Latest news with #BrianPotter
Forbes
3 days ago
- Business
- Forbes
New Studies Explain Why Housing Is So Expensive And Why It Is So Hard To Make It Cheaper
Most Americans—more than 80% in a recent National Association of Home Builders poll—think housing affordability is a problem in their community. Yet despite the widespread agreement that housing is too expensive, it remains difficult for developers to build the housing needed to increase affordability. A few studies in the recent issue of the Journal of Economic Perspectives shed some light on what communities must do to reduce the price of housing and why doing what needs to be done is so hard. The first study examines perhaps the most logical cause of high housing costs—high building costs. The authors, Brian Potter of the Institute for Progress and Chad Syverson of the Booth School of Business, note that building costs account for 60% to 70% of the full cost of bringing a new house to market. If building costs have increased over time, then it would not be surprising to see housing costs go up, too. To track costs, they use housing cost data from RSMeans, a company that has been tracking cost data for the construction industry since the mid-20th century. They find that while building costs have exceeded overall inflation since the mid-1970s, these costs generally do a poor job of explaining housing prices. In a variety of cities over different time periods, growth in housing prices is substantially larger, and sometimes smaller, than growth in building costs. The table below shows the ten cities with the largest deviations in price from building costs over five-year intervals from 2010 to 2024. For example, over the 2020 to 2024 period, housing prices in Miami, FL grew 8.6% faster than building costs, while in Lake Charles, LA prices grew 2.8% slower than building costs. The authors also find that the cost-price relationship has weakened over time. This suggests that something besides building costs is having a growing impact on housing prices. They note that one such factor could be regulations that prevent additional supply in high-demand areas. Building on this first study, the next study by Boaz Abramson of Columbia Business School and Tim Landvoigt of the Wharton School estimates what happens when cities add more supply. They develop a model to evaluate the impacts of different housing policies on housing price-to-income and rent-to-income ratios. They examine a demand-side policy—direct housing subsidy—and two supply-side scenarios: One that increases supply at the top of the market and one that increases supply at the bottom of the market. The results for the subsidy are not what most people would expect. Their model estimates that giving people $100,000 towards the purchase of a house raises prices and worsens affordability when supply is unable to respond to the additional demand the subsidy creates. They also find that the subsidy increases rents, too, since some wealthier people who are indifferent between renting and buying at the higher price enter the rental market and bid up rents. The result is that most people end up worse off. As they say, 'The lesson is that only policies that raise supply (or decrease demand) will make housing more affordable.' Adding supply to the bottom of the market generates better results than the $100,000 subsidy and makes lower-quality housing more affordable, but the best policy according to the model is adding supply to the top. Adding supply to the more expensive end of the market reduces rents and prices across the entire housing-quality distribution. This may seem counterintuitive, but it makes sense. When more expensive housing is added to the market, wealthier people no longer compete with middle- and lower-income people for lower-quality housing. This decrease in demand for housing in the middle and lower end of the market leads to lower prices. As the authors say, 'In short, increasing the supply of housing in the top segment is more effective at reducing house-price-to-income ratios than adding supply in the bottom rental segment.' These modeling results are consistent with other research that shows adding more market rate housing, even expensive housing, improves affordability by allowing the filtering process to work: When wealthier people move into a new house, it frees up their old house for someone with slightly less income, which in turn frees up that person's house, and so on. This process makes it easier for everyone to afford a home. So, if building more housing makes housing more affordable, and there is plenty of evidence that it does, we should be building a lot more housing. But we are not. The third paper by law professor Chris Elmendorf and political science professors Clayton Nall and Stan Oklobdzija helps explain why. This study examines survey data to better understand how people think about the housing market in their communities. One common explanation for why people tend to dislike new development, including new housing, is the homevoter hypothesis. The idea is that homeowners who are also voters tend to have a lot of their wealth tied up in their house, which makes them leery of any nearby development and its associated ills—noise, traffic, loss of views—that may erode the value of their homes. As a result, they stymie new development to protect their largest asset. While this story makes some sense, the authors find little evidence for it in the survey data. For example, the homevoter hypothesis predicts that homeowners prefer higher housing prices since that increases the value of their asset while renters prefer lower prices since they do not get the benefit of asset appreciation. But in their survey, they find that 57% of homeowners would prefer prices to fall in the future, not increase. Unsurprisingly, 85% of renters would prefer prices to fall. Instead of the homevoter hypothesis, the authors suggest that the real reason people oppose new development is they do not understand housing markets. Only 35% of respondents correctly predicted that a significant increase in the supply of housing would reduce housing prices, all else equal. Only 31% correctly predicted that an increase in supply would reduce rents. Even more interesting is that this misunderstanding of supply and demand dynamics was unique to housing. As shown in the figure below from the paper, 86% of respondents correctly predicted how supply chain problems in the auto industry would impact used-car prices, while 59% correctly reasoned that better fertilizer would increase crop yields and reduce grain prices. As the authors put it, 'Supply skepticism…is distinctive to housing.' This lack of understanding has a few implications. First, voters who want lower prices will be less willing to support policies that increase housing supply since it is not clear to them that more supply helps. Second, since they do not really understand the forces at work, they will be more likely to support non-supply ideas to lower housing prices, such as rent control or direct subsidies. Sure enough, the authors find that more than 80% of respondents support rent control and down-payment subsidies while less than 55% support supply-side policies like reducing parking minimums or allowing more infill development, despite evidence showing these latter policies help reduce housing prices. A final implication from not understanding how housing markets work is placing blame on the wrong things. In the paper, the authors show that survey respondents were more likely to blame developers and landlords for high housing prices than state or local governments that restrict supply through regulations. This is wrong, but it helps explain why policies like rent control are popular: If voters believe developers and landlords, not supply and demand, control prices, it is not surprising they want government to take that power away though policies like rent control. The big takeaway from these three studies is clear. Building costs are not the main cause of high housing prices in most places. Instead, rules and regulations that restrict the supply of housing, such as minimum lot sizes, parking requirements, and height limits, are what make housing so expensive. Unfortunately, many people who say they want cheaper housing do not really understand how supply and demand work in the housing market. Advocates for more housing must continue to teach policymakers and voters how housing markets work to overcome this barrier. Since most people understand how supply and demand operate in other markets, this may not be as hard as it seems. Either way, there is still a lot of work to do.
Yahoo
06-08-2025
- Entertainment
- Yahoo
'Brian Potter' kicks off over three-month wait to get a sinkhole repaired
Brian Potter's voice is even higher than usual. The Bolton nightclub owner is fuming about a hole in the road. The sinkhole appeared on May 4 and despite dozens of phone calls to Bury Council and United Utilities it has still not been fixed. Now Potter - alias Connor O'Brien, a resident of Wingate Drive in Whitefield - has made a video demanding action. Trained as an actor he has the Peter Kay character's squeaky tones down to a tee. But his message and those of fellow residents in the cul-de-sac is serious. They believe the hole is dangerous and delivery vans to the long road have been unable to get access due to the cavity being surrounded by barriers. READ MORE: LIVE Police descend on Manchester street after body found in alleyway - latest updates READ MORE: 'I never thought for one minute the fire service could do that to my house' Never miss a story with the MEN's daily Catch Up newsletter - get it in your inbox by signing up here In the video Connor is seen in a wheelchair like the Kay character and declares: "We've had this for three months - cars can't get in and out, causing a nightmare. I don't care who's to blame, right, we want a response now". In the clip he is then seen in the hole on top of his wheelchair, and says "Christ almighty look what's happened. I was driving my chair and fell in - get it sorted." Connor said: "What motivated me to do it was how much upset it has caused my neighbours in the street. Residents were getting wound up and no one seemed to be taking responsibility for it. I am not very academic, so instead of writing emails I thought the only way I can help is injecting a bit of light hearted banter on social media. "I was given a wheelchair through a theatre company. I think Potter's message to Bury Council and United Utilities would be 'get my hole filled in. Potter's barmy army, you have got to be on it.' "It is a bit of comedy but there is a serious message. The cavity is falling in and it is a danger to pedestrians and drivers. I have and agent and went to drama school in London but actually worked in stage management in the West End. Then I went on the cruise ships as a host and thought I would never work backstage again." Resident Sue Stott has kept a diary of the "farce" involving the hole. It was discovered by children on May 4th and reported to Bury council the next day. Bury council sent out a team on June 3rd who said it was a "sewer" problem. The council did replace a bollard placed around the hole after it was clipped and damaged by a lorry trying to get past. Sue's diary records numerous phone calls from several neighbours to both the council and United Utilitiesover the last three months. In one entry for July 1st a member of staff from United Utilities said they had been given no notice of the work by the council. A team from United Utilities did come out on July 18th but the hole has still not been repaired. Three local councillors and MP Christian Wakeford have contacted both the council and United Utilities in a bid to get the job done. Sue said: "People in the street did think of stopping paying their council tax and United Utilities bills. But although they are not helping us, we didn't want to break the law. "I spoke to United Utilities this week. I said I wanted to put in a complaint and he said he would ring me back by Thursday (this week). I said do you realise the hole is in-filling. It is coming from the sides and therefore the tarmac underneath on either side could be going down. This is a dangerous hole. He said he would upgrade it and be back to me by 8pm tonight." Yesterday one resident had to put the barriers back in place as they had been blown down by heavy winds. "But vehicles going past are nudging them into the hole to get through," said Sue. "There must be some conversation between them (the council and United Utilities) to ease getting it done. Why is there not a system in place for communication? Talk to each other." A couple of hours after the Manchester Evening News made inquiries about the fiasco workmen from United Utilities arrived at the hole and erected different yellow barriers with the notice "We're working on the sewer pipes". But no work commenced. Join the Manchester Evening News WhatsApp group HERE A spokesperson for Bury Council said: "It is not for us to fix. United Utilities have accepted responsibility." In a message on social media United Utilities have told one resident in the street: "Hi, thank you for getting in touch. I have just been speaking with another resident in the area about the same issue. We're currently planning a date for us to carry out the repairs, and the job reference is 07899881. Thanks." But the resident replied:"You now appear to accept responsibility but give no timeline to repair, it's already been 3 months!!! This is an accident waiting to happen, photo taken today showing the barriers moved in the wind leaving open hole which could easily been missed in the dark!" A United Utilities spokesperson said: 'We apologise to residents of Wingate Drive for the delay in dealing with this and for any inconvenience caused. Our team has attended this afternoon to carry out further investigations and get our safety barriers in place to ensure the necessary repair work can be delivered as quickly as possible.'
