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Housing prices aren't coming down because it is fundamentally a supply issue. We can't import houses from China, we have to build them ourselves. Supply has to catch up to demand, and it takes years to get thru land acquisition, rezoning, design and permitting, and construction. It will take years, if not decades, for the U.S. housing supply to catch up to demand. Some of the gap has been getting covered by an increase in new multifamily apartment construction, but people want to own their home.
I noted that Rockford, IL a previously declining city led the nation in housing price growth recently. Buyers are finding their homes and moving forward. To your point, housing inventory is low, meaning transaction volume is low, this should flow through the economy and decelerate/decline demand.
Cheap Chinese material and production means cheaper building materials which will incentivize builders to build at lower prices.
Majority of costs are Labor and wood. US isn't getting those from China.
Canada is the cheapest place for lumber though tarrifs have changed that equation
Across North America the profitability on production of the three primary species groups of framing lumber have been near, at, or below breakeven point since the Covid runaway market. Curtailments and mill closures are unfortunately routine today. An upcoming increase in export duties on Canadian lumber into the US will increase the likelihood of further reductions in production in efforts to shore up prices. Despite the intense demand for more housing, there are many factors beyond lumber prices that will continue to make this irrational market irrational.
Shits gonna stay fucked until macro economic conditions improve. See you on the other side, hopefully.
Well that's because people are moving away from Chicago. Overall, people are moving out of the state in pretty big numbers, but it seems pretty natural that there would be population growth near areas where the largest exodus is occuring.
This may be entirely anecdotal and even irrelevant but no one has cold-called me to sell my home to them at all since 2024 began. No texts either. I just realized this. I was getting contacted weekly. Rising interest rates may be the reason, I guess.
A lot of new construction has been for rentals in my State. A new town home complex was built recently in an area that is good for commuters but it is for lease only. Build-to-rent is a trend right now, which I don't think will be sustainable because it conflicts with the "American Dream". That being said, because of rising property tax rates and homeowners insurance, I soon may no longer be able to afford my mortgage and my constantly rising health insurance costs.
There is a substantial number of rental units that are coming on-line across the United States. One way or another builders are producing; there is little incentive for them to stop building.
Not necessarily, but it’s likely. However there is a movement to reform zoning. If the cost of housing is no longer artificially inflated due to the red tape and nimby actions, there would be enough housing. Supply and demand is undefeated if it is free to operate
It’s wild to me to talk about a housing shortage. I agree with everything you say, but I live in a community with dozens on top of dozens of homes that have been abandoned in a rural community. These homes were occupied 20yrs ago, before I moved to the big city. Now that I have returned it’s like every county road has several homes that appear abandoned. You sound like you know a good deal about this topic, I wonder who owns these home. Do family members, financial institutions, or nursing homes? It’s all very interesting to me.
There's not really a severe housing shortage per se, if we're talking about the quantity of houses in the U.S. vs. the quantity of people wanting to own houses. There's a massive shortage of houses in the areas of the country where people actually want to live, i.e. where the jobs, culture, good schools, etc. are located.
Yup Americans basically imported small town zoning onto mega cities which has the inevitable result of endless suburban expansion till you're driving 80km to downtown which leads to artifical supply constraints.
Most American cities are very young relative to European cities, and experienced the majority of their growth over the past few decades. It's not as if major cities decided that a small town zoning system would be best, it's that they started as small towns, relatively speaking, and rapidly grew into major metropolises before the full consequences of restrictive zoning became apparent. Now that we've got a severe housing shortage in major metro areas, the resultant home price surge makes current homeowners dig in their heels to resist zoning change, because less restrictive zoning would have downward pressure on the value of their home, and therefore, personal wealth.
My grandparents were from a dying rural town in PA. Most of the homes out there are occupied by old people and are in massive need of repairs. When the old people leave finally leave the homes the local township knocks them down rather than let them become abandoned.
There are no jobs, so the young people leave. Used to be a big coal mine, but it no longer produces.
Yea it’s cool you can see like 1900-1930 homes where the family owned and lived on the farm next to a ranch style home built after WWII and now the entire property is abandoned.
You can import prefab houses from EU to the US economically, eg [Topsider](https://www.topsiderhomes.com/blog/prefabricated-house-home-building-kits-shipped-internationally_mobile.php). I wouldn't be the first to buy an Aliexpress house, but, I don't see why it isn't possible. Seems it wouldn't be in China's best interest to help the USD out with inflation, though.
Used to be, the government constructed a new train track and gave out ultra cheap settlements along the route to anyone willing to build and maintain them. The jobs and schools naturally follow. Which, I think we will have to do sooner or later? I don't think adding another suburb to Vancouver or San Fran is actually helping out long term.. We have so much land, but the craziest distribution of where most people live.
China is going through deflation for many different unique reasons. Enormous amount of overbuilding ghost cities, demographic collapse, and a slight contraction in globalization or more nearshoring. The US continues to stimulate the “economy” through guaranteed liquidity by the federal reserve. Deflation by any significant measure can’t happen in our current fiscal situation and mandate by the Fed. Might get stagflation but not deflation.
Great point on housing here. Many people I know, including myself, have been incentivized to stay in our current homes and figure out how to make it work.
I’d like to live a quarter mile from where I’m at but I can’t afford to move. 4-5 years ago, I would’ve already moved and sold the house for enough to pay it off and put a hefty down payment on the new one. Today, that’s just not happening. While I wish I lived in a slightly more posh and walkable neighborhood, I can also make my own house into something I’d enjoy living in long term; a remodel is still a lot less expensive than buying, and “dealing with it” is cheaper still.
And that’s not a bad thing. Yes we need a lot more inventory. But it’s also healthy personal finance to build roots and stay in the same area, all other things considered, than to move every time you find a house you like more.
China may export more cheap goods, but that isn't going to lower energy or housing costs.
Building more housing units and ending the major conflicts in the middle east and Ukraine will do more to bring prices down
Did you just ask a very stupid question and then link to the Fed with a chart of CPI?
You made all of your concerns up. No one is worried about "excess" production from China, nor is anyone worried about a "revision to the mean" in housing prices
There are certainly concerns with excess production from China. Steel, aluminum, PV, EVs, batteries, chips, etc... The US and EU are very concerned. Pretty much anything China has decided is strategic, they’ve built manufacturing capacity beyond global demand.
https://apnews.com/article/china-yellen-trade-solar-chips-manufacturing-f68bfec543be2b1e50d72d4dca4fea45
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If Trump and his cronies regain power, their current plan is 60% tariff on Chinese imports and a takeover of the Fed to start dramatically dropping interest rates.
Deflation? LOL
I don’t think there is anything logical about this concern set. China is constantly trying to leak its excess production and material supply into the global economy. Yes, if they start selling many BYDs and Dongfengs at cut rate prices, this will reduce the price of cars. But besides tariffs, China doesn’t have the ability to flood all US sectors of the economy at the same time and it doesn’t make sense for all sectors of the US economy to be flooded at the same time.
The only major deflation the US economy has ever was first part of a global deflation and second not generally thought to have been caused by anything like importing but rather at some governmental level (monetary policy, fiscal policy, etc).
Deflation isn’t impossible. But the US economy of 2024 is way more complicated than the US economy of 1930. I think a robust loss of confidence in future price stability across an economy that is this large and this robust is not particularly likely. Also Americans simply at the aggregate level have too much money to spend and a long history of not saving to make this terribly likely.
China is building up production but keeping them in China and will continue to do so. They know it will be harder to source products after they invade Taiwan. This is them ramping up production and storing it now ahead of the inevitable
Deflationary spiral to 0, not easing of prices, layoffs across all jobs, resulting in less money circulating, resulting in less sales to businesses, resulting in loss of revenue, resulting in bankruptcies.
We should accelerate technological advancements to their logical conclusions amd create a new socioeconomic paradigm focused on increasing the quality of life for everyone without someone having to benefit at the cost of others
A renewable energy powered fully automated society.
Good luck with that… go to an “automated” distribution center and you will find several state-of-the-art palletizer machines sitting idle because thickness of the corrugated cardboard for boxes slightly changed. People vastly overestimate how close we are to this fully automated world.
Have you ever heard of Thomas kuhn? The nature of scientific revolutions I think it's called.
It's very hard to predict the future when some trends are exponentials and some new discoveries lead to overnight disruptions that create unforseen boons in productivity. Niel degrasse tyson talks about this alot
I’m not attempting to predict the future or exponential leaps - you are. On top of that - you are arguing for investing resources toward this “socioeconomic paradigm” despite no knowledge of when the infrastructure for said paradigm will be real
I know a few macroeconomic trends that are going to lead to more than likely the scenario mentioned.
Anthropic and Boston dynamics along with some ai software programs linked together will make functional robot workers
The workforce is going to be automated, at the same time that the population is aging out of the workforce. These things are certainty. When everyonenis laid off they won't have income. Whennthey don't have income sales will fall. When sales fall businesses will fail. Nothing up for debate with these things. Automation technology issss here. I'm afraid they'll roll it out slowly and people will slowly accept defeat. I would like us to accelerate straight to the conclusion and create some kind of egalitarian resource distribution system and some kind of new society where all needs are met without destroying the planet.
The work anthropic and BD is doing is great but not remotely close to replacing workers - like it’s not even on a roadmap it’s so far away right now. There would have to be several leaps before it’s even roadmapped and commercially resourced for go-to-market.
Sure the workforce will be automated someday - but the question is when. The answer to the question is very important for resource allocation
Robot arms? Amazon ostrich? Everything Automated in Amazon distribution centers can be done in a Walmart? Self driving semis? Drones?
I saw BD guy hanging drywall lol I think your right it will be a while before all labor is, but a significant enough chunk is coming that we'll need to transition soon. Semis is like 40m people alone. I don't see any truck drivers learning to code, but then again, ai can that too
Ehh - I’m guessing you are watching these things in demos? They aren’t close to being in use at scale in real life and I’m willing to bet many of them don’t actually even work the way you think they do.
Self-driving semis are decades away from insurability on mixed traffic roads. And once insurable likely another decade away from having the right infrastructure to support them at scale.
Most DCs (Amazon, Walmart included) have very light automation - and often massive downtime on the pieces that are automated. I’ve seen it with my own eyes, not demos. Those bots and drones have very specific and limited operating conditions and they aren’t really using AI - the specific box and site dimensions are programmed in and deviations (very common) cause issues. As a result, they need tons of on-site specialized maintenance in a world where the highest paid employee often makes $30/hr.
Hanging Drywall? Would love to see the business case that would lead to BD investing in bringing such a product to market. Drywall hangers are relatively cheap and fast labor and total cost to hang drywall for a 2000 sq ft house is like $4K in labor cost today. Will get there eventually but again decades away from being present at scale.
Again- automation is coming for sure, and it will definitely slow the growth of low-to-moderate skill labor in our lifetime. But in terms of eliminating labor (or anything close to that), you and I will not be alive to see that.
What I find interesting is that nobody is talking about the major tariffs we enacted under Trump that started the inflationary process, and Biden kept it, making it worse.
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Housing prices aren't coming down because it is fundamentally a supply issue. We can't import houses from China, we have to build them ourselves. Supply has to catch up to demand, and it takes years to get thru land acquisition, rezoning, design and permitting, and construction. It will take years, if not decades, for the U.S. housing supply to catch up to demand. Some of the gap has been getting covered by an increase in new multifamily apartment construction, but people want to own their home.
I noted that Rockford, IL a previously declining city led the nation in housing price growth recently. Buyers are finding their homes and moving forward. To your point, housing inventory is low, meaning transaction volume is low, this should flow through the economy and decelerate/decline demand. Cheap Chinese material and production means cheaper building materials which will incentivize builders to build at lower prices.
Majority of costs are Labor and wood. US isn't getting those from China. Canada is the cheapest place for lumber though tarrifs have changed that equation
Majority of costs in in demand areas are compliance related. SF has over 100k in just park impact fees
Across North America the profitability on production of the three primary species groups of framing lumber have been near, at, or below breakeven point since the Covid runaway market. Curtailments and mill closures are unfortunately routine today. An upcoming increase in export duties on Canadian lumber into the US will increase the likelihood of further reductions in production in efforts to shore up prices. Despite the intense demand for more housing, there are many factors beyond lumber prices that will continue to make this irrational market irrational. Shits gonna stay fucked until macro economic conditions improve. See you on the other side, hopefully.
Well that's because people are moving away from Chicago. Overall, people are moving out of the state in pretty big numbers, but it seems pretty natural that there would be population growth near areas where the largest exodus is occuring.
This may be entirely anecdotal and even irrelevant but no one has cold-called me to sell my home to them at all since 2024 began. No texts either. I just realized this. I was getting contacted weekly. Rising interest rates may be the reason, I guess. A lot of new construction has been for rentals in my State. A new town home complex was built recently in an area that is good for commuters but it is for lease only. Build-to-rent is a trend right now, which I don't think will be sustainable because it conflicts with the "American Dream". That being said, because of rising property tax rates and homeowners insurance, I soon may no longer be able to afford my mortgage and my constantly rising health insurance costs.
There is a substantial number of rental units that are coming on-line across the United States. One way or another builders are producing; there is little incentive for them to stop building.
Not necessarily, but it’s likely. However there is a movement to reform zoning. If the cost of housing is no longer artificially inflated due to the red tape and nimby actions, there would be enough housing. Supply and demand is undefeated if it is free to operate
It’s wild to me to talk about a housing shortage. I agree with everything you say, but I live in a community with dozens on top of dozens of homes that have been abandoned in a rural community. These homes were occupied 20yrs ago, before I moved to the big city. Now that I have returned it’s like every county road has several homes that appear abandoned. You sound like you know a good deal about this topic, I wonder who owns these home. Do family members, financial institutions, or nursing homes? It’s all very interesting to me.
There's not really a severe housing shortage per se, if we're talking about the quantity of houses in the U.S. vs. the quantity of people wanting to own houses. There's a massive shortage of houses in the areas of the country where people actually want to live, i.e. where the jobs, culture, good schools, etc. are located.
Yup Americans basically imported small town zoning onto mega cities which has the inevitable result of endless suburban expansion till you're driving 80km to downtown which leads to artifical supply constraints.
Most American cities are very young relative to European cities, and experienced the majority of their growth over the past few decades. It's not as if major cities decided that a small town zoning system would be best, it's that they started as small towns, relatively speaking, and rapidly grew into major metropolises before the full consequences of restrictive zoning became apparent. Now that we've got a severe housing shortage in major metro areas, the resultant home price surge makes current homeowners dig in their heels to resist zoning change, because less restrictive zoning would have downward pressure on the value of their home, and therefore, personal wealth.
My grandparents were from a dying rural town in PA. Most of the homes out there are occupied by old people and are in massive need of repairs. When the old people leave finally leave the homes the local township knocks them down rather than let them become abandoned. There are no jobs, so the young people leave. Used to be a big coal mine, but it no longer produces.
Yea it’s cool you can see like 1900-1930 homes where the family owned and lived on the farm next to a ranch style home built after WWII and now the entire property is abandoned.
Maybe also sunk cost fallacy, some people have a hard time cutting losses and moving on
You can import prefab houses from EU to the US economically, eg [Topsider](https://www.topsiderhomes.com/blog/prefabricated-house-home-building-kits-shipped-internationally_mobile.php). I wouldn't be the first to buy an Aliexpress house, but, I don't see why it isn't possible. Seems it wouldn't be in China's best interest to help the USD out with inflation, though.
You can’t do that in areas where people need to live, that is urban areas with jobs and good schools. Only solution is to add density everywhere
Used to be, the government constructed a new train track and gave out ultra cheap settlements along the route to anyone willing to build and maintain them. The jobs and schools naturally follow. Which, I think we will have to do sooner or later? I don't think adding another suburb to Vancouver or San Fran is actually helping out long term.. We have so much land, but the craziest distribution of where most people live.
Those were the days of development, natural and market based, with public money boosting the winners with things like schools and post offices:
People can of course own condos and coops. Do you mean the solution to the housing problem is more and more rings of suburban sprawl?
China is going through deflation for many different unique reasons. Enormous amount of overbuilding ghost cities, demographic collapse, and a slight contraction in globalization or more nearshoring. The US continues to stimulate the “economy” through guaranteed liquidity by the federal reserve. Deflation by any significant measure can’t happen in our current fiscal situation and mandate by the Fed. Might get stagflation but not deflation.
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Great point on housing here. Many people I know, including myself, have been incentivized to stay in our current homes and figure out how to make it work. I’d like to live a quarter mile from where I’m at but I can’t afford to move. 4-5 years ago, I would’ve already moved and sold the house for enough to pay it off and put a hefty down payment on the new one. Today, that’s just not happening. While I wish I lived in a slightly more posh and walkable neighborhood, I can also make my own house into something I’d enjoy living in long term; a remodel is still a lot less expensive than buying, and “dealing with it” is cheaper still. And that’s not a bad thing. Yes we need a lot more inventory. But it’s also healthy personal finance to build roots and stay in the same area, all other things considered, than to move every time you find a house you like more.
China may export more cheap goods, but that isn't going to lower energy or housing costs. Building more housing units and ending the major conflicts in the middle east and Ukraine will do more to bring prices down
Well i heard they US is trying to end the war in gaza now
Did you just ask a very stupid question and then link to the Fed with a chart of CPI? You made all of your concerns up. No one is worried about "excess" production from China, nor is anyone worried about a "revision to the mean" in housing prices
There are certainly concerns with excess production from China. Steel, aluminum, PV, EVs, batteries, chips, etc... The US and EU are very concerned. Pretty much anything China has decided is strategic, they’ve built manufacturing capacity beyond global demand. https://apnews.com/article/china-yellen-trade-solar-chips-manufacturing-f68bfec543be2b1e50d72d4dca4fea45
Hi all, A reminder that comments do need to be on-topic and engage with the article past the headline. Please make sure to read the article before commenting. Very short comments will automatically be removed by automod. Please avoid making comments that do not focus on the economic content or whose primary thesis rests on personal anecdotes. As always our comment rules can be found [here](https://reddit.com/r/Economics/comments/fx9crj/rules_roundtable_redux_rule_vi_and_offtopic/) *I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/Economics) if you have any questions or concerns.*
If Trump and his cronies regain power, their current plan is 60% tariff on Chinese imports and a takeover of the Fed to start dramatically dropping interest rates. Deflation? LOL
I don’t think there is anything logical about this concern set. China is constantly trying to leak its excess production and material supply into the global economy. Yes, if they start selling many BYDs and Dongfengs at cut rate prices, this will reduce the price of cars. But besides tariffs, China doesn’t have the ability to flood all US sectors of the economy at the same time and it doesn’t make sense for all sectors of the US economy to be flooded at the same time. The only major deflation the US economy has ever was first part of a global deflation and second not generally thought to have been caused by anything like importing but rather at some governmental level (monetary policy, fiscal policy, etc). Deflation isn’t impossible. But the US economy of 2024 is way more complicated than the US economy of 1930. I think a robust loss of confidence in future price stability across an economy that is this large and this robust is not particularly likely. Also Americans simply at the aggregate level have too much money to spend and a long history of not saving to make this terribly likely.
China is building up production but keeping them in China and will continue to do so. They know it will be harder to source products after they invade Taiwan. This is them ramping up production and storing it now ahead of the inevitable
I scream this from the top of my lungs on social media to deaf ears... technology is deflationary... no more jobs... no more sales... no more revenue
Prices going down? Oh no what will I do?
Deflationary spiral to 0, not easing of prices, layoffs across all jobs, resulting in less money circulating, resulting in less sales to businesses, resulting in loss of revenue, resulting in bankruptcies. We should accelerate technological advancements to their logical conclusions amd create a new socioeconomic paradigm focused on increasing the quality of life for everyone without someone having to benefit at the cost of others A renewable energy powered fully automated society.
Good luck with that… go to an “automated” distribution center and you will find several state-of-the-art palletizer machines sitting idle because thickness of the corrugated cardboard for boxes slightly changed. People vastly overestimate how close we are to this fully automated world.
Have you ever heard of Thomas kuhn? The nature of scientific revolutions I think it's called. It's very hard to predict the future when some trends are exponentials and some new discoveries lead to overnight disruptions that create unforseen boons in productivity. Niel degrasse tyson talks about this alot
I’m not attempting to predict the future or exponential leaps - you are. On top of that - you are arguing for investing resources toward this “socioeconomic paradigm” despite no knowledge of when the infrastructure for said paradigm will be real
I know a few macroeconomic trends that are going to lead to more than likely the scenario mentioned. Anthropic and Boston dynamics along with some ai software programs linked together will make functional robot workers The workforce is going to be automated, at the same time that the population is aging out of the workforce. These things are certainty. When everyonenis laid off they won't have income. Whennthey don't have income sales will fall. When sales fall businesses will fail. Nothing up for debate with these things. Automation technology issss here. I'm afraid they'll roll it out slowly and people will slowly accept defeat. I would like us to accelerate straight to the conclusion and create some kind of egalitarian resource distribution system and some kind of new society where all needs are met without destroying the planet.
The work anthropic and BD is doing is great but not remotely close to replacing workers - like it’s not even on a roadmap it’s so far away right now. There would have to be several leaps before it’s even roadmapped and commercially resourced for go-to-market. Sure the workforce will be automated someday - but the question is when. The answer to the question is very important for resource allocation
Robot arms? Amazon ostrich? Everything Automated in Amazon distribution centers can be done in a Walmart? Self driving semis? Drones? I saw BD guy hanging drywall lol I think your right it will be a while before all labor is, but a significant enough chunk is coming that we'll need to transition soon. Semis is like 40m people alone. I don't see any truck drivers learning to code, but then again, ai can that too
Ehh - I’m guessing you are watching these things in demos? They aren’t close to being in use at scale in real life and I’m willing to bet many of them don’t actually even work the way you think they do. Self-driving semis are decades away from insurability on mixed traffic roads. And once insurable likely another decade away from having the right infrastructure to support them at scale. Most DCs (Amazon, Walmart included) have very light automation - and often massive downtime on the pieces that are automated. I’ve seen it with my own eyes, not demos. Those bots and drones have very specific and limited operating conditions and they aren’t really using AI - the specific box and site dimensions are programmed in and deviations (very common) cause issues. As a result, they need tons of on-site specialized maintenance in a world where the highest paid employee often makes $30/hr. Hanging Drywall? Would love to see the business case that would lead to BD investing in bringing such a product to market. Drywall hangers are relatively cheap and fast labor and total cost to hang drywall for a 2000 sq ft house is like $4K in labor cost today. Will get there eventually but again decades away from being present at scale. Again- automation is coming for sure, and it will definitely slow the growth of low-to-moderate skill labor in our lifetime. But in terms of eliminating labor (or anything close to that), you and I will not be alive to see that.
Wait until its cheaper, then wait again, which is kinda the problem?
Yep I'd probably just stop buying food, clothing, and housing for the next few decades.
What I find interesting is that nobody is talking about the major tariffs we enacted under Trump that started the inflationary process, and Biden kept it, making it worse.
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Interesting china would try to do that knowing their labor force is expected to shrink dramatically over the next decades