Very strong. What’s being priced here isn’t housing or land in the abstract, but access to dense coordination, jobs, time, matching, and institutional proximity because we’ve frozen the systems that once allowed those benefits to scale.
That’s why aggregate supply metrics miss the problem: the constraint is local, not national. Upzoning alone underperforms when land remains a speculative asset, since added capacity gets capitalized into prices rather than affordability.
Land value taxation and leasing matter because they convert land from a hoarded option into a productive input. In that sense, this isn’t just a housing crisis, it’s a coordination crisis expressed through land.
The inconvenience and exorbitant expense related to congestion on the roads could be reduced if numerous individual entrepreneurs, as distinct from 'single developers' had the the freedom to create, relatively self sufficient communities where the periphery is within walking distance of the core. Zoning would have to be abandoned and the idea of town planning consigned to the dustbin of history as an instance of the silliness that results from institutionalizing the idea of separating the rich from the poor. A feature of each village would be its educational institutions and playing fields. As cars disappeared, public space would be seen to be an asset that is with investing in because it is of greater importance to lifestyle than the 'residence'. The public space is that outside space that comes alive as an expression of communality. Many would choose to live in two story dwellings with working space below and bedrooms and ablutions above. Eating under the sky would become a popular way to meet and greet. People would take an interest in what happens in schools and the duality of private and public schools would be seen to be a mistake. Ideally the land component would be leased. Buildings would be constructed in factories and transported to site, designed to endure for the length of the lease and to be replaced with something better adapted to the mode of living of a day thirty years hence. The Japanese seem to have the right approach.
Great post. You might be interested in this paper from a couple years ago, which basically tells the same story but from a more recent land conservation perspective using data on farm/forest conversion. The upshot is that the rate of new development declined precipitously between 2000-2015, which, like your narrative, we associate with stagnant income growth and costlier commutes. I’m interested to see if the rise of remote work post-pandemic may have counteracted this trend in a meaningful way.
Both old and recently inaugurated! We use real estate as an investment vehicle in Panama. Like in NYC or Miami, rich people abroad take their money out of their country — for whatever reason — and stash it in a prime-location apartment in Panama City. At minimum, it’s a dollar-denominated asset that (supposedly) will keep/increase its value
Thanks,this was a marvelous essay. One solution I'd like to add is social housing. The city builds it and rents it for low income affordability. It'll not only allows people to live near their jobs, it lowers prices in the market overall.
Interesting. What about the increase in demand caused by wealthy people buying second, third, fourth houses as alternative investment? That's what I see happening in my area.
This behavior would no longer be incentivized if we shifted our tax base from production/consumption/investment to land value - home would no longer be an appreciating asset on its own, and would only be a useful purchase if you yourself plan to use it productively.
I looked into this and found no evidence that there has been a steady increase in this trend to explain the housing crisis we are in. I do think in certain vacation towns this does price folks out but outside of certain local issues I am not sure this explains the current situation
Hmm, interesting. I live in rural Vermont, but house prices are insane. I noticed that on my road, typical rural Vermont road, definitely not ski-area-adjacent, of the twenty houses, 10% were short term rentals and another 10% were second homes empty except when the owner was there. I asked both the VT Tax dept. and my local town clerk if they had stats for how unoccupied second home ownership had changed over the years and they both said that they don't have that kind of data (hunting camps, condos, four season non-primary residence homes, sugarhouse (for making maple syrup) etc. all get categorized the together). There is some US Census data, but it seems mostly like extrapolations and not that reliable.
I think they're less likely to significantly improve congestion since each car needs a certain amount of space in between cars to be able to brake anyway. If you assume 3 seconds to brake that caps all cars on a lane at 1200 an hour not including things like mergers or lane transfers to enter and exit.
I tend to agree, I am a. a huge fan of self driving cars, but b. not sure they relieve our roads significantly since the roads are already at capacity during peak times.
However, maybe folks would be willing to live say 2 hours out from work and do 2 hours of work in a car, hence significantly expanding the suburban frontier. I am not sure that would be the case.
With housing prices skyrocketing in denser areas I think there’s a case that people’s preferences are living in areas dense enough to have lots of amenities but we still want to have the larger suburban style homes. Longer commutes to not only work but also those amenities feel hard to imagine. I think evidence for people prioritizing amenities or communities are the young people who work from home often, but still want to be in cities.
Even if self driving cars make commuting less bad, that just increases the value of those previously inconvenient locations, and that increased value will quickly get baked into rents and home values. We’ve already seen this with remote work.
(Your last sentence indicates that you probably agree but I think it’s still worth making this point explicit since a lot of non-Georgists genuinely do think we should solve the housing crisis by leveraging technology to enable sprawl).
It seems to me that some of the "de-densification" talk mixes together two things. The number of people per acre is the number of people per housing unit multiplied by the number of housing units per acre. You mention some of the constraints on the number of housing units per acre, but these become more stringent when there's a parallel decline in the number of people per housing unit (caused by a combination of families having fewer children, people living as singles for longer before forming couples, and things like that.
There's also a separate more recent factor as people do a lot more work from home, and thus often want larger residences so that they can have some dedicated work space at home.
Was going to make a similar comment. Households on average contain far fewer people than they used to. In terms of increasing housing density, there’s some low hanging fruit if more people would be willing to consider co-living, having a roommate, etc.
(I’m not disagreeing with the overall piece just elaborating on one piece)
The change in household size fell quite dramatically in the 60's to 90's but has remained relatively consistent since then. That change is initially caused by those same cultural factors. But it is curious as to why the trend evened out over the past decades which I think is a cause of single people doubling up as opposed to living alone.
This also means there's an interesting point to be made which is that in an urban area, building new buildings may increase the share of households choosing not to double up.
Yeah those are interesting points and questions. From other charts I've seen, I think that (on average) housing spaces have grown larger since the 90s, meaning that while household size is remaining steady, each individual person is using more space than used to be the case. A lot of this is due to cultural preference, need to work from home, and other factors, but again I think some folks would benefit from sharing this extra housing space with other folks (which would then free up other housing units for other people).
I'd have to dive deeper, but my speculation is that trend is largely in suburban areas, and is caused in part by the credit chart you see in this post.
We have stopped financing families in the medium-good credit range (700-760) and therefore, the smaller suburban houses were less profitable and less demand for home builders. Kevin Erdmann (linked in article) makes this article a bit persuasively.
Therefore, we made larger homes. Many folks in housing talk about the lack of starter homes (small houses that fulfill the functions that a family needs) which once existed for families to enter into homeownership. The lack is perhaps caused by lack of financing for those families.
Doing the research for this article and thinking through this problems has indeed been interesting!
I wonder if a big issue is simply that too much land in cities has become locked into low density that is hard to address so long as this is across many small lots. Upzoning should incent some redevelopment but in a pretty indirect and inefficient way where a lot of windfall gains accrue to people fortunate enough to own the homes currently
Very strong. What’s being priced here isn’t housing or land in the abstract, but access to dense coordination, jobs, time, matching, and institutional proximity because we’ve frozen the systems that once allowed those benefits to scale.
That’s why aggregate supply metrics miss the problem: the constraint is local, not national. Upzoning alone underperforms when land remains a speculative asset, since added capacity gets capitalized into prices rather than affordability.
Land value taxation and leasing matter because they convert land from a hoarded option into a productive input. In that sense, this isn’t just a housing crisis, it’s a coordination crisis expressed through land.
The inconvenience and exorbitant expense related to congestion on the roads could be reduced if numerous individual entrepreneurs, as distinct from 'single developers' had the the freedom to create, relatively self sufficient communities where the periphery is within walking distance of the core. Zoning would have to be abandoned and the idea of town planning consigned to the dustbin of history as an instance of the silliness that results from institutionalizing the idea of separating the rich from the poor. A feature of each village would be its educational institutions and playing fields. As cars disappeared, public space would be seen to be an asset that is with investing in because it is of greater importance to lifestyle than the 'residence'. The public space is that outside space that comes alive as an expression of communality. Many would choose to live in two story dwellings with working space below and bedrooms and ablutions above. Eating under the sky would become a popular way to meet and greet. People would take an interest in what happens in schools and the duality of private and public schools would be seen to be a mistake. Ideally the land component would be leased. Buildings would be constructed in factories and transported to site, designed to endure for the length of the lease and to be replaced with something better adapted to the mode of living of a day thirty years hence. The Japanese seem to have the right approach.
Great post. You might be interested in this paper from a couple years ago, which basically tells the same story but from a more recent land conservation perspective using data on farm/forest conversion. The upshot is that the rate of new development declined precipitously between 2000-2015, which, like your narrative, we associate with stagnant income growth and costlier commutes. I’m interested to see if the rise of remote work post-pandemic may have counteracted this trend in a meaningful way.
https://iopscience.iop.org/article/10.1088/1748-9326/ac4537
Great stuff! I’ve also been arguing for an LVT for Panama on my Substack. We literally have rows of high-rises with hardly any occupied apartments
Interesting, why were they built and why can't they be filled? Are they dated or new?
Both old and recently inaugurated! We use real estate as an investment vehicle in Panama. Like in NYC or Miami, rich people abroad take their money out of their country — for whatever reason — and stash it in a prime-location apartment in Panama City. At minimum, it’s a dollar-denominated asset that (supposedly) will keep/increase its value
Thanks,this was a marvelous essay. One solution I'd like to add is social housing. The city builds it and rents it for low income affordability. It'll not only allows people to live near their jobs, it lowers prices in the market overall.
Interesting. What about the increase in demand caused by wealthy people buying second, third, fourth houses as alternative investment? That's what I see happening in my area.
This behavior would no longer be incentivized if we shifted our tax base from production/consumption/investment to land value - home would no longer be an appreciating asset on its own, and would only be a useful purchase if you yourself plan to use it productively.
I looked into this and found no evidence that there has been a steady increase in this trend to explain the housing crisis we are in. I do think in certain vacation towns this does price folks out but outside of certain local issues I am not sure this explains the current situation
Hmm, interesting. I live in rural Vermont, but house prices are insane. I noticed that on my road, typical rural Vermont road, definitely not ski-area-adjacent, of the twenty houses, 10% were short term rentals and another 10% were second homes empty except when the owner was there. I asked both the VT Tax dept. and my local town clerk if they had stats for how unoccupied second home ownership had changed over the years and they both said that they don't have that kind of data (hunting camps, condos, four season non-primary residence homes, sugarhouse (for making maple syrup) etc. all get categorized the together). There is some US Census data, but it seems mostly like extrapolations and not that reliable.
self-driving cars a release valve?
- more productivity during commute
- hopefully less congestion via more competent driving
- less demand for parking
Only delays the inevitable ofc.
I think they're less likely to significantly improve congestion since each car needs a certain amount of space in between cars to be able to brake anyway. If you assume 3 seconds to brake that caps all cars on a lane at 1200 an hour not including things like mergers or lane transfers to enter and exit.
I tend to agree, I am a. a huge fan of self driving cars, but b. not sure they relieve our roads significantly since the roads are already at capacity during peak times.
However, maybe folks would be willing to live say 2 hours out from work and do 2 hours of work in a car, hence significantly expanding the suburban frontier. I am not sure that would be the case.
With housing prices skyrocketing in denser areas I think there’s a case that people’s preferences are living in areas dense enough to have lots of amenities but we still want to have the larger suburban style homes. Longer commutes to not only work but also those amenities feel hard to imagine. I think evidence for people prioritizing amenities or communities are the young people who work from home often, but still want to be in cities.
Even if self driving cars make commuting less bad, that just increases the value of those previously inconvenient locations, and that increased value will quickly get baked into rents and home values. We’ve already seen this with remote work.
(Your last sentence indicates that you probably agree but I think it’s still worth making this point explicit since a lot of non-Georgists genuinely do think we should solve the housing crisis by leveraging technology to enable sprawl).
Good post, I wrote quite similar post a year ago
https://substack.com/home/post/p-153865332
It seems to me that some of the "de-densification" talk mixes together two things. The number of people per acre is the number of people per housing unit multiplied by the number of housing units per acre. You mention some of the constraints on the number of housing units per acre, but these become more stringent when there's a parallel decline in the number of people per housing unit (caused by a combination of families having fewer children, people living as singles for longer before forming couples, and things like that.
There's also a separate more recent factor as people do a lot more work from home, and thus often want larger residences so that they can have some dedicated work space at home.
Was going to make a similar comment. Households on average contain far fewer people than they used to. In terms of increasing housing density, there’s some low hanging fruit if more people would be willing to consider co-living, having a roommate, etc.
(I’m not disagreeing with the overall piece just elaborating on one piece)
The change in household size fell quite dramatically in the 60's to 90's but has remained relatively consistent since then. That change is initially caused by those same cultural factors. But it is curious as to why the trend evened out over the past decades which I think is a cause of single people doubling up as opposed to living alone.
This also means there's an interesting point to be made which is that in an urban area, building new buildings may increase the share of households choosing not to double up.
Yeah those are interesting points and questions. From other charts I've seen, I think that (on average) housing spaces have grown larger since the 90s, meaning that while household size is remaining steady, each individual person is using more space than used to be the case. A lot of this is due to cultural preference, need to work from home, and other factors, but again I think some folks would benefit from sharing this extra housing space with other folks (which would then free up other housing units for other people).
Lots to think about..
I'd have to dive deeper, but my speculation is that trend is largely in suburban areas, and is caused in part by the credit chart you see in this post.
We have stopped financing families in the medium-good credit range (700-760) and therefore, the smaller suburban houses were less profitable and less demand for home builders. Kevin Erdmann (linked in article) makes this article a bit persuasively.
Therefore, we made larger homes. Many folks in housing talk about the lack of starter homes (small houses that fulfill the functions that a family needs) which once existed for families to enter into homeownership. The lack is perhaps caused by lack of financing for those families.
Doing the research for this article and thinking through this problems has indeed been interesting!
I wonder if a big issue is simply that too much land in cities has become locked into low density that is hard to address so long as this is across many small lots. Upzoning should incent some redevelopment but in a pretty indirect and inefficient way where a lot of windfall gains accrue to people fortunate enough to own the homes currently