Pretty good talk, although I would like to see some of these ideas be tightened up a bit. Aziz is bang on about CM having a consistent and coherent model for understanding the market —the best I’ve seen out there. I’d like to see CM’s model be built into a computer program so that we can predict outcomes by tweaking certain levers.
One of Aziz’s questions was why the price of goods is coming down and the price of housing is going up in relation. He is missing that the price of housing is only partially in its construction. Housing is not a production good. About 80% of the geographic variation in house pricing comes from the cost of the land. As CM discusses in his excellent book, The Great Housing Hijack, property is a location-based monopoly. The land in a given location is the only land that can be in that location.
This point is always glossed over by YIMBYs who naively think that more density means more people will be able to live in a given location for less. It does not work that way. If everyone wants to live on the same postage stamp, the stamp will be really expensive.
What I would have liked to have seen discussed in this podcast is the impact of immigration on housing. If the price of land is driven up by more people wanting to live on it, immigration is driving up the cost of land. The challenge we face today, IMHO, is that we have increasing rates of immigration and decreasing new frontiers for people to build housing. Countries like the United States and Australia and Canada grew by sprawl because there were always new places to go. But the reality is that some places are suitable and others not and we have taken most of the best places. What is left are the places that don’t easily support more people. At the same time, all three countries are seeing immigration push up population numbers very quickly. In countries like Canada the rate of immigration is the fastest it has ever been. Supply and demand curves for housing do not exist on the same temporal dimensions. Immigration can be cranked up quickly. Housing cannot, especially if nothing is done to bend the absorption rate. It is this temporal adjustment mismatch that is producing today’s “housing crisis”.
Cameron touched on a few ideas for accelerating the absorption rate with penalties for sitting on land too long. It is great that he is now discussing solutions, but the ideas need further development. They also need to be incorporated into his broader five equilibrium theory. I have confidence in his brilliance. I’m looking forward to watching him develop his thinking further.
There is discussion here about whether or not there is a housing problem or shortage for those at the higher end of lower end of the income spectrum. Here's a recent paper suggesting there is no lack of supply, at least at the high end.
Where Is the Housing Shortage? Kirk McClure & Alex Schwartz
Thanks for this engaging discussion. Any thoughts re how different generations are affected by housing affordability?
I agree with much of what you say about rents/income being a more relevant measure for assessing affordability, and the point that because demand putting upward pressure on these ratios, we can’t just increase Q and expect to improve them, I think price/income is particularly relevant for first home buyers who are struggling to save their deposit (especially in NZ where finance on a sub-20% deposit is almost impossible to obtain).
Separately, and not really relevant but a big concern (to me 🥴), high interest rates are a real killer for those that have recently entered the housing market —> disproportionately bearing the brunt of the monetary policy mood.
How sad this whole video is. Housing is absolutely basic human need and right , but heartless and corrupted politicians and jobos like you make it divorced from reality
As Hobbes said, “the life of the average man is nasty, brutish, and short”. One can view the world through a social justice lens and believe that housing is a human right or one can view the world through cold reality and realize that social justice is a human construct and that the laws of economics, like the laws of physics, have no concept of social justice.
Laws of economics?or a law of physics? They are not construct based on real truth, rather imposed by despicable, cunning masonic and Satanic filth and their immediate servants, who sold their soul to Devil. God created everything for whole humanity, and not calling it social justice .Just watch when your lane of economics crumbles right in front of your eyes, what system is that? Fraud ,that is why is crashing in shorter and shorter circles
There's a difference between how "it" works and how it should be. Many of us do support housing policies that would address the needs of lower income families.
One of the saddest parts of the housing policy debate happening right now is how housing justice advocates are used by YIMBY's and neo-liberals to advocate for-profit, market-rate housing policies that don't address the needs of housing justice. "Abundance. Supply. Build, build, build.
Houses don't grow on trees. Someone needs to build them and someone needs to pay for them. If you don't understand how that system works you cannot tweak it to do your bidding.
Yes, true that they do not grow on trees!The truth is that housing shortage is deliberately created by corrupted governments that are supposed to serve public end not themselves, with huge and overpaid beaurocracy .Sizeble amount of public housing is deliberately or for unknown reason locked up and perfectly good houses,and houses that need renovation are empty and locked, while people live in tents, cars or streets.Australia is govern in the way that every aspect of life will collapse and amount of immigration is making it fast approaching.None of the policies are fresh or a positive, it is more like a spending of the drunken sailor, destruction of the energy supply, destruction of small business , manufacturing,agriculture and so on and on ,on the sinking ship called Australia. We never had more stupid and dumb entire Albanese Government that are destroying this country ,that will be hard to rebuild.
There are laws in economics. They are the equalibria that inevitably form in every system involving competition for resources. We can try to change these systems — and human history has tried over and over — but inevitably something happens elsewhere to rectify the equilibrium.
Pretty good talk, although I would like to see some of these ideas be tightened up a bit. Aziz is bang on about CM having a consistent and coherent model for understanding the market —the best I’ve seen out there. I’d like to see CM’s model be built into a computer program so that we can predict outcomes by tweaking certain levers.
One of Aziz’s questions was why the price of goods is coming down and the price of housing is going up in relation. He is missing that the price of housing is only partially in its construction. Housing is not a production good. About 80% of the geographic variation in house pricing comes from the cost of the land. As CM discusses in his excellent book, The Great Housing Hijack, property is a location-based monopoly. The land in a given location is the only land that can be in that location.
This point is always glossed over by YIMBYs who naively think that more density means more people will be able to live in a given location for less. It does not work that way. If everyone wants to live on the same postage stamp, the stamp will be really expensive.
What I would have liked to have seen discussed in this podcast is the impact of immigration on housing. If the price of land is driven up by more people wanting to live on it, immigration is driving up the cost of land. The challenge we face today, IMHO, is that we have increasing rates of immigration and decreasing new frontiers for people to build housing. Countries like the United States and Australia and Canada grew by sprawl because there were always new places to go. But the reality is that some places are suitable and others not and we have taken most of the best places. What is left are the places that don’t easily support more people. At the same time, all three countries are seeing immigration push up population numbers very quickly. In countries like Canada the rate of immigration is the fastest it has ever been. Supply and demand curves for housing do not exist on the same temporal dimensions. Immigration can be cranked up quickly. Housing cannot, especially if nothing is done to bend the absorption rate. It is this temporal adjustment mismatch that is producing today’s “housing crisis”.
Cameron touched on a few ideas for accelerating the absorption rate with penalties for sitting on land too long. It is great that he is now discussing solutions, but the ideas need further development. They also need to be incorporated into his broader five equilibrium theory. I have confidence in his brilliance. I’m looking forward to watching him develop his thinking further.
There is discussion here about whether or not there is a housing problem or shortage for those at the higher end of lower end of the income spectrum. Here's a recent paper suggesting there is no lack of supply, at least at the high end.
Where Is the Housing Shortage? Kirk McClure & Alex Schwartz
https://www.tandfonline.com/doi/full/10.1080/10511482.2024.2334011
Thanks for this engaging discussion. Any thoughts re how different generations are affected by housing affordability?
I agree with much of what you say about rents/income being a more relevant measure for assessing affordability, and the point that because demand putting upward pressure on these ratios, we can’t just increase Q and expect to improve them, I think price/income is particularly relevant for first home buyers who are struggling to save their deposit (especially in NZ where finance on a sub-20% deposit is almost impossible to obtain).
Separately, and not really relevant but a big concern (to me 🥴), high interest rates are a real killer for those that have recently entered the housing market —> disproportionately bearing the brunt of the monetary policy mood.
How sad this whole video is. Housing is absolutely basic human need and right , but heartless and corrupted politicians and jobos like you make it divorced from reality
As Hobbes said, “the life of the average man is nasty, brutish, and short”. One can view the world through a social justice lens and believe that housing is a human right or one can view the world through cold reality and realize that social justice is a human construct and that the laws of economics, like the laws of physics, have no concept of social justice.
Laws of economics?or a law of physics? They are not construct based on real truth, rather imposed by despicable, cunning masonic and Satanic filth and their immediate servants, who sold their soul to Devil. God created everything for whole humanity, and not calling it social justice .Just watch when your lane of economics crumbles right in front of your eyes, what system is that? Fraud ,that is why is crashing in shorter and shorter circles
There's a difference between how "it" works and how it should be. Many of us do support housing policies that would address the needs of lower income families.
One of the saddest parts of the housing policy debate happening right now is how housing justice advocates are used by YIMBY's and neo-liberals to advocate for-profit, market-rate housing policies that don't address the needs of housing justice. "Abundance. Supply. Build, build, build.
Houses don't grow on trees. Someone needs to build them and someone needs to pay for them. If you don't understand how that system works you cannot tweak it to do your bidding.
Yes, true that they do not grow on trees!The truth is that housing shortage is deliberately created by corrupted governments that are supposed to serve public end not themselves, with huge and overpaid beaurocracy .Sizeble amount of public housing is deliberately or for unknown reason locked up and perfectly good houses,and houses that need renovation are empty and locked, while people live in tents, cars or streets.Australia is govern in the way that every aspect of life will collapse and amount of immigration is making it fast approaching.None of the policies are fresh or a positive, it is more like a spending of the drunken sailor, destruction of the energy supply, destruction of small business , manufacturing,agriculture and so on and on ,on the sinking ship called Australia. We never had more stupid and dumb entire Albanese Government that are destroying this country ,that will be hard to rebuild.
There are laws in economics. They are the equalibria that inevitably form in every system involving competition for resources. We can try to change these systems — and human history has tried over and over — but inevitably something happens elsewhere to rectify the equilibrium.