A side effect of lack of affordable housing

[jimbogumbo]

The title is The Childless City

https://www.ft.com/content/31d9e4b7-a0d8-4316-bd42-9b097c0cb3a0?segmentId=b385c2ad-87ed-d8ff-aaec-0f8435cd42d9

[Hibush]

Paywalled. Can you provide a summary of the salient points?

[jimbogumbo]

Rats! I read it this morning on the website Mahaggony always cited (I can't make myself click on the vast majority of the links, because, I'd be too angry). Now, when I went back to find some highlights, I'm paywalled.

Sorry!

[Antiphon1]

Try going through this link.

https://www.realclearpolitics.com/2023/07/15/the_prospect_of_the_childless_city_603122.html

[lightning]

It's a story about DINKs and the housing culture that caters to them.

[jimbogumbo]

lightning, that's not the main theme as I recall it. More that housing is too expensive in cities, and families can't afford them. Didn't seem quite the same as DINKS, more like dismalest's the market price rises and only some can afford it. There was also (as I remember) a discussion of parents not wanting to raise their kids in the city.

[ciao_yall]

San Francisco is famous for having more dogs than children.

People leave because condos/apartments are being built as 1 br/1 bath, so there is no way to fit a family in there.

Plus, the public schools are a dysfunctional mess. So families with school-age children flee for the suburbs or pay exorbitant amounts for private school.

[dismalist]

I didn't much like the FT article. The author identifies a phenomenon -- people moving from high rent areas to low rent areas and thinks  it's a problem. Actually, it's a solution to a problem, viable so long as there exist low rent areas.

Why are rents high? You guessed it -- lack of new supply.The salient thing about Britain is that the lack didn't begin yesterday. It began with the 1947 Town and Country Planning Act.

There are many details, all of which conspire to choke off new supply to this day. This article

Why Britain Doesn't Build

explains them and their consequences.

It's a longish history, but pleasant to read.

[jimbogumbo]

Well then, here is one on converting unused commercial space:https://www.denverpost.com/2023/07/14/empty-office-space-converted-residential-apartments-condos/

[dismalist]

Well then, here is one on converting unused commercial space:https://www.denverpost.com/2023/07/14/empty-office-space-converted-residential-apartments-condos/

We can't prevent all good things from happening!

[Stockmann]

I didn't much like the FT article. The author identifies a phenomenon -- people moving from high rent areas to low rent areas and thinks  it's a problem. Actually, it's a solution to a problem, viable so long as there exist low rent areas.

A solution in that it's better than being homeless or living in Soviet levels of overcrowding. It creates all sorts of problems of its own.

Why are rents high? You guessed it -- lack of new supply...

No doubt, but what stands out to me is how global the phenomenon is. Pretty much every large city in the world has the same issues of housing costs rising much faster than household income. For some reason governments around the world switched from building affordable housing to creating all sorts of obstacles to building. In the past, growing populations were simply accommodated by building new neighborhoods. The consequences are so far-reaching (not least, the collapsing birth rates in big cities) that the cost of living (towards which the cost of housing is a big contributor) is IMO right there with climate change and the impact of AI as the stuff that's going to shape this century.

[dismalist]

An increase in house prices higher than inflation or even real income growth by itself doesn't necessarily mean much. It's the causes that are interesting. Since this is a highly competitive market, we need only look at the determinants of supply and demand. New supply is constrained by NIMBYism laws in many places. On the demand side, over recent years, worldwide, there has been a low interest rate policy. Because housing is an asset which yields consumption over time, it behaves like an asset price. Everybody wants houses "to make money".

But that's already over. A higher interest rate policy -- and those Central Bankers hang together -- world wide is already causing relative house prices to fall, i.e. nominal prices rise less than the inflation rate.

Here's a lovely table that tells us year-on-year real price changes for housing in 58 countries:

Real House Prices

Note that many, many are already negative. That even includes Canada. The building restrictions in the UK and US, of which I know, and France, of which I can educatedly guess at, exhibit only the tiniest downward movement, if at all.

Build, baby, build!