Affordable Housing Has Become Unaffordable to Build

[–] [email protected] 42 points 1 year ago (1 children)

Japan has faced a housing crisis in the past, but it has implemented several policies to address the issue. Here are some ways the Japanese government has tackled the housing crisis:

Establishment of the Government Housing Loan Corporation (GHLC): The government established the GHLC to encourage housing construction and homeownership through loans[2].
National zoning reforms: In 1968, a new city planning law was passed on a national level with the goal of reforming the city planning process, curbing issues with housing shortages, and promoting urban development[3].
Relaxation of regulations: The Japanese government began relaxing regulations that had restricted supply, allowing taller and denser buildings in Japan's capital[5].
Surplus of housing: Tokyo has had more housing than households every year since 1968, and they continue to build on that surplus. The resulting excess of housing over households creates a buyer’s market, vacancy rates stay high, and all the benefits of abundant housing accrue. The resulting slack in the system has kept rents and prices low and stable[1].

Because of these policies, Japan is facing a housing glut due to falling demand caused by a shrinking population[4]. The government has also implemented a subsidized housing initiative to reduce the number of empty homes, but it has fallen below the national target[6].

Citations: [1] Yes, Other Countries Do Housing Better, Case 1: Japan - Sightline Institute https://www.sightline.org/2021/03/25/yes-other-countries-do-housing-better-case-1-japan/

[2] Land scarcity, high construction volume, and distinctive leases characterize Japan's rental housing markets | Brookings https://www.brookings.edu/articles/japan-rental-housing-markets/

[3] How Tokyo Avoided the Affordable Housing Crisis - KonichiValue https://www.konichivalue.com/p/contrarian-investing-how-tokyo-avoided

[4] More empty homes: Japan's housing glut to hit 10m in 2023 - Nikkei Asia https://asia.nikkei.com/Spotlight/Datawatch/More-empty-homes-Japan-s-housing-glut-to-hit-10m-in-2023

[5] What Housing Crisis? In Japan, Home Prices Stay Flat - WSJ https://www.wsj.com/articles/what-housing-crisis-in-japan-home-prices-stay-flat-11554210002

[6] Japan's New Housing Policy to Reduce Abandoned Homes Falls Below National Target https://thediplomat.com/2019/09/japans-new-housing-policy-to-reduce-abandoned-homes-falls-below-national-target/

[–] [email protected] 16 points 1 year ago

House prices in downtown Tokyo is often as low as $300k, and I'm not talking about living in a shoebox, but something actually kinda decent: https://www.youtube.com/watch?v=iGbC5j4pG9w

The fact that a city like that can achieve something so incredible means that we're doing it all wrong. And that is, we let communities reject bully others because they don't like change, despite change happening in their neighbourhoods constantly. They say it's to preserve the "character" of their neighbourhood, but the neighbourhood I grew up in was all small detached homes, often nothing more than bungalows. Every single house in the area now is at least 4 times bigger, and completely unrecognizable.

How is that fine, but we can't have townhouses and apartments? A properly designed townhouse can house six families in the same plot of land as a single detached home if the laws allow for multiple addresses to exist on one plot. Hell, I know plenty of houses that rent out to multiple families already and only appear to be a single house from the outside, yet proper apartments aren't allowed?

It's just hypocrisy. People want to get rich by sitting on their plot of land until they decide they're ready to retire so constantly lobby to stop the development of high density housing, despite the fact that their taxes go to pay for building houses a hundred kilometers away.

They don't care that as long as homes are unaffordable to the young, it's going to push back marriage and decrease as the number of children they have. When this happens, there'll be a glut in housing demand a few decades down the line as the population stops increasing and instead decreases, causing the housing bubble to violently burst.

Japan learned that lesson the hard way and fixed their laws so it won't happen again. It took 30 years since the housing bubble burst, but there's finally signs of a recovery. We don't want that here, and the only way to prevent it is to make it easy to build high density housing. The price isn't the issue, the problem is that only a handful of development are allowed every year, and it takes something like 5 years from application to approval to develop a site.

We don't need houses in the middle of nowhere that'll have a commute time of 4 hours each way. We need to rebuild the inner city for low and mid-rise apartments and condos, single detached turned into townhouses. And if I can be a bit greedy, allow for mixed used development almost everywhere. I don't mind dealing with some neon lights if it means there's a convenience store every two blocks, a grocery store every six, and dozens of small shops in between generating the governments billions in tax revenue. Because nothing makes everybody rich like downtowns: https://www.youtube.com/watch?v=7Nw6qyyrTeI

[–] [email protected] 34 points 1 year ago (1 children)

Tax the rich and there will be plenty of money.

[+] [email protected] -10 points 1 year ago (1 children)

It's not the money, it's the cost of labor and materials driving up costs. I paid under 200k for my house just 6 years ago. You can't even buy the raw materials to build a similar sized house for that.

[–] [email protected] 28 points 1 year ago (1 children)

So it's the money then...

[+] [email protected] -12 points 1 year ago (1 children)

It's not the lack of money. raising taxes wont lower the cost of raw materials.

[–] [email protected] 19 points 1 year ago (1 children)

But we'd have money to pay for those raw materials.

[–] [email protected] -1 points 1 year ago (2 children)

The article is about affordable housing, not subsidized housing. If it costs 300K to build a house these days the builder is going to try to sell it for more than that.

[–] [email protected] 7 points 1 year ago* (last edited 1 year ago) (1 children)

Ok then raise waiges so that 300k house is affordable.

It's all about money.

[+] [email protected] -10 points 1 year ago (1 children)

Feel free to make yourself more valuable to demand higher wages. That's what most of us homeowners have done. Raising the minimum wage from $15 to $20 isn't going to help anyone buy a 300K house.

[–] [email protected] 7 points 1 year ago (2 children)

So because I don't have a skill you deem valuable I must starve and labor for the rest of my life just to survive?

The median wage in Canada (https://www.canada.ca/en/employment-social-development/services/foreign-workers/median-wage.html) (54k /year pre taxed in ON 42k /year post tax) bairly covers basic cost of living (https://www.savvynewcanadians.com/cost-of-living-canada/) (31k /year though this could be higher based on city,and I don't know how much to trust this source, though it seems accurate based on my expenses).

Rather than focusing on yourself, if you raise everyone else up, making living easier for all, you too will benefit from it. (Infrastructure, social security, public transportation....)

[–] [email protected] -3 points 1 year ago* (last edited 1 year ago) (2 children)

You can do whatever you want. If you want to wait for a mandated higher minimum wage, yeah you are going to labor just to survive for your entire life.

[–] [email protected] 6 points 1 year ago (1 children)

It's not about mandated wage increases, it's about people like you and me running or voting for representatives that will pass bills that over all decrease the gap between cost of living and income. This can be achieved through many avenues, wether through taxation, regulation, or subsidies.

Taxing the rich will increase tax revenue that can be used to subside material costs of a house (there for decreasing building costs). Charging higher taxes for non primary residents and or corporate purchases will reduce the cost of homes, allowing those who need a roof over their head opportunity to buy, rather than tho who just wanna pad their portfolio.

Regulating the pay gape between the highest and lowest payed employees (including stock options) will increase overall wages for all (except the few that already make more than their worth), making a 300k house affordable.

[–] [email protected] 0 points 1 year ago (1 children)

I guess I just don't have faith in government solving problems and wouldn't want to get other people's hopes up.

[–] [email protected] 2 points 1 year ago (1 children)

The only thing necessary for evil to triumph is for good men to do nothing.

[–] [email protected] 0 points 1 year ago

You are a more generous person than me. Government officials do nothing, but I'm hesitant to call them "good".

[–] [email protected] 5 points 1 year ago (1 children)

Then government should be the builder.

Not everything needs to whored out to the private sector.

[–] [email protected] -3 points 1 year ago (1 children)

Because government run projects are well known for being cost effective and cheaper than private sector?

[–] [email protected] 7 points 1 year ago (2 children)

Actually, yes. They can be.

Much of the overrun that you hear of in, eg, the US and Canada is because of cost-plus contracts negotiated with the private sector. It's been a very, very long since we've seen purely public offerings.

I'd also challenge someone who says "the private sector is more effective". I get the impression they've never worked at private company larger than a neighbourhood coffee shop. I've worked a F50 companies; trust me, they can piss money away and blow through deadlines like it's nobody's business. Try to do an ERP conversion some day.

[–] [email protected] 2 points 1 year ago

Also to tack on, you only hear about the projects that blow their budget, because they are the problem projects. You don't hear about the ≈75% of projects that come in "on time*" and under budget, because that's the baseline of what is expected.

*For varying definitions of "on time."

[–] [email protected] 0 points 1 year ago

I don't know what a ERP conversion is but it sounds yucky. I double my fee when contracting designs for the government, and engineers who can't cut it end up taking government jobs. Unless the entire culture of government workers change, in my opinion, you have described a fever dream.

[–] [email protected] 23 points 1 year ago (2 children)

Then let the government build it, profit isn’t the point

[–] [email protected] 5 points 1 year ago* (last edited 1 year ago) (2 children)

Building all affordable housing with tax dollars is a noble goal, but that’s not happening anytime soon and our housing crisis demands action now. Our current regime has nowhere near the money and administrative power to facilitate this alone.

Why not just make it easier for for-profit AND non-profit developers to build housing in the meantime? Fixing the broken process is free and we can start today.

[–] [email protected] 8 points 1 year ago* (last edited 1 year ago) (1 children)

The government needs to fill in the underconstruction of housing since 2009. All of the "market based solutions" have been attempted and failed.

The ONLY remaining solutions are government produced housing targeted at first time home buyers and pre-empting zoning, parking and density requirements such that new housing can be built with less materials and space. Those are it. Anything else is just nonsense political masturbation about bipartisanship and unicorns.

Since 2009 private investment in housing has been too low and it will continue to be too low.

[–] [email protected] 3 points 1 year ago* (last edited 1 year ago) (1 children)

I'm confused by your assumption that "private investment in housing has been too low and it will continue to be too low." Do you think private companies, the very greedy developers, are choosing to limit their investment in such a lucrative industry? Their business has been artificially restricted by something you hinted at, zoning requirements. It's reductive to say "market based solutions have been attempted" when municipal governments have had a stranglehold on new supply since the 60s, there is nothing natural about this market because it's incapable of responding to demand.

pre-empting zoning, parking and density requirements such that new housing can be built with less materials and space

Why are we only removing restrictions for the federal government? Why not also allow non-profit and for-profit pipelines that already exist contribute to this shortage of housing in the meantime? Even if you could raise the hundreds of billions (if not trillions) from the feds, they can't administer this program anytime soon.

I'll reiterate my original point: I wish we entrusted the government with building housing and cut out for-profit developers for such an essential human need, but I know there's no way the feds are able to raise that money, political capital, and administrative power in the next decade at least. I feel the same way about food, but I'm not saying we need to end food production until it's a public entity.

[–] [email protected] 1 points 1 year ago

our housing crisis demands action

I love the 'act now think later' banners.

[–] [email protected] 5 points 1 year ago

If we can subsidize billionaires we can subsidize housing.

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