Also what i find very interesting about this topic is how demographics plays into this
i personally think that the UN predictions about how the population numbers are going to evolve are utter bullshit. it is well known that the population pyramid looks something like this:
and it’s going to get thinner and thinner at the bottom as time progresses.
anyways, i think a lot of organizations that could build housing are a bit reluctant mostly for that reason. a company thinks “if i build a house today, there’s a good chance that there won’t be demand for that house in 30 years, so it might not pay off”. and municipalities, i’m afraid, are way too under-invested in building social housing in general because that would be communism or sth.
after a quick search on the internet, about 1.6 million people live in public housing in the US in 2024. that’s about 0.5 percent. Source
Meanwhile in Europe, about 9.3% (45 million people) people live in public housing according to this article, with some countries like Austria having 24%. (8% of EU according to this OECD study).
anyways, i think a lot of organizations that could build housing are a bit reluctant mostly for that reason. a company thinks “if i build a house today, there’s a good chance that there won’t be demand for that house in 30 years, so it might not pay off”.
First of all, that would only apply to companies with a build-and-hold business model, not to ones that develop a property and then sell it off to owner-occupants. Clearly, there do exist people who want to be owner-occupants, so the real issue is how to construct the regulations etc. to incentivize the latter business model.
Second, even build-and-hold companies wouldn’t give a fuck about 30 years from now; the asset would be fully depreciated by then anyway. If you’re in business to make a profit, you’re looking to do it way sooner than 30 years.
First of all, that would only apply to companies with a build-and-hold business model, not to ones that develop a property and then sell it off to owner-occupants. Clearly, there do exist people who want to be owner-occupants, so the real issue is how to construct the regulations etc. to incentivize the latter business model.
fair point. i had completely not considered that. especially as we were discussing blackrock which is a buy-and-hold business model.
Also what i find very interesting about this topic is how demographics plays into this
i personally think that the UN predictions about how the population numbers are going to evolve are utter bullshit. it is well known that the population pyramid looks something like this:
and it’s going to get thinner and thinner at the bottom as time progresses.
anyways, i think a lot of organizations that could build housing are a bit reluctant mostly for that reason. a company thinks “if i build a house today, there’s a good chance that there won’t be demand for that house in 30 years, so it might not pay off”. and municipalities, i’m afraid, are way too under-invested in building social housing in general because that would be communism or sth.
after a quick search on the internet, about 1.6 million people live in public housing in the US in 2024. that’s about 0.5 percent. Source
Meanwhile in Europe, about 9.3% (45 million people) people live in public housing according to this article, with some countries like Austria having 24%. (8% of EU according to this OECD study).
First of all, that would only apply to companies with a build-and-hold business model, not to ones that develop a property and then sell it off to owner-occupants. Clearly, there do exist people who want to be owner-occupants, so the real issue is how to construct the regulations etc. to incentivize the latter business model.
Second, even build-and-hold companies wouldn’t give a fuck about 30 years from now; the asset would be fully depreciated by then anyway. If you’re in business to make a profit, you’re looking to do it way sooner than 30 years.
fair point. i had completely not considered that. especially as we were discussing blackrock which is a buy-and-hold business model.