In the developed world (including but not exclusively US and EU), the problem is people flocking to big cities which grow way past their housing capabilities while small towns and villages become depopulated with mostly old people living there.
I seen this in Romania (where I live), it's the same in France, Germany, etc. Whole houses with terrain and garden in the countryside cost a fraction of an apartment in a big city and yet they become derelict because noone buys them.
The work from home "revolution" only touches a very thin layer of people, most people with jobs still need to show up physically every day. And it's only in big cities that jobs get concentrated.
I think overall it's a problem going back at least a century, the move from rural economy where 90-95% of the people were working in agriculture, to urban economy. In the rural days, people were spread relatively uniformly. In fact cities were a small fraction of the whole population so no wonder houses were aplenty.
Therefore as long as the trend of jobs concentrating in the big cities won't stop or revert, the raise in house prices is inevitable.
It's not a trend, it's just plainly more efficient to have dense population centers. For both living and for business. One of the downsides of course is limited land, but there are tons of other upsides.
So then the question is whether we should just remove barriers that stop urban spread
If we just removed the arbitrary legal barriers which stop urban areas from densifying according to demand, they might never need to spread any further, given the global fertility slowdown.
A bit of rent control wouldnt hurt either - it helps keep a lid on property values and hence keeps NIMBYism down. The average economist's salary is, of course, dependent upon them not understanding this.
Absolutely. One can only dream of a future where LVT covers almost all of a nation's tax needs...
> A bit of rent control wouldnt hurt either
> The average economist's salary is, of course, dependent upon them not understanding this
Huh? If there's one thing that is in almost universal agreement among economists of all political bents, it's that price controls, including rent control, result in worse outcomes for those that they are ostensibly designed to help.
They were in almost universal agreement that raising the minimum wage caused unemployment until the mid 90s too. Where the interests of capital are at stake their vision of reality is distorted.
They're one of the few types of scientists who are essentially paid to be wrong by people who benefit from the policy decisions that result as a side effect of them being wrong.
The strictest rent controls in NYC in the last 80 years were in the 1950s. The fastest rate of home building in NYC was also in the 1950s. It didn't hurt then, it won't hurt now.
I wonder though if it is more fragile than the alternative. Are social and economic systems more robust when they're distributed across smaller urban and rural areas?
Are megalopolis settings susceptible to long tail risks that smaller urbs don't face?
Susceptible? The whole system is a house of cards.
You don’t need anything exotic like a terrorist attack or a war, you can simply have a power outage and the whole system would collapse if it wasn’t rectified in a couple hours. I like cities but I’m not willingly putting myself into a mouse trap.
> It's not a trend, it's just plainly more efficient to have dense population centers.
This is the perfect example of min/maxing society while completely missing the point. We’re not insects, we’re humans. Most people are happier when they have space, space for a family, space for pets, somewhere to grow a garden, a sense of ownership.
Sometimes, efficiency be damned, maybe we should prioritize happiness and well being over trying to stuff the most amount of humans in the smallest space.
On the other hand, most people are happier when they don't have to spend hours every day in a car for basic things like going to work, picking up the kids from school, or buying groceries. Most people are also happier when they live close to their friends and family, when there are resources like libraries and universities nearby, or when they can choose between multiple restaurants in town.
There are plenty of people who are actually happier in cities, believe it or not. We're social animals, after all.
People also need transportation, healthcare, entertainment, shopping and restaurants, their children need schools, universities etc. Automated delivery may solve some of these problems in 5-15 years, but not all.
It's a network effect. The jobs, dating scenes, and opportunities for career advancement are in big cities. This has always been true to some extent but the trend seems to have accelerated in the 21st century.
There is plenty of land and housing in most places outside these cities.
There are two solutions. The individual solution is to go to these cities, get what you want, then leave and settle somewhere more reasonably priced. In some cases you might be able to skip this step if you're in a field that allows telework. I would personally recommend: once you career is established enough that you can get a good job in lots of places, don't stay in these cities unless you can comfortably afford housing. Comfortably means ideally 30% of your income goes to housing. If you stretch and spend absurd percentages of your income on housing you'll be house-poor and will never be able to accumulate wealth. It's even worse if you are renting or on a variable rate mortgage.
The collective/societal solution is that we need to massively increase the density of these cities and improve their infrastructure, but that will in many places require going to war against the NIMBY obstructionists.
> The collective/societal solution is that we need to massively increase the density of these cities and improve their infrastructure, but that will in many places require going to war against the NIMBY obstructionists.
The Tokyo solution which we should all follow. It's the only way out of this mess
I am a steadfast exurban/ruralist at heart, but I agree that we need to increase city density and not expand the land footprint with urban sprawl. I prefer the Helsinki social housing solution. I think it is more intellectually honest to make it clear that the state takes the financial loss to bring housing costs down instead of completely forcing it onto the builder or the property owner.
I know this is an unpopular opinion, but cities don't change because it is too costly to rip and replace in terms of dollars, disruption to parts of the city, transportation, etc. However, I do think that rip-and-replace is an important strategy for improving housing density in the city and correcting past mistakes.
I do worry about the impact of higher-density living. I think people will lose touch with the natural world. Being outdoors in wilder spaces will become a tourist experience rather than an appreciation and understanding of the wilder parts of the world.
Only considering the cost of housing ignores how expensive transportation can be. See https://htaindex.cnt.org/compare-affordability/ for a comparison of affordability between housing costs below 30% of median regional income and housing and transportation costs below 45% of median regional income. When I moved to New York and got rid of my car it ended up being significantly cheaper than the Bay Area overall despite the higher rent.
> The work from home "revolution" only touches a very thin layer of people, most people with jobs still need to show up physically every day.
I also think that it's a mistake to think that only jobs drives urbanization. Don't get me wrong, it's a huge factor, probably the biggest, but it's not the only reason.
Most of my peers now work full time remote, but they nearly all still live major metros. Some have moved from one metro to another. Only very few have left for more suburban or rural settings, and in those cases the motivation has almost always been reducing cost of living.
A lot of people live in cities simply because they want to.
A lot of people live in cities because they have no frame of reference of anything else, and (at least in the US) an active fear of being more than 5 minutes away from Starbucks. I am being somewhat facetious on their preference for bad coffee, but the amount of times I've been told that my living arrangements (dead end rural country road with very few neighbors) is to them scary. They can't deal with the lack of city noise, etc. Reminds me of the t-mobile ad with the couple camping in the woods then using their phones to pipe in the sound of Times Square to get to sleep. Sad really.
Personally, I'm in the opposite camp of urbanite types. I grew up rurally and have no desire to go back to hour-long trips to get groceries, no commercial services existing after 8PM and no social events to attend without taking half a day between reaching them and coming home.
Not to mention the degraded infrastructure (be it power, internet, roads or otherwise).
Sub/urban life, although noisy and less peaceful, is just far more convenient for an active adult. I'd be happy to go back to the country when and if I ever get to retire.
I think a better solution is exurbs where we have suburban clusters of low to medium density housing but centered around hubs in the middle of nowhere instead of radiating out of a major metro area.
This is much cheaper but still gives “culture” and community opportunity’s over pure rural life.
I live in such a setup in Norway. Much smaller scales all up than anything in the us, but my little city has about 60k people in the metropolitan area.
Gives great options for food, culture and whatnot, but I am only one hour by train from the million plus capitol (Oslo). I telework and go in for meetings as needed. One and a half hour to drive to measure it in american terms hehe.
Kids love it too. Roam freely around the neighbourhood, buy area is dense enough that they have all the options for after school clubs and sports and we even have an eSport club now :)
Gosh I wish we did suburban planning in that way, instead of acres and acres of housing developments served by a single gas station and perhaps a grocery store with a starbucks attached.
Also during industrial revolution there were lot more population centres. Lot of large factories were not near existing cities, but instead communities got build around them. Thus population started to concentrate, but was still more spread out. Now due to globalisation those factories are gone and thus the smaller towns around them have no more single big employer with all the downstream activity.
Issue is not so much moving from rural to urban, but hyper-urbanisation. Where we have not taken early enough action to build enough housing.
A major factor causing increased demand for housing that's rarely discussed is the dramatic drop in the number of people per household.
Consider a hypothetical city with a population of 100,000:
1960: average household size: 3.63 persons
1960 housing units needed at 3.63 persons/household: 27,548 units
2020: average household size: 2.28 persons
2020 housing units needed at 2.28 persons/household: 43,860 units
So even with zero population growth, the city would need 59% more housing units.
That increase in demand drives up the price per housing unit.
At the same time, the decrease in the number of people per unit reduces each household's earning power, and makes it much more difficult for that household to afford the cost of housing.
That is interesting. Is this discussed anywhere, more formally? I guess the simple reason is that people had more children previously. But then, what about the second order effect that households with fewer children also need less space and would be happy to have an apartment rather than a four bedroom house?
I have seen some discussion about this. It's usually in the context of a divorce, converting one household into two households.
To answer your question about households with smaller numbers of people, it all depends on what you do outside of work and what's important to your life. For me, having a home office, home computer lab, gardening, astronomy, hiking, casual birdwatching, and turning pieces of wood and metal into sawdust and metal chips are all important and completely incompatible with apartment living. For my partner, having an art studio is incredibly important. Again, it is incompatible with apartment living.
Traffic and city noise are not good for me (they raise my blood pressure), which is kind of why I am okay with losing my hearing. I can't hear it as much as my partner can, and I'm not sure I want to get hearing aids. I would've moved farther away from the city, but my partner works deep in Cambridge, Mass., and we went as far as she could stand the commute.
> For me, having a home office, home computer lab, gardening, astronomy, hiking, casual birdwatching, and turning pieces of wood and metal into sawdust and metal chips are all important and completely incompatible with apartment living.
Good question. Of all my interests, hiking is the most compatible with apartment living. :-) When I was living in an apartment, the usual problem was finding a place to store equipment. I eventually gave up and found a way to semi-permanently stage my kit in my car. This made it easier to have a grumpy moment and flee to a trailhead.
Local multinational has its UK headquarters in a nearby town here in England. It's considering moving its HQ to a city 40 miles away, despite the extra cost, because it can't get trained staff.
Doesn't help that the town is in a train desert.
Rural England (which is not exactly Rural by US or even France standards) suffers from a self-perpetuating brain drain. Unless you're on a commuter line into a city.
I was once offered a job by Dyson, at their Malmesbury HQ, but I wasn't going to move to a town with a single major employer (and very limited job prospects for my then-partner were she to accompany me) so I turned them down.
Turned out to be the right decision, because shortly after they moved their HQ to Singapore.
It's not just for work. I fully work from home and could live in a bigger place in the country. I just want to live where there's culture - access to restaurants, nightlife, etc etc.
That's a very important point. I'm glad you know that living inside or closer to a city gives you access to what's important to your life. I don't know how old you are; I'm not sure that it matters, but I found that as I aged, culture in the form of restaurants, nightlife, etc., became much less important, and I enjoyed being around fewer people.
Yes, I also fully agree here - this is absolutely a personal value judgement and not a universal truth. It's the right tradeoff for me, it might not be for you.
It's also the same in developing or underdeveloped countries (I live in one). Almost everyone now wants to live in a city, so rents have become sky-high and more so in trendy cities. Even historically affordable suburbs near the cities have become expensive. You can rent a small two-bedroom flat in a city for the same price as a 5-bedroom mansion in a rural area.
I always wonder if fewer new small towns and cities are being created as well. It doesn't get talked about much because it's harder to discuss something that doesn't exist.
People start new businesses all the time. What does is take for people to start new cities?
Cheap, fast computing can repopulate towns near cities. 45 min as max commute time, with a train going 300kmh an hour gives you revitalized neighborhoods along the whole rail.
I seen this in Romania (where I live), it's the same in France, Germany, etc. Whole houses with terrain and garden in the countryside cost a fraction of an apartment in a big city and yet they become derelict because noone buys them.
The work from home "revolution" only touches a very thin layer of people, most people with jobs still need to show up physically every day. And it's only in big cities that jobs get concentrated.
I think overall it's a problem going back at least a century, the move from rural economy where 90-95% of the people were working in agriculture, to urban economy. In the rural days, people were spread relatively uniformly. In fact cities were a small fraction of the whole population so no wonder houses were aplenty.
Therefore as long as the trend of jobs concentrating in the big cities won't stop or revert, the raise in house prices is inevitable.