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Comment by arcticbull | Hacker News Reader

Then why didn't it happen in Japan? Same easy money, no increase in house prices. It's not the interest rates, it's the zoning rules. [1, 2]

[1] https://fred.stlouisfed.org/series/JPNCPIHOUAINMEI

[2] https://fred.stlouisfed.org/series/INTDSRJPM193N

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No, Japan has had massively crashing population, which offset the massive inflationary impact.

https://www.macrotrends.net/countries/JPN/japan/population-g...

Despite a massive decrease in population, Japan has been mostly flat, when they should be in a strong deflationary environment due to demand destruction - because, you know, people being dead.

So hey, if the US population would decrease .5% a year (doesn’t sound like a lot, but it adds up fast - 1.75 mln/yr if in the US), we could also tame some inflation!

That's a funny way of saying that 'supply and demand meet in Japan' which you can do but decreasing demand or increasing supply. It really is that simple. When supply and demand are allowed to meet, prices stabilize. Otherwise please explain to me why you think that this is the one asset on earth not affected by supply and demand. And you could really use a solid citation.

Thought exercise.

There are 140,000,000 houses in the US. What do you think would happen to the price of each house if there were 280,000,000? If you answered anything other than 'they would still go up for some reason despite many of them being empty and derelict' then we are in agreement that it is a supply and demand issue. Ergo a zoning issue.

Have you been to Japan?

There is massive excess supply of housing in Japan.

They literally demolish entire villages because no one lives there anymore.

Everyone who can moves to Tokyo, and prices there are insane.

In the US, if we had 288 million homes, the big question would be ‘where?’.

We already have millions of acres of land with literally no zoning rules at all. Even Greenlee County Arizona (1500 sq miles) is more than enough.

No one would want to though, because it’s not the place people want to live.

You’re fighting a straw man, nobody is arguing you need to do what Japan did verbatim. The only argument I’m making is when you allow supply and demand to meet prices stop going up. All the rest is narrative.

The answer to where is “up.”

Also the prices in Tokyo aren’t insane at all they’re super affordable by any standard.

That is not at all reflective of reality.

https://japanpropertycentral.com/tag/tokyo-apartment-prices/

Tokyo prices are running 908k yen/square meter, or $685 square foot. While manhattan real estate is $1.5k/sq Ft and San Francisco $1k/sq ft - median incomes are dramatically lower in Japan, as is purchasing power, with the median Tokyo income being only $66k/yr.

There is a reason the stereotypical apartment in Tokyo is tiny - on average 65 square meters (700 square feet), of which only 41 square meters (441 square feet) is livable space.

That’s often for more than one person.

Outside of Tokyo, property is nearly free. Inside Tokyo it’s expensive, crowded, and tiny.

Looking at the national stats, it roughly averages out.

But that isn’t this utopia you seem to think is occurring.

So at $685 (1/3 of Manhattan and 1/2-1/3 of SF) there are also units that are somewhat smaller. Just like in Europe. Sounds pretty darn affordable. Meanwhile in SF if you can’t afford the units that are larger by regulation you can live 2h outside of town. The whole point is folks can live in the metro, and live well. And despite that prices haven’t changed in nominal terms in 30 years - meaning slightly cheaper each year. Not everyone can afford the home of their dreams right now but it shouldn’t be between that and homelessness or a 2h commute.

You've skipped over the criticism.

Put a billion houses on Jupiter, and their value will be zero, while new york remains expensive

But if you put a billion houses on Manhattan their value will be zero. There's almost an unlimited amount you can build up. The problem is we're currently putting houses on Jupiter instead of Manhattan through arbitrary restrictions on density. There's single-family zoning in San Francisco! 94% of San Jose. 15% of NYC (25% if you include single and two-family zoning). It's wild. [1] And that's if you can even get the city to approve your development regardless of zoning, parking minimums, etc.

[1] https://www.nytimes.com/interactive/2019/06/18/upshot/cities...

If you put a billion houses on Manhattan, MOST of those billion houses would be worth nothing, and the ones where people wanted to be (which is probably not Manhattan if a billion houses were blocking out the light - but I digress) would still be expensive.

The price of a house in the middle of nowhere is labor + materials. The closer you get to a population center (where people want to be) it becomes labor + materials + property value, where property value increases non-linearly. At the center it becomes labor + materials + property value + zoning overhead. Zoning overhead grows as more people are involved in the process.

I don't think you'll ever get much cheap housing, unless you build a ton along the periphery of a population center (which people don't want). You'd have to build at least 20% more housing for the price to drop 10%, and most of that housing will be where people don't want to live.

It’s the freeway fallacy though.

Zoning ‘overhead’ is people trying to control perceived negative effects and assert boundaries on what they will and will not accept.

Building more freeways doesn’t result in lower traffic for any length of time, because traffic increases based on available capacity in high demand areas.

If we put a billion houses on Manhattan (somehow), there would still be ‘in’ and ‘out’ areas with high prices and restrictions, with those high prices driven by managed scarcity.

Because being selective is a large part of HOW an area becomes and stays desirable. It’s not possible for one to stay that way for long without some attempt to defend itself, in my experience.

Saying ‘prices wouldn’t be high and we could all have what we want if we just got rid of zoning’ doesn’t reflect what is really going on.

Now, busting the worst offenders with artificial scarcity, like monopoly/trust busting, could easily have a lot of value as it has gotten over the top in a lot of areas.

But frankly, remote work and increasing costs of funding should do a lot of that anyway here soon.

People being dead also means that people aren't working to provide those services and goods

Those people stopped providing those goods or services decades beforehand though (retirement), while still spending money.

Homes are not assets in Japan, they are liabilities.

They only depreciate

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