I am confused by the following comment, which is something I have seen echoed in a few of your articles, "The thing that differentiates a homeowner from other families is that they are a supplier"
I thought home-builders would be the only suppliers in this context? Are you referring to families who build custom homes?
Every household is a food consumer. Only farmers are food suppliers. When a family farms, they are both a consumer and a supplier. A homeowner is like a subsistence farmer. They only produce exactly as much as they consume. But, their net effect on the market, compared to a non-farmer or homeowner is to add supply.
Living in a home is like buying bread. Buying or owning a home is like buying or owning farmland. The farmland produces the grain for the bread. The house produces the service of shelter.
The farmer still needs hired help, tractor-producers, seed dealers, etc. But they are the farmer - the producer - because they bought the land. The homebuilders are more like the hired help and dealers. The homeowner and the farmer are the suppliers.
If we made it harder for farmers to buy farmland, it would lower the price of farmland, but it would raise the price of bread.
We are short in Austin, San Antonio, and Dallas? If Texas can't build, who can?
Are Pittsburgh and Philadelphia doing better because Pennsylvania has better policies, or because no one wants to live there?
I would think that if any moderately-desirable-to-live-in area had sufficiently permissive zoning and construction approval process, it would clean up in this environment, attracting a huge amount of building and in-migration. Do you agree? Is any decent metro area trying this?
(1) Cities where local land use rules were binding before 2008.
(2) Cities that could make up for over-regulated infill building by building new single-family homes in the exurbs.
Group 2, which includes Texas, was mostly hurt by the mortgage crackdown. They stopped building entry-level single-family homes in the exurbs because federal regulators made it illegal for the buyers to get mortgages. They are better than the coastal cities, but they have enough obstructions to infill construction that it couldn't make up for the huge loss of production in the exurbs.
As we speak, a formerly unimportant market segment - single-family homes built at scale for rental - is now suddenly growing to fill the gap, because rents have finally risen enough to raise the price of rental homes above the cost of construction. That will help the cities in Group 2, though in every city, there are proposals to ban it.
I think there’s also a third category of stable or shrinking places (esp rural and small towns) where mortgage suppression has messed up the market without very large unit shortages. I’d be interested in more of your takes on those places and how the economics of all this work at some point.
I am confused by the following comment, which is something I have seen echoed in a few of your articles, "The thing that differentiates a homeowner from other families is that they are a supplier"
I thought home-builders would be the only suppliers in this context? Are you referring to families who build custom homes?
I think farming serves as a useful analogy.
Every household is a food consumer. Only farmers are food suppliers. When a family farms, they are both a consumer and a supplier. A homeowner is like a subsistence farmer. They only produce exactly as much as they consume. But, their net effect on the market, compared to a non-farmer or homeowner is to add supply.
Living in a home is like buying bread. Buying or owning a home is like buying or owning farmland. The farmland produces the grain for the bread. The house produces the service of shelter.
The farmer still needs hired help, tractor-producers, seed dealers, etc. But they are the farmer - the producer - because they bought the land. The homebuilders are more like the hired help and dealers. The homeowner and the farmer are the suppliers.
If we made it harder for farmers to buy farmland, it would lower the price of farmland, but it would raise the price of bread.
Does that help?
Yes! If you aren’t allowed to be a homeowner , you are taking supply out of the system because you are not allowed to supply yourself
Orthodox macroeconomists dislike the word "shortage," except when describing "labor shortages" in the US.
We are short in Austin, San Antonio, and Dallas? If Texas can't build, who can?
Are Pittsburgh and Philadelphia doing better because Pennsylvania has better policies, or because no one wants to live there?
I would think that if any moderately-desirable-to-live-in area had sufficiently permissive zoning and construction approval process, it would clean up in this environment, attracting a huge amount of building and in-migration. Do you agree? Is any decent metro area trying this?
There are two types of cities:
(1) Cities where local land use rules were binding before 2008.
(2) Cities that could make up for over-regulated infill building by building new single-family homes in the exurbs.
Group 2, which includes Texas, was mostly hurt by the mortgage crackdown. They stopped building entry-level single-family homes in the exurbs because federal regulators made it illegal for the buyers to get mortgages. They are better than the coastal cities, but they have enough obstructions to infill construction that it couldn't make up for the huge loss of production in the exurbs.
As we speak, a formerly unimportant market segment - single-family homes built at scale for rental - is now suddenly growing to fill the gap, because rents have finally risen enough to raise the price of rental homes above the cost of construction. That will help the cities in Group 2, though in every city, there are proposals to ban it.
I think there’s also a third category of stable or shrinking places (esp rural and small towns) where mortgage suppression has messed up the market without very large unit shortages. I’d be interested in more of your takes on those places and how the economics of all this work at some point.