Four Harmful Myths About Housing Affordability

There are a lot of compelling ideas out there about why we’re experiencing the current housing affordability crisis, and it can be easy to want some of these myths to be true. It’s a lot easier to have clear bad guys and feel-good proposals than to acknowledge that housing affordability is a complex problem like any other that requires practical and reality-driven solutions that are based on the best evidence we have.

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[TheSharkasmCrew]

"You still need to build new housing now to have old housing later." I've been saying this for soooo long so thank you. Tired of seeing new developments in my city (Hamilton) continually getting scraped or reworked because they don't have enough "affordable" units.

[Zraknul]

Restrictive municipal zoning is a huge problem because it distorts everything. For the private market it leads to escalating prices through competition resulting in higher and higher bids. For affordable non-profit seeking models give you longer and longer waitlists.

Zoning needs to be adjusted in a significant manner to actually produce some competition and let supply expand towards demand. One of the least intrusive methods would be to turn most commercial zoning into mixed use. Residential on top, commercial on the bottom.

Why not let fancy business towers have some floors of high-end residential on top? Why not let malls and strip malls throw residential units above it?

[alanthefisher]

Thank you, thank you, thank you for making this video! This hits all of the points that I've been arguing about for awhile. There is nothing more frustrating than an uninformed twitter housing thread.

Also another thing to mention to combat the "evil investors" mentality is that often when new housing is built in quantity the housing market becomes less appealing to invest in because its more stable from the availability of new units at market rate. So the solution is literally always to build new housing!

[TigerofRobare]

One other myths: one is the idea that investor-owned units are being kept empty. This is a pervasive myth and has only ever happened a few times in London and in at least one of those cases, the building was unlivable anyways.

[dwc]

A whole lot of those units are being rented out alright, but not to regular tenants, but as full-time AirBnB-type rentals - for a much higher rate per month than they'd get renting to a resident. They get the best of both worlds - all the rental income without either the responsibilities of a landlord to their tenants, or dealing with hotel taxes and regulations. This also drives housing prices up in the surrounding area and gentrification.

[Tyurannical]

As always the elephant in the room is zoning laws and local governments' unwillingness to increase supply. However, I feel like if the market share of owner-occupied housing is falling, that's a problem worth addressing too. A blanket ban on corporate ownership has a lot of obvious issues that most proponents aren't engaging with, but REITS purchasing affordable housing stock and raising rents without improving the units is a documented phenomenon across Canada. A potential mitigation policy to address that issue could come in the form of right-of-first-refusal laws for tenants--what's your take on right-of-first-refusal laws?

[RsSooke]

What a great video! I live in new rental apartment housing and yes it does cost almost $2000 a month for 2 bedrooms 2 baths but this is Victoria BC where there is not enough supply and there is high demand. I’m also in an outer suburb not downtown or anything.

Recently an article came out that greater Victoria has the lowest fertility rate in all of Canada at 0.95 - not surprising in the least when you consider economic factors here. Affordability is an issue with everything but especially housing, and with a growing shortage of family doctors no less…

[PaigeMTL]

I've never really gotten how, after decades of life so many people manage to avoid the basics of how markets work. When food prices go up they get annoyed at the "greedy supermarket owner" and when there is a blind bidding war on a condo they say "ban blind bidding", it just seems like human instinct is really bad at grasping things with supply side solutions.

[nacoran]

Shift the portion of property tax to tax land more than what's on it. The idea is to keep the overall revenue the same, but it means underdeveloped lots pay more taxes and more developed pay mostly based on the value of the land. One of the big problems is empty or under utilized lots. Run down tiny house on a big piece of prime real estate? Currently they pay next to no taxes. Housing complex squeezed in an odd shape lot? They pay lots of taxes. You don't need to go full on land value tax, but the mix needs to be better. We need to encourage people with valuable land to actually develop it where the market demand is there, rather than wait for a the land value to go up.

As for hording rental units, the problem is often that the units being horded end up being airbnb's. If you want your town to have more places for tourists to stay build for it. When it comes out of current housing stock it's a problem.

[elsholz]

Ah yes, finally two of my greatest interests, housing and age old thinkpads, combined 😉

[Preygrantess]

The amount housing construction went down after 08' is astronomical. Housing supply needs to go up anyway possible, except single family homes.

[mdhazeldine]

My biggest beef with all this is rich investors buying houses or apartments speculatively and leaving them empty as 2nd or 3rd homes. There should be a hefty tax on empty properties.

[lucagattoni-celli]

Please make a myth debunking playlist, y'all! You have so many great video essays like this one and the piece on rethinking suburban traffic. Thank you!

[davidaloha]

I love this analysis, thank you!

While I largely agree with you on the necessity of new home/apartment construction, I have a specific argument against point #1. Whether #1 helps or hurts housing prices really comes down to whether you're building new housing supply on vacant/under-utilized land, or on land with existing housing stock. When older apartment buildings are demolished to make way for new high end condos, the new supply displaces the old, rather than adding to it.

In most big cities facing housing shortages, there really is a need for new housing supply. However, these are the very same cities which tend to demolish old apartments in favor of new luxury condos. This is partially due to a lack of available land. But one of the other big reasons is that many cities facing high housing prices have protectionist zoning policies for single family housing. This means that areas that already align with city plans for high density - AKA places where there are old mixed use and apartment buildings - disproportionally get the shiny new luxury condos.

Cities like Toronto and Vancouver have a higher percentage of their land zoned for single family residential than mid-tier cities like Edmonton, Ottawa, Winnipeg, and Calgary, which are all much more affordable cities; although this is no longer true in Vancouver as of 2018, as they dropped single family housing classification altogether to allow multi-unit developments on all lots, with some restrictions. This might be one of the reasons Vancouver's housing market has stopped rising as rapidly as Toronto's.

This difference in single family zoning rates is insane when you think about it! New Zealand also is facing high housing prices, and they recently banned single family housing classifications in 5 major cities.

[thomascharky]

Good call making this video. A lot of people get lost in the sauce and go down rabbit holes that end up hurting more than helping. It's good for them to hear the people they look up to tackle the details and set them back on the right track.

[Rosebud]

I’m a current renter whose building was bought by an investor who has applied to demolish our building and build something bigger. Now us current tenants will be kicked out and have to find a new place to live until the new building is ready. It seems like investors and government don’t care about what happens to tenants who have to leave the demolished buildings to make way for the new ones.

[steemlenn]

The problem isn't expensive housing. The problem is when expensive housing is almost all that is build over a long time. A 120 m² appartment will never be a thing for the childless minimum wage earner. Same for the suburban desert with buy-only houses etc.
Such a think also results in splitted classes, which causes a lot of problems through the politics/policy line. That it is also very damaging to the environment doesn't make it better.

[johnroutledge]

"Buy a used thinkpad!"
Computers (and cars) aren't cheap simply because a lot of them are made, but because they constantly depreciate in value due to short product lifespans, and have a constant improvements in performance. Homes aren't built like that. There is no Moores Law of housing, and older homes and flats are often just as well built (and larger) than modern ones.
So that wasn't a great example.

[dwc]

One huge problem in San Francisco is that so many of the new market-rate condo developments were built on ground that once held an equivalent amount of housing, that was *rent controlled* and thus was lived in by lower-income families often for decades, before being shoved out. In many cases, the amount of housing wasn't increased at all - only the price. And of course this leads to increases in property values in the surrounding area making it even more expensive to build the next thing - and so on and so on.

[madskittls]

I love your channel, but would like to say that I think income inequality and lowering rates of owner-occupied homes is not a good combo.

If landlords control too much of the supply of housing, they can increase rents when wages are increasing. Having a certain percentage of of housing regulated to be owner-occupied can be a good way of reducing landlord power.

Edit: to be clear, that’s not our current problem by a long shot, but has the potential to be one in the future.