What happens when private equity buys homes in your neighborhood

> Why and how did that ear worm infect so many people?

It's a story they want to believe.

The big bad out-of-town corporation is causing the housing crisis and not the complex web of dozens of factors: existing owners wanting to protect their largest asset, more people wanting to live in fewer places, inflation, tariffs on Canadian lumber, safety standards, etc.

Ultimately it's not really that complex to explain: there just literally aren't enough physical housing units of whatever kind in major US cities to meet demand (https://www.fanniemae.com/research-and-insights/perspectives...), so prices keep going up.

Unfortunately, there are a ton of people who will deny that that factual, well-studied shortage exists, and will try to blame its effects on anything and everything else even tangentially related.

Lumber is a tiny fraction of the cost of a house, the US produces a huge amount of lumber on its own. I don’t think there’s any real evidence to show that lumber tariffs have had a measurable impact on housing costs. Most housing is built with lumber from here.

Also the tariffs are new this year, housing costs have been a problem for much longer than just this year.

to be fair, xnx said "dozens of factors" and mentioned lumber and tariffs as among them... maybe better examples would've made their point stronger though.

There are ~ 15 million unoccupied houses in the US [https://www.realtor.com/news/trends/states-with-most-vacant-...]. That we know about.

A desirable location will never have enough capacity. Regardless of how much building occurs. If you don’t believe me, look at NYC, Paris, etc, etc.

People move as close to a desirable location as they can afford. And often more.

Don’t get me wrong, rules set where and how bad the line is, but there is no realistic situation where everyone who wants to live in SF can, and can afford to, and it is anything like SF.

Here's a "kit" for a 1,400 sq ft house: https://www.menards.com/main/building-materials/books-buildi...

$90k for materials.

Around here a 1,400 square goes for $385k (half a house, but there you go).

So materials are somewhere around a quarter of the cost. Land + foundation + utilities is another quarter; the rest is labor and profit.

Yes very true, and lumber is a sub-category inside materials and it is not very expensive compared to the other materials like concrete, siding (fiber cement, stucco), roof material (metal, asphalt, tile), drywall, paint, plumbing, electrical. Of all those things lumber is a cheap line item.

The land, foundation, and utilities (often in the form of impact fees) are largely fixed costs regardless of home size. The larger the home one builds the less impact they have on the final cost to build. This is why “starter homes” don’t get built anymore. The builder has every incentive to build that 3,000 sq ft home on a small lot instead of something more reasonable in size.

Yes that’s true, I think he’s right on all the other points.

I just built a house by myself, from the ground up, so I couldn’t let that lumber thing slide though as I literally just paid for all the materials myself and I know how little lumber costs compared to everything else.

Well the problem with SF is less density and more than half of it is single-family home neighborhoods with zero amenities.

Anti-growth people will point to neighborhoods like Glen Park, NoPa and Noe as "SF" while forgetting most of the surface area of the city is empty neighborhoods like Parkside, Mt Davidson Manor, etc.

It’s a matter of degree, not difference. If you fit 2x the number of people in them - you’d still have the same general problem. Just 2x the number of people now.

And because larger cities tend to also be more attractive (Tokyo is still growing, for instance), you’ll never have enough density to be ‘enough’ - aka where it’s cheap enough for everyone to live where they want.

You will have more people though.

It's a false premise, cities do not grow endlessly. If you look at other cities they're actually losing population – NYC for example.

This is a real "you'll never make it perfect, so don't bother even trying to make it better" argument.

Paris is cheaper than SF, even in the middle of downtown along the river, because they actually have consistent housing density throughout the city. Look at the arrondissements that are even 20 minutes out from downtown by subway and you can find apartments that people in SF and NYC would kill to have at that price. Paris will never be free to live in, but it's extremely obvious that they have avoided the worst of the US housing crisis by just actually building lots of housing.

> There are ~ 15 million unoccupied houses in the US

Unoccupied houses across the entire country don't matter. What matters is housing in the places that people live.

And yet, with the Tokyo example, the combination of lots of housing and good public transit means that you can get small but liveable apartments that are a 20-minute walk from central downtown Tokyo (and under a 10-minute walk to multiple train stations with access to the rest of the metro area) for under $1500/month. Here's one right here: https://www.realestate-tokyo.com/rent/B0021114/park-flats-gi...

Also, other options that used to be more efficient to build multiple homes at once, like row houses or duplexes/triplexes, are generally directly or indirectly illegal to build in most US cities now. Row houses and brownstones were the cheap-and-fast housing option once upon a time; they're now rare and expensive because in most places nobody's allowed to put up a new one.

Places that people want to live. Which are often aspirational. Plenty of people live in places that would be 2nd, 5th, or even 10th on their list if money were not a concern, eh? And that’s normal. And almost everyone could live in those out of the way places too.

Which is why comparing against the rest of the country is valid. Just like comparing SF to Vacaville. Or South SF. Or Oakland.

There are definitely parts of Paris that your typical Parisian (or even atypical French citizen!) cannot afford to live, yes? And many, many live in Paris’s equivalent to Oakland. (Or NYC’s Harlem)

It could be better - but people also have this weird mental block where the only place they ‘can live’ is also the same place everyone else wants too, but they can’t afford it, and somehow it is everyone else’s problem to fix that for them.

The studies on this subject look at entire metro areas (https://www.fanniemae.com/research-and-insights/perspectives...), which include places like Oakland and Vacaville, not just city downtowns. "Want to live" here isn't just 'aspirational', it's covering basic elements like 'are there actually enough jobs there'. "Oh, there are fifteen million empty houses" means absolutely nothing because most of those houses are in places where there's no way for any substantial number of people to actually make a living.

I've seen sixplexes around here, but unless they're apartment buildings (which have better designs anyway) they're relatively undesirable.

A duplex saves you some coin, but each additional house you stick on the side saves you less, and the desirability goes down. People don't like duplex/triplex/sixplex living.

ding ding ding the housing prices have nothing to do with some vague notion of ‘I want to live there’, but are rather a proxy for the expected economic value of a place * people’s ability to leverage it.

Give businesses a reason to spread out a bit and not concentrate in these urban centers, and voila - all those ‘undesirable houses’ are all the sudden more desirable, and all those crazy zoning issues and nimby’s are not such an issue anymore. And the housing crisis mostly evaporates.

But since availability is also a proxy for competition for those jobs, it’s not like folks have too much incentive to make it easy eh?

NYC is not losing population. [https://www.nyc.gov/assets/planning/downloads/pdf/our-work/r...]

There were two years during the pandemic when people moved out- because jobs let them - but people moved back and it has more than made up for it since.

Every major city in the world has seen significant population increases as mechanized farm work and fertilizers have removed the need for many farm workers, and economy activity has concentrated.

It’s been a consistent trend for almost 100 years.

The tiny salaries in Japan make that even more expensive (comparatively than SF) - last I checked. But yes, the Japanese are significantly more socially coherent eh?