The social and political ramifications of unaffordable housing
Due to over-zealous NIMBY housing regulations all around the world, housing is becoming increasingly unaffordable to younger generations (graph below, hat tip to Jay). That is leading to more and more young adults living with their parents rather than moving out on their own (2nd graph below, also hat tip to Jay). The NYT has a story today: "‘The Social Contract Has Been Completely Ruptured’: Ireland’s Housing Crisis - Soaring rents have left many struggling to afford homes in Dublin and have created a generational divide. Two-thirds of younger adults in the city live with their parents." (no-paywall link)
More anecdotally I've seen the same situation on my visits to California: houses with a half-dozen vehicles parked out front as adult children live with their parents.
A lot of this is well known, but what hasn't been discussed are the third-order impacts. First is a flaky workforce, since they don't have to pay rent. Stories abound in California of young people quitting on a dime or even just not showing up to work or a new job when they don't feel like it (and just wait until people get free universal basic incomes!). It also creates this new political constituency for socialism: if they don't see a path to affording their own home, then their only option is getting the government to give them one. The irony is that it was government in the first place that made the housing unaffordable! It's just a complete cultural disaster unfolding in slow motion with the younger generations. And it could be avoided if we would just allow builders to build the housing the market is asking for!
(click images to zoom in)
Labels: affordability, home affordability
posted by Tory Gattis @ 3:59 PM
5 Comments:
I have first hand experience with this. Why work in Florida. Not enough blue collar work and too expensive housing.
Government spending is to socialism as Donald Trump is to Republicanism.
This long tradition of equating anything that is not purchased in the market as socialism doesn't hold much water - in fact if you want to go to the source then Karl Marx is adamant that the state is antithetical to the 'Communist Project'. The problem is also widespread in much of Western Europe - people's perceived (very different to actual) wealth is derived from their houses and then stock portfolios.
The experience of the UK is something to bare in mind as an exemplar of this process. When Margaret Thatcher became the PM at the beginning of the 1980's she had 2 clear objectives. Firstly, to break union power which had brought down her predecessor's government (particularly the miners), but also to create a new ideology that would wed the British working class to her administration. Our social housing (projects? in Yankee speak) were sold at below market prices so as to transfer wealth from democratic control to the individual. However, instead of building new homes local councils (municipalities) saw their funding from central government dramatically cut and needed to use the money garnered from the sale of these properties. This allowed tax cuts to be introduced and for a while everyone thought they were wealthier.
Some people like myself have benefited massively from such a policy, but I am all too aware that the social outcome of my enrichment has resulted in a shortage of homes for which the emergent generation (21-35) are now paying the price.
Wrong. https://mises.org/library/theory-socialism-and-capitalism-0
Yeah, unfortunately the US is entering late stage socialism (enshitification of government). I suspect in part its a problem with our constitution, that there is no check on the expansion of the federal government and no easy way to reduce its size. Or a real check and balance against the tyranny of city governments... I'm radical enough that I would like to see all local zoning boards abolished. As well as a new amendment that ties limiting government budgets deficit spending to no more than 3% of GDP or you can't be re-elected. This would force us to stop giving away money or inventing crises to justify spending.
I have hope as the same problem(s) existed in the Republic of Ireland in the 1980s. Where the average Irish citizen was poor and the government is broke. The Republic ended this and the economy has flourished (celtic tiger), so there is hope that the US will push through the curse of late stage socialism. I am a dual citizen of Ireland...
There is not a housing affordability "crises" in Ireland. This is more activist manufactured than reality. The Irish Government is offering people $92,000 euro to live in and fix up abandoned homes. https://www.forbes.com/sites/laurabegleybloom/2023/06/22/these-irish-islands-will-pay-you-92000-to-move-there/?sh=650e688a3cc2
What there is is a lack of "affordable" housing in desirable areas, isn't that always the case?
I also suspect there is a lot of lifestyle inflation in generations Gen Z spending money on influencing, phones, and other disposable goods as experiences... Bad choices on degrees (they aren't priced based on their ability to generate income)
the same was said about my generation Gen X.
Fundamentally why is it that housing goes up in value? And does it always?
This is why Texit will be awesome. The Texan economy will be the 2nd largest given the lack of political will to implement insane regulations, no income tax, no corporate income tax, and a large industrial base!
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