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The correct thing to do is build a shit ton of housing. But that will never happen politically. So I was simply offering a solution that might be attainable.

by johnrob 11y ago

rm_-rf_slash 11y ago
Wrong, building housing as a means to reduce housing prices is a huge misconception. If a low-rise neighborhood sees the construction of a mid-rise condo building, you've suddenly raised the opportunity cost of not having dense housing, and prices go up regardless. EDIT: Apparently I'm being downvoted without comment. Great way to further the dialogue. Well, I will: I live in a college town and when developers promised a decade ago that replacing houses with high rises would lower housing prices, well, they built the apartment blocks and prices still went up across the board, by a lot. I'm not talking out of my ass, here.
- maccam94 11y ago
  As long as demand outstrips supply, prices will go up. How much depends on how big the gap is. Government action can try to limit this (subsidizing construction in nearby areas, improving public transit to areas with more room to build, slashing police budgets to increase the crime rate....) but it only works if it can shift the demand.
  - politician 11y ago
    > slashing police budgets to increase the crime rate [to reduce housing prices] That sounds interesting -- can you point me to any documentation about this practice, or are you just brainstorming?
- Decade 11y ago
  It's simply a matter of supply-and-demand economics. Supply is going up, but demand is going up even faster, like one or two orders of magnitude faster. San Francisco's population has been growing at about 900 people per month for the past few years. San Francisco's housing stock has been growing at about 150 units per month. Approving new housing is way too hard, and the economically illiterate voters just throw up even more roadblocks to housing (e.g. Proposition B, passed by 14% of San Francisco's registered voters in a very-low-turnout June 2014 election). Tall buildings also cost more per unit to build, which needs to come out in the price. But the way I see it, 1 unit of rich person living in a luxury condo is 1 unit of rich person not out-competing a middle-class family for a little house in a boring neighborhood.
  - rm_-rf_slash 11y ago
    Again, the reasonable expectation and misconception. When you have a remarkably elastic demand for housing (tech workers and college students WILL pay), then it signals to property owners that they can raise rates by a few ticks. Like I mentioned above, if you create a ton of prime housing stock and charge a ton to live there, then you've effectively moved the goalposts and set the new normal for rent. So while that rich person may not live in the boring neighborhood, the middle class family will have to pay more to live there because of the presence of proximate wealth.
    - Decade 11y ago
      Economic illiteracy, Exhibit A. The definition of elastic demand is that there is change in demand given a change in price. College students and tech workers, who will pay anything for their place, are examples of demand inelasticity. The demand keeps going up, despite the price. Though, I suppose you have a point, considering the global market. There are enough houses in the United States for everybody to live. It’s just that more people want to live in the Bay Area than in Detroit, so we’re double- and quadruple-packed here while entire neighborhoods go empty there. And then, skyrocketing house prices attract speculators, who will bid against people who actually belong here and keep the price rising as long as possible.
- pm24601 11y ago
  The missing bit is that that first dense housing signals unmet demand. The real keys are: 1. is to keep on going with the dense housing to saturate. 2. a city council that insists on below-market-rate housing be included with the development 3. layer cake development: bottom floor is retail, middle is office, top floors are apartments/hotels + below market rate This prevents developers from cherry-picking the highest demand usage for their building at the expense of the total needs of the community.

The correct thing to do is build a shit ton of housing. But that will never happen politically. So I was simply offering a solution that might be attainable.

by johnrob 11y ago

The correct thing to do is build a shit ton of housing. But that will never happen politically. So I was simply offering a solution that might be attainable.

rm_-rf_slash 11y ago

Wrong, building housing as a means to reduce housing prices is a huge misconception. If a low-rise neighborhood sees the construction of a mid-rise condo building, you've suddenly raised the opportunity cost of not having dense housing, and prices go up regardless. EDIT: Apparently I'm being downvoted without comment. Great way to further the dialogue. Well, I will: I live in a college town and when developers promised a decade ago that replacing houses with high rises would lower housing prices, well, they built the apartment blocks and prices still went up across the board, by a lot. I'm not talking out of my ass, here.

maccam94 11y ago
As long as demand outstrips supply, prices will go up. How much depends on how big the gap is. Government action can try to limit this (subsidizing construction in nearby areas, improving public transit to areas with more room to build, slashing police budgets to increase the crime rate....) but it only works if it can shift the demand.
- politician 11y ago
  > slashing police budgets to increase the crime rate [to reduce housing prices] That sounds interesting -- can you point me to any documentation about this practice, or are you just brainstorming?
Decade 11y ago
It's simply a matter of supply-and-demand economics. Supply is going up, but demand is going up even faster, like one or two orders of magnitude faster. San Francisco's population has been growing at about 900 people per month for the past few years. San Francisco's housing stock has been growing at about 150 units per month. Approving new housing is way too hard, and the economically illiterate voters just throw up even more roadblocks to housing (e.g. Proposition B, passed by 14% of San Francisco's registered voters in a very-low-turnout June 2014 election). Tall buildings also cost more per unit to build, which needs to come out in the price. But the way I see it, 1 unit of rich person living in a luxury condo is 1 unit of rich person not out-competing a middle-class family for a little house in a boring neighborhood.
- rm_-rf_slash 11y ago
  Again, the reasonable expectation and misconception. When you have a remarkably elastic demand for housing (tech workers and college students WILL pay), then it signals to property owners that they can raise rates by a few ticks. Like I mentioned above, if you create a ton of prime housing stock and charge a ton to live there, then you've effectively moved the goalposts and set the new normal for rent. So while that rich person may not live in the boring neighborhood, the middle class family will have to pay more to live there because of the presence of proximate wealth.
  - Decade 11y ago
    Economic illiteracy, Exhibit A. The definition of elastic demand is that there is change in demand given a change in price. College students and tech workers, who will pay anything for their place, are examples of demand inelasticity. The demand keeps going up, despite the price. Though, I suppose you have a point, considering the global market. There are enough houses in the United States for everybody to live. It’s just that more people want to live in the Bay Area than in Detroit, so we’re double- and quadruple-packed here while entire neighborhoods go empty there. And then, skyrocketing house prices attract speculators, who will bid against people who actually belong here and keep the price rising as long as possible.
pm24601 11y ago
The missing bit is that that first dense housing signals unmet demand. The real keys are: 1. is to keep on going with the dense housing to saturate. 2. a city council that insists on below-market-rate housing be included with the development 3. layer cake development: bottom floor is retail, middle is office, top floors are apartments/hotels + below market rate This prevents developers from cherry-picking the highest demand usage for their building at the expense of the total needs of the community.