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In the 1950s, average size of new homes was about 1200 square feet. In 2000, it was more than 2400 square feet and held one less person (iirc: 4.5 VS 3.5 people).

We are building 1950s suburban homes on steroids in a post-baby-boom world where average household size has shrunk.

There are a lot of problems with this.

You build the biggest thing you can within a parcel because there is plenty of demand at the top of the market. Want more, smaller homes? Reduce or eliminate minimum lot sizes, setbacks, constraints on number of units, and process required towards entitlement.

What is legal is what gets built. Not enough is legal, and not enough is built as a result.

> You build the biggest thing you can within a parcel because there is plenty of demand at the top of the market.

I know many people who have built many homes and I don't know a single one who thought that way or built a house that reflects it.

While impacted by practical needs to a degree, preferred home size is just a fashion that changes over time and amounts to personal taste.

The 3500sf McMansion of yesterday becomes the "who would want to maintain and heat all that?!" of tomorrow, the cramped matchbox of yesterday becomes the Eco Friendly Tiny Home of tomorrow, etc

People build for the intersection of they want to budget and either: what they want to live in, or what their near-term anticipated buyer is assumed to want in light of current trends.

The trend in Seattle at least is to take one SFH policy and build three town homes on it that don’t share walls but have the minimum buffers between them and the property line. People don’t really build homes at all, developers do, and they want to maximize the earnings they can get on an expensive plot of land.

Fwiw, that's my non-American impression of North American suburban homes everywhere (as far as I've seen, largely TV/film of course) - y'all say scathing things about terraced houses in Europe, but then your own seem for the most part detached only as a technicality.

(And probably it is mostly about making legal and construction matters easier? No party wall; if you want to tear it down and put a new one up you can do so without disturbing the neighbours' property, etc.)

We have townhomes that share walls as well. My wife wasn’t a fan although I loved one place like that. It’s mostly preference going on.

I know, it just seems like preference is much stronger against them / there are fewer of them in NA. Maybe because if you build your houses with a timber frame you need an air gap not to heat the neighbours? Also I suppose the cost saving of constructing like that is a lot less than with brick or even breeze blocks.

I would say 25% of the townhomes here in Ballard are row homes that share walls, the rest are townhomes with footpath sized spacing between them. It isn’t a matter of heat here in Seattle, heat pumps are efficient and insulation between homes is pretty good.

Besides cost savings, you can fit more in if you don’t have those foot paths between, but the market isn’t into it.

Sorry, 'heat' was a typo for 'hear' - air gap not to hear the neighbours, I wasn't worrying about cheap neighbours sapping up your heat, ha. (Although anecdotally, that can be huge for mid-storey flat/apartments, not completely stupid.)

In Southern China, flats built as early as just 10 years ago lack indoor heating and reasonable insulation. So even if you want to heat your apartment with a space heater, you aren’t going to get very far. The coldest 5C I ever experienced.

Noise is an issue. In particular the one I really wanted to buy overlooking the Ballard locks, we suspected that the unit next to us was a party airBnB.

If a home does not have a shared wall, it is not a townhome.

There regional variations in how the word is used. In my region, a townhome is defined via other criteria.

People building their own homes are outliers.

Most homes are built by cookie-cutter block developments, and they make the most money by:

1. Minimizing the size of their lots.

2. Maximizing the size of the homes on the lots.

They subdivide as much as they are allowed to, and build as big as they are allowed to. If the houses in your city are too big, it's because the smallest allowed lot size is.

If we ever caught up with the housing shortage, and there was a glut of housing on the market, maybe developers would start to build smaller, but we aren't there, and we won't be there for the next ~30 years.

Again: I know builders.

The size of the home is not a structural rule of the building industry, and is not universal or permanent. Just like any business, it's something builders decide based on who their market is and what they think they'll buy.

The described strategy might be what you're seeing in your area and might be the only thing that makes sense to your own tastes, but there are plenty of cities and counties where the pressing demand from buyers is for other things. In trend-leading communities, demand has been growing for years for denser housing with immediate access to retail and commerce; for efficient homes with low utility costs or green considerations; for small houses, condos, and townhouses that are well-appointed but accessibly priced and low-maintenance, etc and this is what builders have been building when they've been able to get cleared to build at all.

On a national level, the trends are that home size is increasing and lot size is decreasing. Sure there will be some local variances, and it is driven by what the market will support, but it's still the general trend.

Builders build bespoke one off things for crazy people. Developers build bulk housing to try and make a profit, and they maximize FAR.

The options are not limited to {"bespoke custom house", "one size for all"}.

These ones from this builder vary from 80-320 square metres (~10 square feet per square meter): https://www.heinzvonheiden.de/hausfinder

It would be hilarious if the famously choice-filled capitalist USA has a building industry limited to Cold War DDR "commie block" identikit construction.

In the US, price per square foot is an important metric for appraisal. If the appraiser puts too low a price on the house, the buyer can't get a loan. Therefore if you are building in the US to sell the house, then you will maximize the square feet to maximize the appraised value.

In addition, it is relatively rare in the US for an individual owner to commission a custom house to be built. Particularly in the more populated areas, it is more overhead to build one house vs several houses, so people buying new houses are typically buying a new house in a development with mostly cosmetic differences as their only choices.

> In the US, price per square foot is an important metric for appraisal. If the appraiser puts too low a price on the house, the buyer can't get a loan. Therefore if you are building in the US to sell the house, then you will maximize the square feet to maximize the appraised value.

Something in that paragraph doesn't add up. 500 sqft/$500k property is $1k/sqft, a 750 sqft property needs to be valued at at least $750k to be the same price per unit area; bigger is not sufficient for more per unit area — my expectation would be that cost is sublinear with area for most residential units due to various fixed costs such as (an assumption on my part) utility connection fees and architecture fees.

Mid scale development, entire districts at a time, I'd expect that to be linear with regard to area (so the derivative, cost per square foot, is constant); Very large scale, an entire city at once, that I'd expect the derivative of cost with respect to area to increase as size increases, due to the expectation that infrastructure becomes a dominant cost.

The number of buyers able to obtain a loan increases if the home’s price is lower.

Increasing a home’s price reduces the number of potential buyers.

The reason to build a more expensive home is to be able to sell for a higher price. But if the population of buyers in a location cannot afford to pay more, then a builder would be stupid to build the most expensive home they can, because insufficient people will be able to afford it. Hence smaller (cheaper) homes get built in some places, and bigger homes in other places.

Exactly, and there is plenty of unmet demand from people who can afford high prices. It makes sense to build the most profitable thing you can sell.

In my view, it's also the aspect ratio of the lots. Most suburban lots are fairly close to square. That leaves wide side yards that are just wasted space. Who ever really does anything in their side yard?

Lots should be narrower. You could get more houses on a block, and they'd could all still have a usable front and back yard. In fact I'd allow them to be built closer to the street, because nobody really uses their front yard either. A nice backyard is something most people would use and enjoy.

Wide side yards are moats to keep you away from your neighbors. This is widely seen as a feature, not a bug.

"Not meeting your neighbors" works even better in a high rise, and that is tightly packed. :)

Not really, when you can hear every breath they take through the walls.

For noise reasons and to prevent spread of fire

Replying to you from a typical suburban home (3k sf 4 bed, 3 bath with an office and a bonus room).

It’s about 10 feet from the sidewalk at its closest point. It’s about 8 feet from each of the property’s sides.

The back yard is very nice (about 6k sf, with nice outdoor living spaces, room for kids and dogs to run around, and good views).

This seems fairly common for newer construction in the Seattle suburbs.

Front gardens are a benefit to everyone in the neighbourhood, maintained at cost to the owner. They are an anti-SUV, in a way.

I could even support tax benefits for maintaining green space in the public view. The alternative (I saw this the UK) is that people turn their front garden into parking or expand their building towards the street.

Grassy front yards are a complete waste of space and water. Kids don't play on them. The person who uses a front yard to grow food is pretty rare.

At the end of the day, too, we have a housing crisis, not a front-yard crisis.

Lawns are bad but greenery is good.

We can recognize the need to not recreate Kowloon in the context of a housing shortage.

It's more likely that a man will jump to the moon than a North American municipality is to recreate a Kowloon.

That’s basically what you do with town homes. You need to obey minimum setbacks for fire reasons, but otherwise no yards.

If there was a glut of housing developers would quickly exist the business or go bankrupt. It’s either feast or famine for them, and the 2008 crash is why it took so long to ramp back up a decade later (talent pipeline for people who build homes stalled big time).

3500sf houses (my home is not a McMansion) are not likely to become unfashionable. They sell for insane amounts of money because they are so desirable - even old ones and all the maintenance issues that come along with them. We should be meeting the demand of what people want.

"Who would want to heat all that" is very much dependent on the available energy subsidies.

I lived in a 3x2.5 meter room one time. There are obvious drawbacks but it had a surprising amount of advantages too. Using all available space leaves very little air to heat. Where would you get oxygen in a normal house? It's not like my heater can keep up if I open the windows.

> preferred home size is just a fashion

It's been a linear and monotonic increase for over 100 years

I worry about the unintended consequences of a plan like this because you might inadvertently break the cycle of the average neighborhood getting more desirable over time. And as much as it's silly that our entire financial system depends on the spice flowing it's where we're at. Having lots of square footage and (relatively speaking) spacious lots means that neighborhoods can grow to be roughly as nice as the residents have money.

So why enough housing is not getting build in Europe, surely they don't have crazy american rules but still facing severe housing shortages all over.

> surely they don't have crazy american rules

Surely they have crazy European rules instead? The EU isn't exactly known for a lack of rules.

Europe’s population density is also much higher whilst it simultaneously has an irrational hate for highrises.

Do you have the people to build them?

That's a problem in this part of the world. People would rather sit at a comfy desk writing software than expose themselves to a harsh construction environment. The small few willing to do it are booked up years in advance. They can't possibly build any more than they already are.

You might say higher pay would attract more people, but guess what higher pay brings?

Where would you build them? You’d need to first “seed” new neighborhoods with subway stations “in the middle of nowhere”…

As soon as you announce a new subway station the vultures descend and prices will ratchet up as speculators by land and sit in it, waiting for the hither bidder.

One part of the answer to that is a land value tax. That way the “vultures” won’t be able to simply sit on the property waiting for it to appreciate before selling it.

That means the demand is very high and we need to build even more subway stations until the “vultures” can’t arbitrage the market anymore.

If I think through this;

1. Price varies based on desirability of a location.

2. Desirability varies based on many factors, including proximity to a city center or major business concerns, cost of living, crime rate, etc.

3. To optimize desirability until there is more desirable space than those who desire it would require optimizing the variables that contribute to desirability.

4. The potential result is desirable, ie proximity to jobs or cultural center, low crime, low cost of living, etc. A number of variables contribute to each of these, and those would require optimization as well.

4a. There will be a point of diminishing returns, where builders will exit a market when there are not enough buyers at high enough prices to make a profit. As soon as there is a hint of profit, the vultures will appear.

5. In order to prevent real estate speculation, we could impose a few laws: first, make lending at a profit illegal for all non productive enterprises; second, levy a land value tax that hurts enough that it makes owning non productive commercial property untenable to own; third, allow only individuals to own residential real estate, ie, eliminate the rental market entirely and levy use taxes for vacant homes (your real estate must be your home of record and must be your residence for some minimum percentage of time every year).

This would destroy the real estate market entirely, and I don't think that would be a bad thing.

Crazy that you are being downvoted for applying the principles of supply and demand.

Aren't most EU cities significantly more dense than in the US?

Not enough people in Europe who can pay what those homes would cost

Oh god, spare us the YIMBY talking points. Just like this article completely ignores how many vacant homes there are, how many have been converted to short term rentals, etc. There are plenty of luxury condos and McMansions being built, not because “that’s what’s legal”, but because that’s where the fattest margins are and we live in a neoliberal nightmare.

The article specifically calls out home vacancy rates. We're at an all time low in cities.

What cities? How do you define vacancy? Is a 2nd home vacant? Is an airbnb vacant? How were these vacancies counted and who collects the data? Can you compare vacancy rates from the past to the present? Did they use same methodology to collect vacancy rates?

Exactly! I live in a major city and there are vacancies everywhere. It’s especially frustrating to see how many houses that sell sit empty for like a year or more before the speculators manage to flip them into a short term rental or whatever.

"Not enough is legal, and not enough is built as a result."

It's a preferences and distribution problem. There are plenty of places with vacancies or where it is legal and practical to build. The problem is people don't want to live there or it has too few jobs. If the market works the way it should, then people should shift out of the tighter areas and into the looser areas, reaching something closer to an equilibrium. The problem is many of the companies that had easy money and extreme growth concentrated it one region and skewed the market. Most of the US does not have a housing issue as nationally housing units exceed "households". We could accommodate everyone, but it's largely a distribution and preferences issue.

https://gigafact.org/fact-briefs/are-there-more-homes-people...

> If the market works the way it should, then people should shift out of the tighter areas and into the looser areas, reaching something closer to an equilibrium.

The problem is that households require two wage earners. Consequently, it is very difficult for a family to move since both earners have to find better jobs simultaneously.

One of the reasons to stay in the overpriced areas is that when one person loses a job, they can get another job without uprooting the whole family.

"Consequently, it is very difficult for a family to move since both earners have to find better jobs simultaneously."

If cost of living is significantly lower, they don't have to be better.

My whole comment was about job distribution. What are we doing to address it? Do the mega corp leaders not see the social and business value in opening offices in smaller cities?

The maximum cost of living differential is something like +25% (NYC) to -25% (Beaumont, TX).

Most differentials are much smaller. "Cheap" places are no longer very much cheaper.

Cost of living changes are no longer extreme enough to offset the loss of a wage earner.

> Do the mega corp leaders not see the social and business value in opening offices in smaller cities?

Um, no?

The difference between opening an office in San Jose and one in Pittsburgh is quite large, for example. Your connectivity due to air travel is much worse. Your personal networking is much worse. etc.

It was the former CTO of Modcloth who talked about how having the programmers in Pittsburgh was great but that they needed to park the executives in the Bay Area.

Google actually has an office in Pittsburgh. That's the more or less the type of expansion I'm talking about - satellite offices for the large corps.

It's still an international airport, even if the schedule isn't as robust. The emphasis on in-person personal networking, and personal networking in general, is atrocious. Personal networking and the requirement to so it in person is a huge factor in many biases and discrimination. It's only going to get worse as the group-think and physical concentration increases while the job market gets worse.

Also, 25% is a big difference. I think we have to compare the commutable areas as well. Some places like NYC and SF do not have much cheaper areas in a reasonable commute. Other areas can have much cheaper areas in a reasonable commute. Many costs are largely the same due to the national brands - cars, electronics, appliances, etc. But things like housing can be massively different. An apartment in a commutable suburb can be close to 50% of what it is downtown in many cities. It's no secret that the salaries and property costs are extremely above average in the bay area.

There are a lot of homes in every country that are essentially worthless. You can live in them, and they may even be in good condition. But if you try to sell them, you probably can't find anyone willing to pay real money for them. Because very few people have a reason to live in that area. And good luck if you need to borrow money to renovate the home.

Then there are areas where many people have a reason to live in. Imagine a highly educated couple. At least one of them probably works in a field where fully remote work is not possible. When they choose where they want to live, they likely prioritize areas with many potential employers within an easy commute. If they take the risk and move to a small city with only 1-2 relevant employers and it doesn't work out, they're in trouble. And because educated people move to larger cities, businesses that need talent also concentrate there.

Homes as such are not worth much. Almost all of the value is in the location. And most locations are not worth much.

Transformation to information economies really re-centered urban areas as well. People used to flee from urban areas (and for reasons like crime) now they're flowing in the opposite direction.

In the US though I see a lot of attitude for "ugh who wants to live in a building with people, I want huge lawns where I don't have to see my neighbors on the end of a cul-de-sac with no traffic. I want to live in a town thats as far from 'walkable' as possible." So many people I come across especially when talking about how housing has a supply-side problem and needs to build more with better density and access to transit.

And why aren't we doing anything to address that distribution? If the employers are having to lay exorbitant salaries so people can afford housing, shouldn't they be looking at opting offices in other cities to reduce their cost? If not, the system is broken and the leaders are poor. In my opinion the leaders should be looking where they are creating jobs as part of their societal duties, maybe even put it under DEI (as worthless as the DEI programs tend to turn out in practice, maybe not).

Everyone is already doing that, which is exactly the problem. When every leader is trying to make their city/company more competitive, the ones that are already competitive will win. They can do more, because they have more money.

If you want to fight the market, you need centralization. You tax everyone and use the collected money to subsidize a limited number of cities with unrealized potential. Selecting the winners is essential. The more evenly you spread the money, the less effect it will have.

"Everyone is already doing that, which is exactly the problem."

I'm not seeing that. I'm seeing concentration and not social equity focused distribution.

"You tax everyone and use the collected money to subsidize a limited number of cities with unrealized potential."

There are already cities with untapped opportunities. In my opinion the reason rhey remain untapped is because leaders don't care. They'd rather follow group-think.

One consideration is that, from a legal rights and social inclusion perspective, places aren’t fungible.

The market can’t make a culturally inhospitable place welcoming.

It's not just culture. Not being American, I don't know what's really up with Detroit, but I categorise it as "like Blackpool" in that it was an economic powerhouse and then industry shifted and it became poor; there's now a lot of empty (or at least cheap) homes.

"One consideration is that, from a legal rights and social inclusion perspective, places aren’t fungible."

You do understand that works both ways? If you reverse the areas you're thinking of, there are people who prefer the rights or social environment in the opposite direction. Shouldn't we be trying to bring similar opportunities to all social groups? If we want to look at how this turns out, take a look at Native American reservations.

Edit 3:

Originally I'd replied about population demographics and migration; @giantg2 has a good reply to that, which you can see below. In reviewing the conversation, I got mentally stuck on the comparisions to reservations, because I think it's a severely fucked up comparison. But saying that alone isn't a helpful or effective conversation, so -

> Shouldn't we be trying to bring similar opportunities to all social groups? If we want to look at how this turns out, take a look at Native American reservations.

In terms of "should we be trying to bring..." - yeah, more or less, yeah, we should. The issue, for me, comes first from trying to say that the social group that is a reservation is the same kind of social group that is a disappearing small town; second, that "bring[ing] similar opportunities" to both would look similar (ye olde equality/equity conversation), and lastly that a meaningful comparison of outcomes can be made between the polities, due to, you know, all the ethnic cleansing (Trail of Tears, etc). But, that's a a hard conversation to have, or to continue, and it's based off of me making a lot of assumptions about what comparison actually is trying to be made.

So, to be constructive about it:

> If we want to look at how this turns out, take a look at Native American reservations.

Can you walk me through this? What are you seeing as the outcome, and why do you think these polities are comparable?

The main comparison points for the rural areas and the Native Americans are:

- Both groups had pressures, albeit to very different degrees and methods, to remove rights and land. We see that rural populations are losing farm land due to the way the market treats commodity crops and the way the government subsidizes - get big or get out. Many people in rural communities feel ignored and even mistreated by their governments on a variety of issues, including things like eminent domain, property rights, due process, and constitutional rights, especially the 10th and 2nd amendments. As urbanization increases the rural areas just have things pushed down their throats. While reservations have a lot of autonomy, they miss out out on a lot of programs and incentives due to having almost no representation at various levels of government.

- The general attitude towards each is that they are dumb, superstitious/religious, and they should stay in their backwater areas if they don't want to get in line with progressive agendas. That it's their own fault they're choosing to be poor by not moving to the cities, or they don't deserve the same sort of opportunities in their area.

- There has been animosity towards both groups. We've had presidents make fun of both groups. While the Native Americans were targeted with more active methods of elimination, there are passive methods of eliminating people - most of it unintentional. If you eliminate enough opportunities the people have to move, as we've seen with the increasing urbanization. It can be hard to believe that things like free trade (elimination of many factories) and elimination of fossil fuel industries without any geographic replacements aren't politically strategic.

Those make sense, and they’re useful to bring up, but I do think that generally considering one informative to the other is A Problem - reservations are from forced relocation and generations of systematic cultural destruction. Even if you’d argue rural areas are facing cultural destruction, it’s (a) not a specific, deliberate aim and (b) has been occurring for a fraction of the time (1-2 generations, vs what, 6 to 20?).

So like, I’d buy that it’s worth taking about both, due to their similarities, but I wouldn’t buy that any conclusions could be made on those alone.

PS - I also want to say, I really appreciate your response; you’ve spoken with a measured an informative tone/etc, and that’s worth celebrating.

Yeah, but you generally need the money from the businesses and employment to grow the other amenities. For example, TX is almost the opposite of CA in many political areas, yet it seems they have been successful in attracting businesses and people to migrate to them. The amenities and infrastructure has been increasing in many of those cities.

"That’s (part of) why the places that are emptying are emptying, and then they’re surprised when only trying to be attractive to businesses doesn’t work out."

I'm not sure I understand you. Places like TX, FL, AZ, etc are actually growing populations while being hailed as business friendly. Yet places like CA and NY are losing population while considered being tought for business and progressive (rights, social atmosphere fron your prior comment?).

Ah; it looks like my impressions are /somewhat/ out of date: https://www.ppic.org/publication/whats-behind-californias-re... Although I’d say trying infer things from numbers during the pandemic is going to, uh, run into some pretty serious confounding factors. Still, looks like the trend was happening /before/ that, so.

> then people should shift out of the tighter areas and into the looser areas, reaching something closer to an equilibrium

thats if infrastructure(roads, airports, hospitals, grid, etc) will appear there

There are plenty of places with infrastructure that also have available land within about an hour or so from an airport. Many of those places have decent hospitals with great hospitals (for specialists) a reasonable drive away. Those decent hospitals would likely get better if they had employed patients to reduce the percentage of their patients on Medicare and Medicaid (both low reimbursing).

IMO the tiny 1950's boxes were the start of the problem. "Everybody gets a house", yet it made for an extreme pressure for kids to gtfo as soon as possible rather than living in the bedroom across the hall from your parents (assuming the parents even allow that).

My grandparents had a bona fide two family house, two stories with the common "balloon" construction from the (earlier) period. Looking at how its use changed through the years, it allowed for great flexibility. Lots of bedrooms for kids, somewhat private space as they got into their teenage+ years. Then after most moved out and settled down on their own, one stayed in the upstairs apartment with their husband and own kid, and helped out grandma while grandma helped watch the next generation. Then when grandma passed, the house passed to a different brother, who lived in one apartment and rented out the second.

Now modern humongous homes are trying to recreate some of that flexibility, but not doing a great job at it. They're still focused on a singular living space where everyone has to interact with each other. This is often due to zoning regulations directly aimed at preventing people from creating full second living spaces that would be possible to rent on the open market - when it's exactly that independence that allows scaling how much house you're actually using.

4.5 people in a 1200 sq ft house is packed.

I'd argue we are simply purchasing larger homes because that's what people want?

that's 111 m² usable space right?

and 4.5 people .. meaning parents and 3 kids, well, yeah, that's not super big, but everyone can have their own room (let's say 10+ m² so that's half of the house, and you still have around 50 m² for a living/dining room with kitchen, bathrooms, etc.)

it sounds lovely to my European ears :)

We live in a wildly different world now. Cars, shopping centers, everything is bigger.

Is that bad? Depends on your viewpoint. As far as I can tell, people are buying what they like so the customer is happy.

There are side effects we don't like, but I can see attempting to solve that could have its side effects.

Eventually, the market works this out. We got sick of sprawl some people moved back to the cities.

Houses are too big? Some people live in much smaller homes closer to the city or even tiny homes.

The market isn't allowed to work it out because of single family zoning

Finished basements.

The house in 1950 had a unfinished basement and was listed at 1200 sq ft. They finished the basement and later sold it as 2400. The difference is a couple pallets of drywall.

Finished basements without egress up to code can’t count in the sq ft of the listed properties.

These also don’t exist in the south since there’s no need to get below a frost line.

Whether not that's true, it doesn't explain the visible insanity of new suburbs

I looked at some old houses in Seattle with basements, and they were incredibly depressing. New homes are mostly built without basements up here, and I don’t think anyone actually misses them.

No basements in western states :)

My family lived from 1969 through 2006 in a house in Colorado with a basement. My stepmother--who grew up in a region with cooler summers--ight have perished of heat exhaustion but for the basement. What anyone in particular had outside our neighborhood, I can't say; but I think that basements were not unusual in Denver.

I've lived in Oregon, Washington, Nevada and Colorado and I've seen and lived in plenty of places with basements.

On flat land, basements are a function of home (and land) price. In places where the frost line is not very deep, a basement is a luxury. One of the most expensive parts of the house is laying the foundation, and not building a basement is far cheaper than building a basement.

If the frost line is lower, then a basement is very little extra cost since you are digging deeper and laying more concrete anyway.

If you are building on a hill, then making a 3 story house is also very little extra cost.

3/6 of the houses I spent a lot of time in as a kid had finished basements.

Anecdotally, finished basements are practically required if there is any sort of hill, which fairly common in the west, whereas they're likely to be absent for houses built on the floodplain.

We don’t live in the 1950’s anymore. When you and your spouse are working from home and have 2+ teenagers 1200 ain’t gonna cut it. Insisting on horrible conditions to raise a family in the modern world is not going to encourage people to have children.

Whatever we are doing now is also not encouraging people to have children. I'm sure many young people would rather choose a 1200 sqft home than no home at all, which is currently the case.

Your example of two teenagers is only relevant for 6 years of a family's lifetime. Why should we optimise for those 6 years?

My spouse and I chose to have kids because we could provide for them and house them in nice conditions. I would support making that a reality for more people. There are new suburbs that are slowly coming online where I live, just a little further out than what's currently available, and more of that would be great.

And we don't need to be "optimizing" like you're talking about. "Well it's only 6 years of our life, not a big deal for everyone to suffer that long!" Good lord. Just build the houses people want. And clearly some of them want the SQFT - we can meet that demand.

How is living in a 1200 sqft "suffering"?

My spouse and I also went for the kids when we were financially stable, and now we live in a 1500 sqft home, and I don't see why would we need a bigger one. We both work from home, the kids have their own rooms, we even have a tiny guest room.

What would I do with a 2400 sqft one? Cleaning and maintaining thus one is already a lot of work.

In a situation where there is a housing crisis all over the West, building bigger houses, except for a niche market that does exist, just doesn't make sense.

I'm in a home around that size and am in the process of upsizing. It's just too small. I don't know you have room for you and your spouse to both take conference calls at the same time, plus have sizeable rooms for the kids, plus have a nice kitchen and living area with that SQFT. If you're living in California that makes more sense though. As for maintenance, we pay for help with cleaning.

Around here, I think there is definitely a market for bigger houses, because any house with 3K+ sqft sells for a butt ton and people are tripping over each other to fight for them. The new suburbs that are being built are getting a ton of demand and their prices have spiked in the past few years at a far greater rate than surrounding housing.

We should be building 3K sqft condos. There is practically unlimited vertical space for that. This will make spacious living more accessible because the purchase price will be more about construction cost than land cost. It will also relieve pressure on suburban house prices, making suburban life more accessible for people who want it.

Agreed on all your points. But I would add you can still do mixed SFH's and condos/townhomes in new developments, which is how they do it around here, but the SFH's are still fairly packed in.

The demand for SFHs will always exist - some people are willing to pay extra not to hear or smell their neighbors through the walls. We can meet that demand with new builds, and once pressure is relieved from current suburban areas, you can go back and start to incrementally redevelop those areas more efficiently as well.

> some people are willing to pay extra not to hear or smell their neighbors through the walls.

There's a worthwhile discussion to be had on this point alone. I believe condos are so small and bad because of a confluence of two factors: (1) a lack of regulations around quality, (2) too many regulations around zoning, making vertical space scarce instead of abundant.

Factor (1) leads to a lack of privacy and noise because the builder wants to save on materials costs. Factor (2) leads to condos being too small because vertical "land" is so expensive when it should be cheap if restrictions didn't exist.

It should not be possible to hear your neighbors through the walls, if we use multiple layers of air gapped steel or concrete. Condos that achieve this exist. They're just not common because regulations don't enforce it.

You are utterly delusional.

Maybe, but unfortunately you won't be able to downvote me until you start making more substantive comments.

All other things being equal, an expansion of housing stock which tracked population growth would keep prices steady.

The big shift is immigration expanding the pool of working-age people, and longer lifespans increasing the time it takes for family homes to be released back onto the market. People having fewer kids now self-evidently does not affect housing demand (except perhaps to reduce square footage needed per working person)

I don't buy it. One thing that stands out to me: he has a ton of charts, but this crucial bit:

>But, since 2008, vacancies have been declining steeply.

is missing one. It looks like this statement is based on his estimates. So... original research. I'll leave it to an actual statistician to analyze his methodology, but that statement doesn't jive with my experience.

I continue to suspect that the "housing shortage" (similar to the "labor shortage") is due to a mismatch between the value that industry expects and what are actually the rates necessary to support the population. Powerful institutions representing wealthy individuals and groups, and large swathes of people, like the status quo; it is, in fact, fundamental to their lifestyle, their finances, the overall economy, and they will (and have) done everything they can to keep prices and the perception of scarcity high. The situation doesn't seem rational from an inventory/demand standpoint because it isn't; there are enough house, and they should be worth less and more affordable. But we won't return to reality until the privileging of incumbents ends.

The "housing shortage" is due to a shortage of housing. This is entirely self-inflicted by various cities that have illegalized all the easy ways of increasing density (see San Francisco for the reductio ad absurdum case), at the prompting of deeply NIMBY voters who oppose anything that will increase construction regardless of claimed political beliefs.

I'm not an expert, so forgive if this is a stupid question...

What you just said might be absolutely true in the US. However, housing is at historic levels everywhere in the developed world. How do you explain that? Surely not all cities in the world made the same mistakes?

There are housing shortages in localities due mostly to distribution issues. Nationally, the number of housing units exceeds the number of households (families). In theory that market should correct this by causing places (San Francisco, in your example) to be less attractive and people will choose other places to work and live.

You may have noticed a broad swell in house prices across the nation as the pandemic freed folks to work remotely.

10% vacancy is generally considered ok. 5% is what New York state defines as an emergency. Even Buffalo is at 4.9%.

The shortage is real.

The work from home trend didn’t last and was largely unrealized. No, you can’t work from Butte, you need to be back in the office in Seattle.

Buffalo has about half the population now than it did at its peak in 1950. They just tore down housing because they could not afford to maintain them, and before they would fall into disrepair and became dens for crime and rodents. Similar de-housification is also occurring in Detroit, the market adjusts one way or the other.

Yep, the tear downs are happening all through the rust belt and Appalachia.

There are about 140 million units and about 15 million vacancies. Seems that nationally there are vacancies around 10%.

https://gigafact.org/fact-briefs/are-there-more-homes-people...

https://fred.stlouisfed.org/series/RHVRUSQ156N

https://fred.stlouisfed.org/series/RRVRUSQ156N

Your links don't measure underutilised and vacant property (e.g. AirBnBs and second homes, or land banked properties).

From the links:

The homeowner vacancy rate is the proportion of the homeowner inventory that is vacant for sale.

The rental vacancy rate is the proportion of the rental inventory that is vacant for rent.

So essentially this is a measure of how many properties are vacant and available for rent or purchase.

You are correct, here is a better statistic: https://fred.stlouisfed.org/series/EVACANTUSQ176N

Thanks.

So with a population of 340m, 15m vacant properties, and an average household size of 2.5 we have 15,000,000/(340,000,000/2.5)= 0.11, or a possible vacancy rate of 11%. That seems like a lot.

I'm not sure why you'd want to include AirBnBs and second houses in your measurement vacancy measurement — they aren't available for rent.

Because usually when people talk of an accommodation crisis they are referring to a shortage of homes available to be used as a primary residence. It makes sense to consider holiday homes and such as contributing to this problem. Just ask anyone in Majorca for example.

Sometimes people refer to underutilised properties rather than vacant properties for this reason.

I am very interested to know what happens to the proportion of underutilised properties during an accommodation crisis. The most recent linked chart in this thread is very interesting - what caused the steep increase leading up to the GFC (i.e. during a boom - often associated with a 'shortage')?

Another point overlooked is that the main focus of the article cites fewer people per household, then discounts things like AirB&B, which directly contributes to this statistic. It seems like a casual dismissal of the statistic, painting it as simply no one having children.

Short Term Rentals do not help, but ... as someone who has been doing housing stuff for a few years now, they're one of several bogeymen that people want so badly to be 'the real problem'. But they aren't. It's your neighbors who show up to oppose housing, like this crowd at a hearing I attended to support some apartments: https://bendyimby.com/2024/04/16/the-hearing-and-the-housing...

That's 40 homes (aka 'units') that are not built, and it's not because of STR's, foreign buyers, Blackstone or whatever other bogeyman.

That happens all over the place, every single day.

I don't think he's saying it's the cause, just a contributor. I would group them in with the "status-quo likers" I talked about, which also includes NIMBYs. The root remains an unwillingness to tell these people, "No, you had enough/had your chance. We're opening the spigot, and we're not predicating it on your getting rent."

The cause of the problem is that real estate is a good investment asset.

The way to solve the problem is making it a bad investment asset.

The best way to do it is to tax real estate progressively. The more you own, the higher percentage of its value you must pay every year.

That taxation scheme would make investors drop millions of houses on the market like a hot potato.

Prices would tank. This might cause issues with real estate as mortgage collateral. So that needs to be reformed first. Bank would need to be forced by law to accept swapping collateral for another of the same value. Regardless of the current price of the collateral and its replacement. They should also be forced to consider mortgage fully paid once they decide to end the loan and take posession of the collateral.

Also no bailouts. Banks are companies. Superpower of companies is that they can die. Let them.

that's the effect, the cause is that supply did not keep up, and that's caused by all kinds of restrictions and disincentives against high-density and corresponding cities (this stretched out populations, increased overall costs)

just as white flight completely turned cities inside out (negating a lot of their economic benefits) the resistance to even gradual "citification" of SFH suburbs further pushed costs up

It's impossible for the supply to keep up for the demand for investment vessel. China has already built 3 times the number of the apartments that are needed to house the entire population and the demand still outpaces the supply.

nah, Chinese real estate bubble bursted, because demand collapsed (despite the prices kept low due to municipalities financing a large part of their budget through land sales, and banks were incentivized to issue a lot of mortgages, and that's how Credit Suisse run into a wall)

I'm not sure how the latest data looks but crash is a strong word.

https://www.business2community.com/wp-content/uploads/2023/1...

It seem like it barely stopped (paused?) growing. Which is reasonable given more widespread awareness that what's being built is of lower and lower quality. Which is also natural given that supply is provided to satisfy investors not honest residential demand.

The tax change would have to be made gradually to avoid a shock to the system, and it could exclude primary residences so that middle-class homeowners aren't punished. Just incentivizing the wealthy to offload their pied-à-terres would free up plenty of housing stock.

The progression can start at zero. Even if you own up to 3 residential properties it still could be zero.

What it must do is incentivise largest owners who hold the most properties to sell them.

A land value tax would be a more efficient way to fairly distribute the benefits of land.

Sure, but progressive land tax to discourage large ownership.

But rents are also high. High rents aren't caused by investors. Rents are caused by too many people wanting to live somewhere versus a small number of dwellings. It's the pigeon hole principle, which you can't solve by reducing investors.

Also, let's think about unintended consequences. A lot of housing starts happen only because of investor capital. Given the existence of a rental crisis, if you inadvertently reduce housing starts, it might backfire and put upwards pressure on rents.

But yes, you are right that prices would go down with your proposal, all else equal. But it is not a full solution until you also have a way to increase the number of dwellings to solve the rental crisis.

High rents are being caused by investors, which is why plenty of stock is sitting vacant. When the developer or PE purchaser financed the building they did so based on an estimate of what the building can generate in revenue. If average rent drops to 70% of what the estimate had, then the loan goes completely underwater. However, if the landlord simply refuses to rent those units at the market rate, they can pretend that the forecast value is still legit since they don't have a market signal indicating otherwise. When the loan comes due, they can maintain this fiction and roll over to another loan. Thus rent stays high despite market forces - the landlord can't afford to rent it at the actual market price or they won't be able to roll the loan over when it pops and they are forced to bankruptcy.

We have to unwind the low-interest financial ponzi schemes the Fed has propped up since 2007, otherwise there is a huge incentive not to fix the problem. Maintaining high interest for another 4 years will probably be enough to force the issue, since most commercial RE loans are pretty short.

> High rents are being caused by investors, which is why plenty of stock is sitting vacant.

Vacancies are a contributing factor, but why think it's the primary one, compared to a lack of housing? Rents are going up everywhere in the West, even in places where vacancy rates are decreasing such as Ireland. How can vacancy rates decrease while rents skyrocket?

How should I know, provide some data to support that claim. Could be more people are cohabitating to meet the higher rents. Roommates are still better than homelessness, after all. There is a ton of evidence for financial shenanigans and only modest evidence of actual shortage. As with most things these days, its a problem is distribution and ownership model, not supply.

Net migration in Ireland is 2x the number of new dwellings. Similar thing going on in Canada, Australia and UK. Even if I believed you that there wasn't a shortage 3 years ago, there has to be a shortage now by the most elementary logic (pigeon hole principle).

This combines with the trend towards increased urbanization, creating a relative shortage near major cities where the jobs are located, which, no coincidence, is also where there's the rental crisis.

But you then point to vacancies as the explanation. Yet vacancy rate changes are inversely correlated to rent changes in some places. This proves that vacancies do not explain the increase in rents we've observed. What other reason can you offer to justify the connection between investors and rent, other than the vague "financial shenanigans"?

> Even if I believed you that there wasn't a shortage 3 years ago, there has to be a shortage now by the most elementary logic

Or you could provide data. I don't live in Ireland, did they have a surplus before?

> So you have not offered any explanation.

I explained exactly how the scheme works, as well as providing the possible explanation of higher cohabitation rates. That's certainly what is happening in Southern California where I am actually familiar with the market. Based on a cursory Google search, it looks like Ireland is having some of the same...

https://dublininquirer.com/2022/11/02/increase-in-landlords-...

> But it had “further potential to secure full market rent levels” subject to tapping into an exemption from the rules around rent increases, with one of the options being “through vacancies”, the advert said. If a property has been vacant for two years – or a year for a protected structure – then a landlord within a rent pressure zone can legally raise the rent by more than the rent-increase cap.

I'm not going to spend any more time on this. The evidence is pretty clear that landlords are playing games to drive up the rental market. There is no question that shifting demand patterns and decades of failure to deliver new housing are part of the equation as well, but those issues are solvable. The intractible problem of a landlord class are much more threatening and difficult to solve.

> Or you could provide data. I don't live in Ireland, did they have a surplus before?

Net migration has tracked higher than new dwellings for a number of years in all of these countries. See Canada for example where this has been a trend since 2016.

Net migration (excludes 2023 which was almost 500k): https://data.worldbank.org/indicator/SM.POP.NETM?locations=C...

New housing: https://tradingeconomics.com/canada/housing-starts

> The evidence is pretty clear that landlords are playing games to drive up the rental market.

This explanation makes no sense, it doesn't generalize outside of Ireland. You're talking about vacancies that are caused by a price ceiling on rent (which is a terrible regulation that always backfires) which doesn't exist in most other locations that are experiencing a rent crisis.

I chose an example of landlords playing games in Ireland. The only generalizable fact across the western world is low interest rates from 2007-2022 and the landlord class continuing to jack up rents every time they got more access to cheap money. That's the problem.

I think you misunderstand elementary economics here. The rental market is not a monopoly or oligopoly. Landlords can not exercise market power. It is a competitive market given the number of independent landlords and given their inability to coordinate in order to effect collusion.

> the landlord class continuing to jack up rents every time they got more access to cheap money

That's not true. As a case study, in Australia during the negative net migration during Covid, rents actually decreased. Rents only increased when net migration levels surged post-2022 to 2.5x the level of annual housing starts. Credit in Australia is actually more expensive now than back when rents were low in the 2010s. https://tradingeconomics.com/australia/rent-inflation

Also, cheap credit does have one deflationary impact on rents, which is that it leads to more housing starts which addresses the shortage issue. If credit was expensive you'd have less housing, exacerbating the main cause of rent increases.

Thank you econ 101 student, but I understand it fine.

> It is a competitive market given the number of independent landlords and given their inability to coordinate in order to effect collusion.

Oops, they did collude. https://www.ftc.gov/business-guidance/blog/2024/03/price-fix...

> rents actually decreased.

This link says rent inflation decreased, which just means inflation was lower. This is also just a graph and some numbers, so I'm not really sure why you linked it. It doesn't explain anything by itself.

> which is that it leads to more housing starts which addresses the shortage issue

We had 15 years of the cheapest money in the history of modern economics, why do we still have a shortage?

Negative rent inflation in 2020 means rents decreased in 2020.

I explained already why it's relevant. Rents went down when credit was the cheapest (refuting your hypothesis) and when net migration was the lowest (confirming my hypothesis that it's shortage related).

Then rents skyrocketed post-2022 when credit was expensive (refuting your hypothesis, again) and when net migration was at an all time high relative to housing starts (confirming my hypothesis, again).

You have no data that backs your hypothesis and you remain obstinate in the face of data that refutes it.

  "We had 15 years of the cheapest money in the history of modern economics, why do we still have a shortage?"

Of course high rents are caused by the investors. After all, rents are huge part of the return on their investment and also huge factor in determining the asset price.

Solution to rental crisis is the reduction of what percentage of people rent vs buy. With a flood of cheap properties on the market more people would consider buying. Also they'd need smaller mortgages so they could be easier to acquire.

> After all, rents are huge part of the return on their investment and also huge factor in determining the asset price.

Yes, rents are part of their ROI. That does not mean asset prices cause rents. Rents cause asset prices by impacting investment demand. Rents provide a soft bound on asset prices because investors demand a certain ROI, else they will allocate capital in other markets. We're getting the direction of causality mixed up.

> Solution to rental crisis is the reduction of what percentage of people rent vs buy.

No. If we have N renters competing for 0.8*N rental properties near their workplace, and we convert half of them into buyers, you're left with 0.5*N renters competing for 0.3*N properties. If anything you have made the problem worse for renters (although you have improved the situation for buyers).

Higher rents inflate asset prices, but higher asset prices also inflate rents because buying becomes too expensive and rents can safely grow because people who can't buy must rent.

Direction of causality goes both ways. It's positive feedback loop that's barely contrained by any reality. That's why it seems to run away towards infinity despite only small changes in supply and demand.

There's no good solution to your example because there's simply too few properties. Some people will become homeless. The same number in each scenario. It hard to tell how much total rent will be transferred in each scenario because competition for rentals is harder in second one but 0.5N properties have zero rent.

This economic reasoning doesn't make sense to me. If a buyer can't buy because an investor priced them out, they'll become a renter (+1 demand), and that property will become a rental property (+1 supply). These things cancel out. You still haven't explained the imbalance (lack of rental properties versus number of renters) that causes rents to go up.

However, the other poster brought up vacancies, which is a good point. That does give a plausible way that investors can cause rents to go up. But rents are going up even in places where vacancy rates are decreasing, so it's not the full picture.

If you proposed a large vacancy tax as a way to remove this contribution to increasing rents, I'd support that. But the other stuff should not contribute to reducing rents, and it won't be close to a complete solution. Rents should remain high until you build. FWIW, I actually do support all your other proposals too, because reducing prices is good, I just don't think it will solve the rental crisis.

There's inefficiency when property becomes a rental. As you noticed vacancy is one factor. There's also the rent itself that's aimed at extracting value from the person that needs a limited resource more than the investor.

Vacancy tax would be great but it's way harder to track vacancy than ownership. And it wouldn't help with the rent. Money would still flow through this channel from people who get their income mainly from work to those who get their income mainly from capital. And there are so many channels through which this process happens that if we could limit this one a bit it would be something.

Hoarding limited resorce that everybody needs is one of the societally worst things somebody can do with money. We'd be better off if that money was redirected to literally almost anything else.

It's always struck me that housing regulation (well, a lot of regulation really) is written by rich people for rich people.

When I moved out of home I'd have been perfectly willing to live in a minimally insulated log cabin, shipping container, etc of sorts with basic running water and wiring that consisted of me running conduit up the walls. I could then upgrade it slowly over time with insulation, stud walls, etc etc time permitting.

There's tons of land in the UK that'd be cheap enough to do this.

You just can't, though. It has to be done "to code" and with planning permission and a billion other legal things, which basically means forcing everyone into a level of luxury/"modernity" that most actually can't afford.

So you end up with basically nonsense like van life, people sleeping in their cars, homelessness etc, because as soon as you build a permanent structure it becomes a huge nonsense.

No, it's written in blood to avoid stuff like the Great Fire of London or epidemics.

Super dense urban situations are not what we are talking about here.

This discussions on house size and housing shortage in a country so big is indicative of a bad labour market and declining quality of life.

The economy is in shambles if homes can’t be built for different income groups. The villain here is the govt that eats up the taxes and imposes more and doesn’t provide basic quality of life. Wealth redistribution is not the solution. Wealth management is the answer. America fails miserably.

Basically..if a country as large as America is wanting dense housing and smaller homes, it means it’s becoming poorer.

For the rest of world..who are resource constrained or resource poor or economically weak…America is laughing stock.

It’s like the world’s richest person has a poverty fetish to fit in.

The only true wealth in this world is land. And the govt has made if so none can truly own it. And there you have it.

The gaslighting is real. Land owning farmers are the richest people in the world. By offering them subsidies, they have become debtors. Land rich and cash poor. The ultimate goal is land grab by institutional investors until very few elite will own all the land…and its resources.

> and adults generally live on their own or with a spouse

This has not been historically true.