The gist of it is that statistics on how many vacant homes exist are highly misleading, for two main reasons:
Many of the homes are not where the demand is. A vacant home in St Louis does nothing to help with a housing shortage in NYC. People want to live in NYC because that’s where the jobs are. A house in St Louis isn’t worth much if you can’t find work there. And statistics consistently show that the most expensive cities have the lowest vacancy rates.
A lot of the homes that are counted as “vacant” aren’t actually just free for the taking like “vacant” would have you believe. In these statistics, “vacant” can mean: 1) a unit that is between tenants, 2) a unit that just finished being built and is awaiting its tenant’s move-in, 3) a unit occupied by someone who doesn’t legally state it as their primary residence (e.g., student housing where the student still lists their parents’ home as their primary address), 4) a unit in horrible disrepair that is unfit for occupation, etc.
Add to this the fact that high vacancy rates are GOOD for you, as it means landlords and sellers have a credible threat of vacancy, meaning they can’t demand ludicrous prices. Reducing vacancy rates is an incredibly anti-consumer, pro-landlord move.
Thank you for taking the time to respond! As per usual, language fails us because “vacant home” sure doesn’t mean the same thing to everyone saying it.
Is NYC (taking your example) prone to low-density zoning? Just looking at induced scarcity vs geographic scarcity, there’s a possibility that everyone that desires to live in NYC just can’t. I’m no expert, obviously.
Say we did remove zoning restrictions and builders could go bananas, what is their incentive to build if they expect vacancy? No one wants to finance new builds if they won’t fill. Developers want low vacancy as much as landlords do. It sounds like zoning changes would be best paired with subsidy programs for individual home buyers or something to allow individuals priority over corporations.
NYC itself doesn’t have much (although it still has some! see image below) low-density zoning, but their suburbs sure do. The city itself also has a lot of other bureaucratic barriers to development that result in it having abysmal housing construction rates.
As for vacancy, yes, the threat of not being able to sell is what stops builders from building too much. For example, it’s the reason no one’s even trying to build the Burj Khalifa in Bakersfield. But if you make it legal and reasonably easy to build, yes, people will build.
In the past half century, by investing in transit and allowing development, the city has added more housing units than the total number of units in New York City. It has remained affordable by becoming the world’s largest city. It has become the world’s largest city by remaining affordable.
Two full-time workers earning Tokyo’s minimum wage can comfortably afford the average rent for a two-bedroom apartment in six of the city’s 23 wards. By contrast, two people working minimum-wage jobs cannot afford the average rent for a two-bedroom apartment in any of the 23 counties in the New York metropolitan area.
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In Tokyo, by contrast, there is little public or subsidized housing. Instead, the government has focused on making it easy for developers to build. A national zoning law, for example, sharply limits the ability of local governments to impede development. Instead of allowing the people who live in a neighborhood to prevent others from living there, Japan has shifted decision-making to the representatives of the entire population, allowing a better balance between the interests of current residents and of everyone who might live in that place. Small apartment buildings can be built almost anywhere, and larger structures are allowed on a vast majority of urban land. Even in areas designated for offices, homes are permitted. After Tokyo’s office market crashed in the 1990s, developers started building apartments on land they had purchased for office buildings.
I think the key idea is to not have government bureaucrats or existing homeowners or landlords decide whether there’s “enough” housing, but rather let builders determine if there’s unmet demand. If there is unmet demand, they will build if you let them. If there truly is enough housing in a certain city, then you don’t need to tell builders not to build – they’ll simply stop building if they sense there’s not enough demand for it.
The “we have enough homes already” is a common (and unfortunately very harmful) myth.
A couple good in-depth videos on the topic:
The gist of it is that statistics on how many vacant homes exist are highly misleading, for two main reasons:
Add to this the fact that high vacancy rates are GOOD for you, as it means landlords and sellers have a credible threat of vacancy, meaning they can’t demand ludicrous prices. Reducing vacancy rates is an incredibly anti-consumer, pro-landlord move.
Thank you for taking the time to respond! As per usual, language fails us because “vacant home” sure doesn’t mean the same thing to everyone saying it.
Is NYC (taking your example) prone to low-density zoning? Just looking at induced scarcity vs geographic scarcity, there’s a possibility that everyone that desires to live in NYC just can’t. I’m no expert, obviously.
Say we did remove zoning restrictions and builders could go bananas, what is their incentive to build if they expect vacancy? No one wants to finance new builds if they won’t fill. Developers want low vacancy as much as landlords do. It sounds like zoning changes would be best paired with subsidy programs for individual home buyers or something to allow individuals priority over corporations.
NYC itself doesn’t have much (although it still has some! see image below) low-density zoning, but their suburbs sure do. The city itself also has a lot of other bureaucratic barriers to development that result in it having abysmal housing construction rates.
As for vacancy, yes, the threat of not being able to sell is what stops builders from building too much. For example, it’s the reason no one’s even trying to build the Burj Khalifa in Bakersfield. But if you make it legal and reasonably easy to build, yes, people will build.
Perhaps Tokyo is the best example. Biggest city in the world, and yet it’s actually relatively affordable, thanks largely to good land use policy:
I think the key idea is to not have government bureaucrats or existing homeowners or landlords decide whether there’s “enough” housing, but rather let builders determine if there’s unmet demand. If there is unmet demand, they will build if you let them. If there truly is enough housing in a certain city, then you don’t need to tell builders not to build – they’ll simply stop building if they sense there’s not enough demand for it.
You’re a treasure and you’ve given me a lot to digest. Have a great day!