly take home of someone on minimum wage.
Then you're making it de facto illegal to build new housing. No bank is going to lend money to anyone to build more housing if they can't charge enough rent to cover the loan.
>In what US city can someone on minimum wage raise two children? On the US federal minimum wage?!
Maybe not the US federal minimum wage, but Austin has become the second-most affordable city in America (median rent price to median household income ratio), just by permitting a huge number of apartments.
https://x.com/nickgerli1/status/2006872715316121750
"Affordability" is more than just rental prices which is why I think building more units is insufficient.
You need to address wages as well.
> Then you're making it de facto illegal to build new housing. No bank is going to lend money to anyone to build more housing if they can't charge enough rent to cover the loan.
This implies you think landlords are trying their best to lower prices, only charging enough rent to just cover their loan payments, which is absurd.
No, it’s the other way around - they won’t build if they can’t sell and if the buyers are landlords …
But landlords only provide a service when rents and mortgages are roughly similar - they’re buying long and selling short as it were.
[dead]
> In what US city can someone on minimum wage raise two children? On the US federal minimum wage?!
Federal minimum wage is a strawman in large cities.
I'm in a medium cost of living city and I doubt I could find a minimum wage job listing if I tried. Fast food places and government buildings even advertise $15-20/hr jobs because they can't hire enough people.
Both assertions display an offensive level of detachment and ignorance.
> Federal minimum wage is a strawman in large cities.
I did first mention city minimum wage, and only referenced federal minimum wage after to drive the point that federally this discrepancy is even more grotesque.
States with "large cities" that use the federal minimum wage:
> Five states have not adopted a state minimum wage: Alabama, Louisiana, Mississippi, South Carolina and Tennessee. Three states, Georgia, Oklahoma and Wyoming, have a minimum wage below $7.25 per hour. In all eight of these states, the federal minimum wage of $7.25 per hour generally applies.
https://www.ncsl.org/labor-and-employment/state-minimum-wage...
> I'm in a medium cost of living city and I doubt I could find a minimum wage job listing if I tried.
Tell me your city and I will find you a minimum wage job posting.
> Both assertions display an offensive level of detachment and ignorance.
The number of jobs paying minimum wage was around 1% several years ago. It’s certainly gone down.
Minimum wage jobs are also highly biased toward young people, not parents raising two children.
> Tell me your city and I will find you a minimum wage job posting.
Show me a minimum wage job posting and I will find you a higher paying job with better conditions in the same area.
https://en.wikipedia.org/wiki/Appeal_to_the_stone
> Housing is too expensive because it's illegal to build enough of it.
A lot is being built. The problem is ruthless cost extraction, parasitic chain of agents and agencies, and oftentimes real estate is the only investment vehicle free of capital gains tax. Have you seen what is being built everywhere from Australia, through Europe, to America? 20-30 sqmt apartments where you walk in straight to the kitchen and sleep next to the oven and dishwasher, if the place is even large enough to fit the full kitchen.
Isn't this obvious?
Yes, per-adult, multi-generation family homes are even more cost-effective than for couples (even accounting for smaller pensions compared to salaries), and both are more cost-effective compared to singles.
Apart from growing prices, my experience (not in Canada though) is that living spaces are growing too, as we are not satisfied to live in the same cramped 20m2 studio as singles were 30 or 50 years ago.
> we are not satisfied to live in the same cramped 20m2 studio as singles were 30 or 50 years ago.
I conjecture that this is, at least partially, caused by modern people being more isolated and even when they do socialize there's less "third spaces" to get together with friends so someone ends up having to host the superbowl watch party in their apartment, for example.
> living spaces are growing too
Median home sizes have gone from 1400 sqft in the 70s to 2400 sqft in recent years.
https://www.bankrate.com/real-estate/average-home-size/
Part of it is the economics of construction. Part of it is growing threshold for “bare minimum”. In unit laundry was optional in the 70s and I’ve heard people wanting a “laundry room”. Pandemic has pushed the need for an office. Larger kitchens and more storage space is also a big difference in newer units vs older ones.
In the '70s, in-unit laundry in a rental apartment was almost unheard of except at perhaps very top end. An on-premises shared laundry room was normal but having to go to a laundromat was not uncommon either.
I did not have laundry facilites of my own until I bought a house.
It’s $1.75/load where I live now. Small washers and dryers
>Median home sizes have gone from 1400 sqft in the 70s to 2400 sqft in recent years.
Because you literally need more square footage to amortize all the regulatory required and industry checkbox required bullshit over. Ain't no different than General Motors saying "no more small cars from us in the US".
30-50 years ago, a cramped 20m2 studio as a single was a luxury; the standard was to have roommates if you didn't have a partner.
>we are not satisfied
Some of us might be satisfied, but zoning and development approvals seems to have a hatred of small apartments. The ones that get proposed meet fierce opposition from locals who are afraid of having too many neighbors who aren’t rich people.
30 years ago I did not need to rent a 20m² studio. As a young college student I rented a spacious 750 sq. ft. 1-bedroom, furnished apartment that was more than affordable on my paycheck from driving a forklift at the pipe yard.
Currently it's impossible to rent 70 sqmt furnished apartment anywhere in the developed world from a warehouse, agriculture, or hospitality job. Maybe if you worked in Amsterdam and lived in Cambodia.
Furnished is doing a lot of work here; local warehouse jobs start at enough to afford a 420sq studio; the 1b would be 750sq ft and barely affordable.
Furnished, at the time, cost almost nothing. It wasn't even furnished by the lessor, it was a separate local furniture company, their monthly was very low and they delivered when you moved in and hauled it off when you moved out, included in the fee.
Indeed. We need a lot more small apartments for individuals. It goes against conventional wisdom that we need more "family-sized homes" but in reality every jurisdiction just needs a ton of 1-bed units.
Toronto overbuilt tiny condos and now prices are down 15% from 2023 peak. Other types of house prices are roughly stable.
Hard to draw too many conclusions since "down 15%" is still "way to fricking expensive", but...
"overbuilt" seems editorial. Drive the price to zero. Nobody says that we overproduced potatoes just because they are all ten kilos for a dollar.
They certainly do say that about potatoes in producer contexts.
True, but our response (in America) is just to pay off the producers to keep food market prices low.
The book the two income trap describes this. It talks about better schools etc but if you are competing with people that have two incomes as an individual you better have two incomes worth of salary.
The issues starts to arise that people with two income households are more likely to lose one of those jobs and that puts a lot of pressure on the finances if you need both jobs for your house payment.
The price of rent is set by local household wages.
If both partners typically work: rent rises to eat nearly all the gain.
If AI makes everyone 20% more productive: rent rises to eat nearly all the gain.
If minimum wages lift the bottom earners from $7.50/hr to $18.50/hr: rent rises to eat nearly all the gain.
If you add more lanes to the interstate, people move further out, and the rent rises to eat nearly all the gain.
The only countervailing forces are:
* landlords not wanting as much money (unlikely, although it happens at small scales)
* rent control-type policies
* competition
And as far as I know competition is the only thing that works at scale. Although, people tend to emphasize intralocal competition as where this gets fixed. But I tend to think that the even larger issue is that so many places suck to live in (due to schools, jobs, culture, lack of prosocial governance...) that everyone with options congregates in the good ones.
There's an effect every larger than all of those, though, which is wealth disparity. If incomes differ by fewer orders of magnitude then prices can't vary as much across markets. At the end of the day when rich people can and do buy 2-5 homes and everyone else can barely buy one of course you're going to have problems.
We had two types of competition in the past that are much less common now:
- competition from new builds
- competition from different locations
The first was killed by restrictive zoning. The second still exists but is no longer useful. You can move to West Virginia for cheap rent, but you'll have to move to a location without jobs.
The combination of far less people moving across states and of jobs concentrating in expensive places to live is what killed that second type of competition.
I’d be interested in a study of moves; it feels to me like everyone used to move much further and more often for work, now it seems things are quieter. But that could all just be feels.
You don't need a study, it's part of the census data and widely available. It's down about half since mid century.
This is an easy problem to solve, regulate the amount of profit you're legally allowed to make from renting land you did not create.
We do this in other industries all the time.
Health insurance is heavily regulated to ensure that there are profit caps (think 80/20 rule) this means that the company is legally compelled to actually spend a certain amount on customers of said product.
Imagine if landlords were compelled to spend 80% of their rent dollars in improving the space or helping the renters.
Which led to insurers to purchase PBMs, hospitals, and doctor groups. The law of unintended consequences.
Landlords will get around this by raising other fees but not calling them rent, like pest control, garbage pickup, coffee room supplies, pets...landlords could do this all day long.
> Health insurance is heavily regulated to ensure that there are profit caps (think 80/20 rule) this means that the company is legally compelled to actually spend a certain amount on customers of said product.
This notoriously does not work at all.
Look up pay-vider structure and the type of manipulation of medical loss ratio it enables.
How does this help young people who want to move to a new city, but can't because all apartments are already rented because rents are far below market rate? This is reality in cities like Berlin and Stockholm.
You need more housing. Rents in Austin have collapsed because the city made it legal to build a lot more housing.
You should look at Vienna public housing then, rents there are typically less than 20% of the median monthly salary. Socialized housing works for the people that want to live and make a community with the limited time on this Earth they have.
It doesn't work for landlords that just want to extract wealth from others.
Relying on private developers that only want to build luxury housing is kinda how we're in this current mess. Expecting them to solve the problem we know, build more housing, is just silly. They didn't do it when money was the cheapest it ever was the last 15 years, they aren't going to start building it now.
This is why the government needs to step in and build more/better public housing.
It works for Vienna, this young chap even speaks about it at great length:
https://www.youtube.com/watch?v=LVuCZMLeWko
I sure hope he goes into politics, we need people with this type of imagination to better our society and give us hope for a better future which we can create now, not later.
It makes more sense to me (both from a personal, and the bank's perspective), that a single person on double income goes to zero salary when he loses his job, thus its riskier lending to him with his monthly payment being 25% of his income, than say 2 people at half salary, in which case one person's income share of loans jumps from 25% to 50%, a financially difficult situation, but temporarily manageable.
I agree in principle but I would venture a guess that number of two-income families that can deal financially with a loss of one source of income is very low.
the very first financial discussion I had with my wife (fiance at the time) was that we will always live off a single salary and 2nd salary will always go into future bucket (we tap in for larger purchases or fancy vacation here and there). I don’t think many families are setup this way though - in my limited personal experiences a loss of one source of income leads to sale of the house/condo and move (rent or downsize)
Another thing that is often not considered is that two salary households are sometimes similar salaries (both nurses or warehouse loaders, say) but often you have one high-paying job and another quite low - I could rattle off a whole list of teachers married to doctors, etc. Losing the lower salary will be noticeable but not hurt anywhere as much as losing the larger.
absolutely… after I read your comment I started thinking about every two-income family I know and none of them have similar salaries, always one (significantly) higher earner
You need more than two incomes worth of salary in any country that does income tax bands. In the UK, two people earning 30k each will take home a combined 50k. A single person needs to earn almost 70k to take home the same. And for council tax you end up paying 75% of what an entire household would pay.
In the US, two moderate incomes see a similar federal tax bill to a single person, with things actually getting worse at higher incomes for the married couple. Is the UK tax code really that different?
Huh? In the US the married filing jointly tax brackets are exactly double the single tax brackets for every rate except the top 37% rate. A single person making 100k definitely pays a lot more in tax than than a married couple making 100k together. It's generally advantageous to be married filing jointly unless you're at the absolute top 37% rate, at the very bottom (where means tested benefits phase out), or both spouses make roughly equal incomes (in which case MFJ vs two single filers works out around the same).
Huh?
In your $100K scenario, that single person pays about $6K more in taxes, but has $36K more in take home pay per person, so that additional tax bill seems reasonable in light of their ability to pay it and pay for their cost of living.
The housing affordability crisis only exists in places that are very desirable, which is to say if you only build homes, you won't solve the problem, because most people don't want to live in a huge belt of suburbia. You have to build 15 minute cities, and you have to connect them with clean, reliable, safe public transit.
This is a huge economic opportunity for exactly the people we've been shafting: build us millions of zero emissions buildings and infra. I have no idea why Democrats aren't making this the front page of their platform.
Adam Smith observed in his "wealth of the nations" that when people get more money they almost always spend it on better housing. There is a limit to how large a house people will want before they decide not to (many rich are living in mansions smaller than they could afford - and in some cases the size of their mansion seems to be set because they want to be the biggest not because they want/use the space), but I don't know where that limit is.
"The rent of land, therefore, considered as the price paid for the use of the land, is naturally a monopoly price. It is not at all proportioned to what the landlord may have laid out upon the improvement of the land, or to what he can afford to take; but to what the farmer can afford to give." — Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations, Book I, Chapter XI "Of the Rent of Land"
I guess I’m unusual because my house is far cheaper than I could afford. It’s quite modest compared to the surrounding area.
Ironically, the Argument just a few months ago ran a long and well-researched piece on how the housing market isn't for parents --- in many rental markets, there are policies that lock out parents, particularly through permitting processes that favor developments for seniors while icing out any other developments.
https://www.theargumentmag.com/p/no-country-for-young-famili...
Meanwhile, a really important dynamic to keep in mind is that in most inner-ring suburbs in the US, the primary driver of home values (and of property taxes) are school systems. If you don't actively enact policies that work against the dynamic, you get trapped in a spiral of increasing prices, in part because parents can bid up prices and suffer them only for the span of time their kids are in school --- "renting the schools".
Sounds like a school choice policy would help decouple property tax zones / addresses to particular schools.
School choice works within municipalities. A huge part of the point of modern inner-ring suburbs is to allow wealthier people to exempt themselves from that system.
When people pay higher rent while their kids are in school and compete with FAANG software engineers, isn't that the market working?
Both groups could live somewhere else, but don't.
It's not a free market, so it's hard to appeal to market purity arguments. The market is deeply distorted by zoning rules. Most popular/expensive locales would look differently if the market was actually allowed to function.
Even more so it’s distorted by people only moving every seven years or longer. But when they do move, they take all changes into account; not just recent ones. So it can be hard to determine causal trends.
Hasn't this been true forever? Of course people who have a partner will be better off financially since they can pool incomes and split expenses.
"Flophouses" or SROs used to provide affordable housing for young people new to a city, single people, workers, etc but they depend on density and transit to be cheap. They were largely made illegal in the mid-20th century. Land use/zoning laws are why we've built nothing but car-dependent suburbs for the last 50 years.
They are still around but less common. Some progressive cities like Austin calls them a "Boarding House"[0] I'm not sure if there is a unit cap where something like your historical tenement housing could happen like in Manhattan. It's the same idea just a different format.
[0] https://www.austintexas.gov/department/get-boarding-house-li...
SRO's are for single people, but they're a form of shared housing, so I think the point stands.
It has not been forever true that households have had two incomes. Now it is common.
Well, only because one of the household did a huge amount of unpaid labor. A lot of which now has been replaced with paid labor (child care, restaurants, house cleaners, and so on).
I meant it's been true forever that people with partners generally have a financial advantage over single people. (Even if they're not in a two-income household.)
What has changed is that dual income became the norm, and is no longer an advantage, but mandatory to compete on the housing market.
When single income was the norm, the norm was to put a family of 6 in an 800-1200 sq ft residence. That's still roughly equivalently affordable today.
Where I live you're pretty much screwed if you're single, or a family that needs extra bedrooms. Extra screwed if you're a single parent, obviously. People spending 50%-60% of their net pay on rent alone, basically stuck renting, because housing prices have increased 10% annually for almost 15 years.
It is also a town that has seen explosive growth in tourism, so the new trend is that people are only willing to rent 6-8 months to normal people. Rest of the year they'll rent out their unit on airbnb, where they can earn 3-5 times more.
Actually Airbnb received a firm push back, nowadays everything lands on Booking. There are virtually no places in developed world cheaper than 100EUR/USD/GBP per night, the standard price is closer to 200. Why bother with long term rental if full month rent can be fetched within a week, or within two days if there is a concert or event nearby.
Some of the people I studied with become landlords, and during peak tourist season they can earn close €5000-€7000 / month renting to tourists. Long-term rent for equivalent apartment would be around €1500-€2000 / month.
So what happens, is as I wrote, they only rent short-term during tourism season, and then find regular renters that are willing to live 6-8 months in the apartment.
This fact makes the high levels of singledom in recent years even more remarkable and concerning. Even with strong economic incentives, a large fraction of people really don't want to pair up.
> a large fraction of people really don't want to pair up.
Don't want to pair up, or can't meet/find someone with which to pair up?
Because from your massive oversimplification, you're making it sound like everyone has 50 potential partners knocking on their door daily asking to hook up or get married, and they tell them to get lost so he/she can keep play videogames in peace.
Have you asked single people why they're single to better understand the issue? I think you'll find that most people actually WANT some sort of loving partner in their lives. Otherwise the pet industry wouldn't be so massive in the west if people were so happy living alone without any company.
In my experience, financially savvy/well-off young people usually get an apartment before they get married - they either get it (or a large downpayment) from their parents or they buy one some time in their 20s - but don't get married until their late 20s to 30s.
People of my parents' generation got married way earlier, typically in early to mid 20s, so it was natural for them to build a life together.
Have you seen the statistics? 20-somethings who own a house are super minority right now.
And plus, rich kids with properties from parents money, has nothing to with the growing loneliness epidemic I was discussing on why people don't pair up despite economic pressure to do so.
I'm sure most young people who have at least decent jobs could save up for a 10% downpayment in a year or two.
Maybe possible if they both live with parents?
nope. plus, that still has nothing to do with the loneliness topic.
Forget being single, having a housemate/roommate is so painful that I refused to have one once I was in my late 20s. I’d rather pay a fat chunk of my salary to the landlord than have to deal with someone who created a mold problem by running a humidifier 24x7 because they wanted better skin.
What if the higher levels of pairing up was due to even stronger economic incentives in the past, specifically for women?
The economic incentives for men are exactly backwards. They're on the hook for alimony/child support in the face of no fault divorce and despite the chants for equal pay, men are still expected to earn more than women if they want to attract a woman.
Marriage is basically economically obsolete at this point and is primarily done for the sake of tradition and tax breaks. In the context of having children, marriage has devolved to a business contract that lasts until the children have left the nest.
Marriage did not devolve, one of its facets has always been a “business” contract. What evolved is that one of parties gained bargaining power, and the other lost bargaining power.
Marriage also has other useful facets, such as a contract to deal with healthcare decisions in case of emergency.
And yet people bemoan the number of batchelor / studio / one bedroom condos cluttering up the market in places like Toronto or Vancouver.
And why shouldn't it be easier to own property with the resources of two people behind the purchase?
What about in LCOL areas?
When I moved to SF when I was 25, I sure could not afford a house or even a condo.
But I sure could have bought a house in the Tahoe area.
Would the commute suck? Yes. Could I have made a go of it? Slept in my car during the week?
I sure would have built a lot of equity, plus you'd have a cool place to go on weekends and invite your friends.
There is no world where a 4 hour commute to work is reasonable. That said, Stockton and Tracy seem like they happen more often at an hour and a half (to San Mateo or San Jose)
But why are we building a world where that is necessary? That's an awful world.
That world isn’t necessarily until that four hour commute is driving past houses the whole way.
But it isn’t.
I think a big part of the problem is we’ve lost the shitholes; it used to be 20/30 years ago you could be making good money in the city and choose to live in a crappy apartment/house that others of your salary tier wouldn’t look at; that option is mostly gone. The shitholes are infinity dollars a month.
That's a problem with constrained supply. But nobody is willing to build up south of San Francisco as far as I still understand.
Are roommates still a thing?
This brings to mind one of my all time favorite quotes.
Paraphrasing madd scientist, Dr. Frankenfurter, from the Rocky Horror Picture Show:
I didn't make it, for you!
Travelling isn't, either, found that the ward way during the last few years. If anyone has a good-ish solution for how they've handled that, feel free to share.
You mean the costs? Travel is expensive but I don't think there's much of an argument that it's gotten more expensive like housing. International flights used to be quite a luxury, now it's so easy that the popular destinations are getting swamped.
Most of the relaxation-oriented holiday industry is definitely designed for couples and families, but backpacking, adventures, and cultural immersion are, in my opinion, better alone so that you don't have the easy escape of sitting around with your partner. And if you want to relax nothing's stopping you from booking a few nights alone at a Japanese onsen or one of those treehouse style resorts in a Central American rainforest. I've spent many nights at onsens in between more outdoorsy climbing and skiing legs of trips in Japan.
Hmm I think this depends alot on the individual and their particular life situation though. I've done a ton of travel solo over the years and the vast majority of the time it was really fun.
You need to provide more information about your specific problems. Last I checked, two seats on a plant cost twice as much as a single one. That can't be it.
A hotel room for one is not two times cheaper compared to a hotel room for two, and accommodation is a big part of the cost when travelling. Also, when travelling in two and going by car you can share the costs, not all travel is airplane-based.
This is exactly it - the second person is “almost free” in many cases.
Singles are left to pay double occupancy rates or stay at hostels.
I'd be surprised to learn that backpacking is no longer singles-friendly
Good.
All the justified complains about housing prices aside, I want to focus on this part
"Some people are fine with getting a roommate, but what if you’re not?[...]Usually, people get to a certain stage of life, and they like their independence.”"
No usually it's the other way around. You get to a certain stage of life, your household size grows. There's exogenous factors like lack of construction but all other things being equal, housing used to be more affordable because the entire nation didn't consist of single person households. Multi-generational homes and large families were the norm because it saves resources. People who decide to want to live independently are going to take a financial hit.
If you're not interested in a traditional family I'd strongly suggest societies think about cooperative housing collectively and having a flat mate or two individually.
We are missing the private bedroom, shared kitchen/dining/living space that a lot of single people want. There are people I couldn't live with, but for the most part people crave some human contact and having the ability to grab a meal with a random person who happens to want to eat at the same time is nice.
When you are married (or acting like married) a shared bedroom is good. However single people often want that personal/private space all to themselves.
There's probably a selection bias in that people who opt-out of dating/relationships probably just want to be left alone most of the time. I doubt there's a huge overlap between people who want to share meals with strangers and people who remain single.
In college in the university dorms I was logistically and emotionally fine day to day sharing a room with a friend and a hall bathroom with a hall of acquaintances, although in hindsight the price was absurdly inflated for that amount of real estate.
https://housing.unc.edu/apply/rates/
Yep, at the moment renting a room at UNC costs 2200 a month if you share it, nearly twice the mortgage on a 3 bedroom house. There's some disease in the american economy where cost cutting code actions magically inflate costs, and we buy it.
University is the one place where you find a lot of single people and thus housing the fits their needs. Though I agree the costs seem out of control.
I think there's also a huge gap in costs and in people's willingness to tolerate shared spaces with bathrooms.
I think shared bathrooms are vastly cheaper, but also vastly less desirable.
The cost to add a bathroom to a house isn’t actually that much, assuming you don’t have to go insane with the plumbing.
Look at how many houses now have “en suite” bathrooms for more than just the master bedroom.
Sure, I mean the cost per unit to add a bathroom to each dorm-style units.
In the US at least having roommates carries massive risk. Sharing a place requires taking on full legal and financial responsibility for a total stranger. If your roomie ends up a drunk who trashes the place, that's 100% on you if they bail out. maybe you could hire a lawyer and take action, but more than likely you're going to be on the hook for any damages (and if you can't pay that debt, you are blacklisted from legitimate rentals until it's cleared.)
[flagged]
No, the modern ideas are fine for what they are. You can disagree with them if you want, but they are just ideas and for many people they are good.
The problem is we are setting government policy based on a one-size fits all idea of expectations and those who don't want those are forced to either follow anyway or live a worse life in other ways for not.
Not really, governments have been encouraging family formation because it brings up new taxpayers since, well, forever.
Which does not make single-living idea weird or dumb, ofc, but it makes it additionally expensive on top of the natural cost (just like multi-floor houses are cheaper per surface built).
yes thats how society works, you give up certain freedoms for structure, safety, and access to resources. This idea that society should conform for lifestyles that dont support the continue existence of the society is pretty dumb