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It's just a hunch but I suspect that induced demand[1] works similarly in the housing market as it does with traffic, at least for otherwise desirable areas lik

It's just a hunch but I suspect that induced demand[1] works similarly in the housing market as it does with traffic, at least for otherwise desirable areas like Los Angeles/Southern California. "Build more housing" will tend to make developers very wealthy while doing relatively little to reduce rents or property prices, just like "build more roads" doesn't help traffic. 1. https://en.wikipedia.org/wiki/Induced_demand https://en.wikipedia.org/wiki/Induced_demand

pfranz 10y ago
I've heard that brought up a lot with road expansions. What I haven't heard (and would assume) is that even if the delays stayed consistent your throughput (therefore economy) grows after the expansion, right?
- HillaryBriss 10y ago
  Just growing the economy (as "economy" is currently defined) may well leave people less happy, with less access to services and infrastructure because the government has failed to keep up. Just being in a "larger economy" may mean each person is burdened with more air pollution (e.g. China and India) and more crowded conditions than when the economy was smaller, while reducing access to various natural attractions (e.g. beaches, forests, open spaces). Where are the economic models that take these sorts of economic costs to people into account? I'm often surprised so many people are persuaded to embrace various policy positions by general statements to the effect of "studies say this increases GDP." As in the old saying "War is much too important to be left up to the generals", it seems the economy is too important to be left up to the economists.
  - pfranz 10y ago
    If they chose to expand the road, the assumption is that they considered the obvious cons (displacement during construction, cost of land and labor for construction, added pollution and noise, change in demographics, etc) and were hoping for the obvious pros (reducing traffic). I always hear people quick to say it won't reduce traffic, but I never hear alternatives that are proven to work. By dismissing expanding a road over that one thing, they also seem to dismiss the other pros (I mentioned possible gains in economic throughput) and the cost of inaction.
- roel_v 10y ago
  Throughput does not directly equate economy. More roads leads to more scattered land use, and there is no 1:1 relation between land use patterns and economic productivity (additionally, there are many other aspects to this like qol and environmental concerns).
  - pfranz 10y ago
    Well, yeah, what I said was a simplification and an assumption. Throughput doesn't directly equate to economy, but it's one of many tools that could be used of the goal is growing the economy and needs to be balanced against other factors. Maybe I should have elaborated more in my reply. My point was that I've heard that argument /a lot/ but I never hear alternatives or what I feel like is an honest discussion (maybe I'm just out of the loop). The scenario usually starts with, "a road is busy and citizens what something done about it." The obvious choice is to expand the road. This obvious response is, "that won't fix traffic." What I'm saying is there are other reasons to expand and I also haven't heard alternatives to expanding the road that are any more proven to work--which I'm genuinely curious about.
    - roel_v 10y ago
      The key is reframing 'mobility' as 'accessibility'. The fundamental 'solution' (although I dislike that word because it implies a global maximum) is different planning and incentivizing users of infrastructure to make choices that better align with the common good; put less nice, to force them to internalize their costs. There are two goals that are in direct conflict in your scenario: one is 'keeping voters happy', the other is 'make efficient use of infrastructure, and minimize externalities of transport' (this goes for other issues as transport, for example water management, but let's keep it concrete for now). The 'solution' in your example is simple, from an engineering point of view: toll roads, congestion charges, smaller and more dispersed schools and healthcare facilities, denser residential development in fewer urban centers (=less sprawl), and a bunch of other, smaller measures. Obviously this is impossible (no single administrative unit can do all or even several of those things), as well as too slow (we're talking 5-10 year implementation timelines, + another 5 or 10 for the effects to really set in). It's all about trade offs, and stopgap measures to keep things rolling in the mean time. I've been on all sides of this: informing the public about these things (haha good luck, even the 'average' citizen who has time to get involved in this is a raging lunatic, in my experience - let alone the real troublemakers), convincing policy makers to (also) look at the long term, infrastructure builders/maintainers who are essentially firefighting most of the time, ... One of my former colleagues wrote his PhD thesis on the effect of remote working on transport demand; if you're really interested, email me and I'll see if I have a pdf somewhere. (I've been working in this field for 15+ years, which is not to say that I know everything or even that that means that I'm right at all, but I've thought about this longer and harder and studied it more rigorously than 99.9999% of the population)
spinlock 10y ago
Induced demand in housing would require people to buy second or third homes because they were affordable. So long as people are only buying or renting one home, there is no induced demand from housing stock.
- toomuchtodo 10y ago
  Perhaps its because those who can afford to buy due to their socioeconomic status can vacuum up properties at cheap interest rates, and then profit by renting to those who can't afford to buy? One part of the solution is to drastically curtail subsidies for landlords (depreciation/mortgage interest deduction)
- bkeroack 10y ago
  The induced demand does not come from those who already live in the area buying/renting multiple units but from new people migrating in (that's why I included the "...otherwise desirable areas like [LA/SoCal]" in my original comment). For areas like LA, you can assume that there is a very large pool of people with at least some desire to migrate in (just like NYC, Chicago, etc). One of the primary throttling influences on this migration is the cost of housing, just like one of the primary throttling influences on "Will I drive to location X" is "how bad is traffic between here and there?" (what is the cost of driving). Increase the housing stock (build more roads) and it will almost immediately be soaked up by those eager to migrate in (drive), before it has the chance to sit on the market for a while and exert downward pressure on prices.

pfranz 10y ago

I've heard that brought up a lot with road expansions. What I haven't heard (and would assume) is that even if the delays stayed consistent your throughput (therefore economy) grows after the expansion, right?

HillaryBriss 10y ago
Just growing the economy (as "economy" is currently defined) may well leave people less happy, with less access to services and infrastructure because the government has failed to keep up. Just being in a "larger economy" may mean each person is burdened with more air pollution (e.g. China and India) and more crowded conditions than when the economy was smaller, while reducing access to various natural attractions (e.g. beaches, forests, open spaces). Where are the economic models that take these sorts of economic costs to people into account? I'm often surprised so many people are persuaded to embrace various policy positions by general statements to the effect of "studies say this increases GDP." As in the old saying "War is much too important to be left up to the generals", it seems the economy is too important to be left up to the economists.
- pfranz 10y ago
  If they chose to expand the road, the assumption is that they considered the obvious cons (displacement during construction, cost of land and labor for construction, added pollution and noise, change in demographics, etc) and were hoping for the obvious pros (reducing traffic). I always hear people quick to say it won't reduce traffic, but I never hear alternatives that are proven to work. By dismissing expanding a road over that one thing, they also seem to dismiss the other pros (I mentioned possible gains in economic throughput) and the cost of inaction.
roel_v 10y ago
Throughput does not directly equate economy. More roads leads to more scattered land use, and there is no 1:1 relation between land use patterns and economic productivity (additionally, there are many other aspects to this like qol and environmental concerns).
- pfranz 10y ago
  Well, yeah, what I said was a simplification and an assumption. Throughput doesn't directly equate to economy, but it's one of many tools that could be used of the goal is growing the economy and needs to be balanced against other factors. Maybe I should have elaborated more in my reply. My point was that I've heard that argument /a lot/ but I never hear alternatives or what I feel like is an honest discussion (maybe I'm just out of the loop). The scenario usually starts with, "a road is busy and citizens what something done about it." The obvious choice is to expand the road. This obvious response is, "that won't fix traffic." What I'm saying is there are other reasons to expand and I also haven't heard alternatives to expanding the road that are any more proven to work--which I'm genuinely curious about.
  - roel_v 10y ago
    The key is reframing 'mobility' as 'accessibility'. The fundamental 'solution' (although I dislike that word because it implies a global maximum) is different planning and incentivizing users of infrastructure to make choices that better align with the common good; put less nice, to force them to internalize their costs. There are two goals that are in direct conflict in your scenario: one is 'keeping voters happy', the other is 'make efficient use of infrastructure, and minimize externalities of transport' (this goes for other issues as transport, for example water management, but let's keep it concrete for now). The 'solution' in your example is simple, from an engineering point of view: toll roads, congestion charges, smaller and more dispersed schools and healthcare facilities, denser residential development in fewer urban centers (=less sprawl), and a bunch of other, smaller measures. Obviously this is impossible (no single administrative unit can do all or even several of those things), as well as too slow (we're talking 5-10 year implementation timelines, + another 5 or 10 for the effects to really set in). It's all about trade offs, and stopgap measures to keep things rolling in the mean time. I've been on all sides of this: informing the public about these things (haha good luck, even the 'average' citizen who has time to get involved in this is a raging lunatic, in my experience - let alone the real troublemakers), convincing policy makers to (also) look at the long term, infrastructure builders/maintainers who are essentially firefighting most of the time, ... One of my former colleagues wrote his PhD thesis on the effect of remote working on transport demand; if you're really interested, email me and I'll see if I have a pdf somewhere. (I've been working in this field for 15+ years, which is not to say that I know everything or even that that means that I'm right at all, but I've thought about this longer and harder and studied it more rigorously than 99.9999% of the population)

spinlock 10y ago

Induced demand in housing would require people to buy second or third homes because they were affordable. So long as people are only buying or renting one home, there is no induced demand from housing stock.

toomuchtodo 10y ago
Perhaps its because those who can afford to buy due to their socioeconomic status can vacuum up properties at cheap interest rates, and then profit by renting to those who can't afford to buy? One part of the solution is to drastically curtail subsidies for landlords (depreciation/mortgage interest deduction)
bkeroack 10y ago
The induced demand does not come from those who already live in the area buying/renting multiple units but from new people migrating in (that's why I included the "...otherwise desirable areas like [LA/SoCal]" in my original comment). For areas like LA, you can assume that there is a very large pool of people with at least some desire to migrate in (just like NYC, Chicago, etc). One of the primary throttling influences on this migration is the cost of housing, just like one of the primary throttling influences on "Will I drive to location X" is "how bad is traffic between here and there?" (what is the cost of driving). Increase the housing stock (build more roads) and it will almost immediately be soaked up by those eager to migrate in (drive), before it has the chance to sit on the market for a while and exert downward pressure on prices.