Rather than decide what is "normal" directly, I'd try to look for policies: regulations regarding bank lending, building codes, zoning/land use regulation, interest rates (?) and show how this would differentially affect the demand by lower income people and supply of lower cost housing. After all, the whole reason for doing the analysis is presumably not just to help builders better target the market, but what policy makers can do to allow more development.
Yeah, I think he's overindexing on the 90's-2008 period as supposedly "normal", when the reality is that the toxic suburban development pattern was alive for a LONG time before that.
I'd be interested to see what multi-family construction looked like pre-1970's, and what single-family looked like pre-1930s. IMO those eras are the last we can consider each to have been "normal" before modernist/suburbanist interventions were made.
Based on FRED data multi-family production was robust but volatile from the 1960's through the mid 1980's. An eyeball calculation implies that starts averaged around 500k units a year--which seems pretty good relative to population. I don't know why things declined after the 80's but I bet the culprit is land use regulation and lending risk to demand. Speaking from some professional experience as an architect I can state that the quality of unit production during the boom years was pretty awful, but because of their relative durability and constant demand these older apartment complexes are still making piles of money for their owners.
As far as I know data is sketchy prior to WW2 but housing production from the Civil War through the Depression was robust--the evidence is still all around us in the form of the original streetcar suburbs in the Northeast and early California suburban developments. Also noteworthy from this period is the significant contribution to housing stock from 2-5 unit buildings. This housing type was very efficient, but their production was halted by racist/classist building regulations at the end of the 19th century that were framed as life-safety improvements for society.
Which is why I think that KE isn't so much *wrong* -- he's probably got a point about our current underwriting standards being too excessive -- but that he's excessively relitigating something that pissed him off in recent history. He's overattributing a narrow time domain to a single factor, when we already know that there are several other factors that in a much longer time domain have shaped the fact that we're already in an unusual *supply* domain.
At the end of the day, I do think that underwriting will play a role in filling out the missing middle, but I'd prioritize that above simply re-legalizing exurban SFH construction.
Rather than decide what is "normal" directly, I'd try to look for policies: regulations regarding bank lending, building codes, zoning/land use regulation, interest rates (?) and show how this would differentially affect the demand by lower income people and supply of lower cost housing. After all, the whole reason for doing the analysis is presumably not just to help builders better target the market, but what policy makers can do to allow more development.
This did not come through for me.
Yeah, I think he's overindexing on the 90's-2008 period as supposedly "normal", when the reality is that the toxic suburban development pattern was alive for a LONG time before that.
I'd be interested to see what multi-family construction looked like pre-1970's, and what single-family looked like pre-1930s. IMO those eras are the last we can consider each to have been "normal" before modernist/suburbanist interventions were made.
Based on FRED data multi-family production was robust but volatile from the 1960's through the mid 1980's. An eyeball calculation implies that starts averaged around 500k units a year--which seems pretty good relative to population. I don't know why things declined after the 80's but I bet the culprit is land use regulation and lending risk to demand. Speaking from some professional experience as an architect I can state that the quality of unit production during the boom years was pretty awful, but because of their relative durability and constant demand these older apartment complexes are still making piles of money for their owners.
As far as I know data is sketchy prior to WW2 but housing production from the Civil War through the Depression was robust--the evidence is still all around us in the form of the original streetcar suburbs in the Northeast and early California suburban developments. Also noteworthy from this period is the significant contribution to housing stock from 2-5 unit buildings. This housing type was very efficient, but their production was halted by racist/classist building regulations at the end of the 19th century that were framed as life-safety improvements for society.
That jibes with my general understanding.
Which is why I think that KE isn't so much *wrong* -- he's probably got a point about our current underwriting standards being too excessive -- but that he's excessively relitigating something that pissed him off in recent history. He's overattributing a narrow time domain to a single factor, when we already know that there are several other factors that in a much longer time domain have shaped the fact that we're already in an unusual *supply* domain.
At the end of the day, I do think that underwriting will play a role in filling out the missing middle, but I'd prioritize that above simply re-legalizing exurban SFH construction.
If you are wondering why there is so much anger and discontent in lower-income communities...housing costs play a major role.
Why should people in low- and moderate-income communities believe in the "the system" if housing costs soar?
It is hard to dodge housing costs.