Effects of a homebuying subsidy on home prices

[superrific]

Another big problem is that the houses got bigger even though families got smaller. I'm not getting into the economic nomenclature nuance with Super as once you get beyond Eastwing framing hammers I'm not sure I can help. I'm just saying that we'll need to relearn what we once knew that less is more.

It's kinda like wanting affordable Mercedes and we're going to need to sell "cozy" to get to affordable.

Why do you think that is? I mean, part of it has to be a wealth effect, right? I mean, a McMansion would have been extremely expensive in 1850. But is it maybe also the dynamics of the housing market with respect to the near suburbs and the far suburbs? The near suburbs (or the city itself) was built out earlier. Now builders show up to build far suburbs, but what's the selling point? Hey, here's your opportunity to live really far from work! So they had to build bigger houses to induce people to buy. Maybe?

 

[stankeylegjones]

OK. I'm familiar with unstable equilibria in game theory, and game theory has applications in economics but is (I think -- you can tell me) actually math. I'm not familiar with it in macro. I read a few links and the concept appears to be theoretical in nature. It occurs when supply and demand are inverted -- i.e. supply is downward sloping and demand is upward sloping. I don't know anything about downward supply. Demand can slope upwards in special circumstances (e.g. Veblen goods with conspicuous consumption), but it's rare enough that I can't imagine it would ever be incorporated into a macro model.

Anyway, it appears that I overstated my case. Let me revise: I was referring to the concept of equilibrium as commonly and standardly used in macro- and micro-economics. I should not have generalized to the concept of equilibrium entirely.

I’m no game theorist, so once again I can offer no support. From my quick google search it does seem that the phenomenon does occur enough to be considered not rare. But, I definitely don’t know how accurate my take away is. In any event, I am going to bow out from the conversation and defer to you and others who know much more about this topic than I do.

 

[EyeballKid]

Why do you think that is? I mean, part of it has to be a wealth effect, right? I mean, a McMansion would have been extremely expensive in 1850. But is it maybe also the dynamics of the housing market with respect to the near suburbs and the far suburbs? The near suburbs (or the city itself) was built out earlier. Now builders show up to build far suburbs, but what's the selling point? Hey, here's your opportunity to live really far from work! So they had to build bigger houses to induce people to buy. Maybe?

I could be misreading, but it seems like you’re focusing on builders’ role in McMansion-ization. Approaching it from the other side of the equation, it certainly seems like there was a willing marketplace that didn’t necessarily need to be sold too hard on the idea.

People are drawn to the idea of owning their own “estate,” away from the noise and congestion of urban centers. Post-1950s highway systems, cheap cars, and cheap gas (along with many other factors) obviously enabled suburban expansion, which obviously meant that houses could be bigger, land was cheaper, etc. So I’m not sure that builders were working hard to “induce” people to buy—seems more like they were responding to consumer desires.

 

[finesse]

There's always a lot of infill and teardown both individually and collectively as well as rezoning to relieve some of the pressure to move farther out. Those tend to be the least well to do who can't afford urban land price and settle for smaller , less desirable land and the most well to do who want larger , more private areas.

Technology and homes as status symbols have gone hand in hand. Engineered materials and heavy equipment make larger homes easier to build. Better insulation, heating ,lighting and make them cheaper effectively to keep livable and maintain. The increase of work from home, in home entertainment takes space. The more efficient kitchens, freezers, washers , dryers also are larger and take up more space. Having and not having any of these affect both you social status and your feelings about yourself. That ends up with ,in many cases, house sizes substituting for lot sizes.

There are some things to consider , though. Quite a bit of the impetus to create this sort of home environment and the costs of it are mitigated in the time and money that you spend on the outside world. That seems like a very personal judgment about what that's worth

 

[Zoo_View]

There's always a lot of infill and teardown both individually and collectively as well as rezoning to relieve some of the pressure to move farther out. Those tend to be the least well to do who can't afford urban land price and settle for smaller , less desirable land and the most well to do who want larger , more private areas.

Technology and homes as status symbols have gone hand in hand. Engineered materials and heavy equipment make larger homes easier to build. Better insulation, heating ,lighting and make them cheaper effectively to keep livable and maintain. The increase of work from home, in home entertainment takes space. The more efficient kitchens, freezers, washers , dryers also are larger and take up more space. Having and not having any of these affect both you social status and your feelings about yourself. That ends up with ,in many cases, house sizes substituting for lot sizes.

There are some things to consider , though. Quite a bit of the impetus to create this sort of home environment and the costs of it are mitigated in the time and money that you spend on the outside world. That seems like a very personal judgment about what that's worth

Let’s say that states/counties/municipalities have the funds to create moderate- and/or low-cost housing.

Moderate-cost housing won’t suffice. It has to be LOW-COST housing to make a change.

Cities and towns are NOT going to ALLOW, much less fund, LOW-COST housing.

Why?

Such housing will bring in a crapload of moderate (moderate, not low) income households. Why? Good schools.

Kids and schools are EXPENSIVE.

To address the nationwide shortage of apartments, starter homes, and next-step-up homes is going to require a New Deal-like building program AND a willingness by local governments to zone and permit lots and lots and tens-of-thousands of “starter” homes.

We can do this…….maybe.

 

[finesse]

You might add that banks don't want to lend money on anything less than 3 bedrooms and a bath and a half minimum. A contractor friend of mine tried to create a market for sub 1000 square ft . homes back in the 80s and financing was always a huge issue.

 

[mpaer]

You might add that banks don't want to lend money on anything less than 3 bedrooms and a bath and a half minimum. A contractor friend of mine tried to create a market for sub 1000 square ft . homes back in the 80s and financing was always a huge issue.

I had no clue Thanks for the information

 

[finesse]

I had no clue Thanks for the information

Well, you do have to look at their POV. It's not wrong from a business sense. The market would be marginal buyers who are probably more likely to default and you are left with a house with a limited market and likely in a less established neighbor so buying for teardown or expansion would have less appeal. The room layouts are minimal size so even if you wanted to do a renovation, the core would still either have small room sizes or need to be gutted.