Tag: ft

• Why you can’t price-control your way out of a housing shortage

  Spain has one of the lowest homebuilding rates in Europe. Over the last decade, it has barely expanded its housing supply, according to this recent FT article by John Burn-Murdoch.

  When you layer on increased immigration, rising tourism, and growing housing demand from digital nomads and others, you naturally get an environment where rents outstrip income growth. According to the same article, more than 50% of young Spanish adults (aged 18-34) now live with their parents!

  The knee-jerk reaction to all of this by most governments is stronger rent controls. Rents are growing too quickly, so let’s just block them from doing that, right? While this certainly does help the already housed, study after study shows that it has negative consequences for the broader housing market.

  

  Non-controlled rents go up, overall housing quality drops, and, perhaps most importantly, new housing supply goes down, further exacerbating the initial problem it’s trying to solve.

  You can’t intervene in the market and not expect there to be second- and third-order consequences. In this case, it’s akin to telling a group of kids there’s an ice cream shortage, fixing the price below the cost of production for the few who do have access, and then wondering why other ice cream trucks don’t show up to service the unmet demand.

  Spain doesn’t seem to get this, but other markets appear to. According to Burn-Murdoch, Ireland recently “watered down rent controls over concerns they were contributing to weak rates of new construction in the rental sector.”

  It needs to be understood that there are no shortcuts to solving housing crises. You need to start from first principles and do the hard work of building housing.

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  Diagram by John Burn-Murdoch via the FT

  2026.10.03

• Why is housing viewed so differently?

  Here is a study by three researchers out of California that asked Americans to predict the impact of a supply shock on various things, such as durable goods, commodities, labor, trade, and yes, housing.

  For basically all of these items, people tended to answer correctly. Usually by a factor of at least two to one. In other words, when asked what reducing the supply of new cars would do to the prices of used cars, the majority of people responded saying that it would lead to an increase in prices.

  However, when asked about the impact of a 10% increase in housing supply, about 40% said that it would cause prices and rents to rise. Only about a third believed they would fall (the correct answer). This is fascinating because it shows that housing seems to be an outlier. Most people don’t have the same intuitive sense.

  

  Why is this? Well, one commonly held belief is that building market-rate housing leads to gentrification, and that this ultimately leads to the displacement of existing residents. This might have been why some people responded saying that new housing will cause an increase in prices and rents. It’ll lead to all housing going up.

  However, there’s research to support that this isn’t the case. The problem isn’t outward displacement following new market-rate housing. The greatest driver of gentrification is actually “exclusionary displacement”, which is the inability of people to move into areas because of a lack of housing. (This study was based on 2010-2014 housing data from the UK.)

  The thing about housing supply is that it relieves pressure across the entire market. Instead of a high-income person buying an old home to renovate (and causing outward displacement), they can instead choose to buy a new home (and not cause any outward displacement).

  By doing this, they also leave behind a home that can then be absorbed by lower earners. One US study found that for every 100 new market-rate homes that are built, somewhere between 45 and 70 people move out of a below-median income neighborhood.

  

  It is for reasons like these that, time and time again, increased housing supply has been shown to moderate home prices and rents (see above regarding Minneapolis and the Midwest as a whole). So if you’re worried about the cost of housing, the answer is to build more. And if you’re worried about gentrification, the answer is also to build more.

  Our intuitions are telling us that this is true for most things. But for whatever reason, housing feels different. It’s not, though.

  Source: The charts and studies in this post are from this great FT article by John Burn-Murdoch.

  2023.09.16

• Apple now owns 7,376 acres of land

  In 2011, Apple owned 584 acres of land.

  As of this year, and according to the Financial Times, the company now owns about 7,376 acres. 

  

  Apple uses its “facilities and land for corporate functions, R&D and data centres.” The latter would include server farms for its various online services, such as iMessage, Apple Music, and the App Store.

  It can be easy to think of “the cloud” and the online services we use every day as existing only in some ethereal world up in the sky or in a distant land.

  But the reality is that these services have very real physical space requirements. The above chart begins to speak to that.

  2018.11.10