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Perhaps OP never took economics and doesn't understand supply-demand dynamics? Perhaps OP thinks housing doesn't behave like a normal good or perhaps he think

by Kinnard 10y ago

Perhaps OP never took economics and doesn't understand supply-demand dynamics? Perhaps OP thinks housing doesn't behave like a normal good or perhaps he think there are some other governing dynamics than the ones people typically learn?

mrec 10y ago
> Perhaps OP thinks housing doesn't behave like a normal good Unfortunately, to some extent it doesn't. House prices go up, especially in a terminally low-interest rate environment, and lots of people with (unearned) equity from that increase pile in buying more as speculative investments. You'd hope that government would step in to break such an obvious vicious circle, but... no, it's no use, I can't keep a straight face. (Not defending OP's specific claim. Also speaking from a London perspective; YMMV.)
- selectodude 10y ago
  London has the same issues as San Francisco, New York and Vancouver, where housing prices are skyrocketing due to it being almost impossible to build new construction, along with foreign money flowing into real estate in those cities. As such, all new construction is hyper-luxury because those are the only buildings that are worth building in this political climate of NIMBY-ism. The new construction going up was never intended to be purchased by people who need a 30-year fixed to pay for it. If new construction was going up that was priced in a normal bracket, affordable for mere normal people who had 150k to put down for a mortgage, I would consider that a massive improvement.
  - mrec 10y ago
    There's actually quite a lot of new construction in London, to the extent that some areas have a serious glut with many many years' worth of supply sitting on the market not selling. The problem here isn't just that what's being built is unaffordable - although it definitely is that - but that it's not what inhabitants want. It's being built to appeal to mostly Asian investors who like shiny high-rise newbuild and will probably never even see their purchases, much less live in them, so you end up with minuscule unit sizes, poor build quality, overheating, insufficient elevators and boilers, all the obvious corners to cut. Not sure what you mean by "mere normal people who had 150k to put down for a mortgage" - with median London incomes somewhere around £30k, needing a £150k deposit doesn't sound especially normal-friendly. If you meant total price, yes, now you're talking.
    - selectodude 10y ago
      >Not sure what you mean by "mere normal people who had 150k to put down for a mortgage" - with median London incomes somewhere around £30k, needing a £150k deposit doesn't sound especially normal-friendly. If you meant total price, yes, now you're talking. I was being facetious, $750,000 is a totally insane cost for a condo unit, but even that would be far more affordable than what's been going up in San Francisco over the last 10 years.
- ktRolster 10y ago
  You may be surprised to learn that investment vehicles act like normal goods, too. They respond directly to supply and demand.
  - st3v3r 10y ago
    But if you buy an apartment as an investment, and just sit on it, you're not doing anything to affect the price of housing, nor anything to help the housing crisis.
    - ktRolster 10y ago
      But if you buy an apartment as an investment, and just sit on it, you're not doing anything to affect the price of housing You are definitely affecting the price of housing by doing that
      - st3v3r 10y ago
        You're right. I should have said, "You're not doing anything to help lower the price of housing."
  - mrec 10y ago
    Demand for normal goods goes down when prices rise. Supply of normal goods goes up when prices rise. Neither is consistently true of housing in the markets we're talking about.
    - ktRolster 10y ago
      Neither of those is consistently true of any product, you are doing it wrong. Drawing supply and demand curves as a straight line is the economics equivalent of a frictionless surface, or a perfect sphere.
geebee 10y ago
Not the OP, but I actually think there's a chance greater density might, long term, increase housing costs in SF, though this is kind of an artifact of borders. SF isn't taking full advantage of the business opportunity that greater housing density presents. It could be that more density, especially if handled well (better public transportation, proper infrastructure) would lead to even more economic activity, more high paying jobs, and so forth. Keep in mind, the cities that are more expensive than SF tend to be denser as well. People actually do like dense neighborhoods under the right circumstances - dense parts of Brooklyn and Manhattan are more expensive than SF, and some of SF's dense neighborhoods are more expensive than the low density ones (russian or nob hill vs excelsior or outer sunset). I figure that the desirability of higher density housing with good public transportation, combined by the increase in economic activity from greater density and a larger population... yeah, it could happen. Not saying it would, but I don't think it's all that outlandish a thesis. Also, this is partly a trick of borders, since lower cost housing would probably be built outside SF's proper, so taken as a region, costs could drop even thought they went up in SF. Kind of like Manhattan vs New York generally.

by Kinnard 10y ago

mrec 10y ago

> Perhaps OP thinks housing doesn't behave like a normal good Unfortunately, to some extent it doesn't. House prices go up, especially in a terminally low-interest rate environment, and lots of people with (unearned) equity from that increase pile in buying more as speculative investments. You'd hope that government would step in to break such an obvious vicious circle, but... no, it's no use, I can't keep a straight face. (Not defending OP's specific claim. Also speaking from a London perspective; YMMV.)

selectodude 10y ago
London has the same issues as San Francisco, New York and Vancouver, where housing prices are skyrocketing due to it being almost impossible to build new construction, along with foreign money flowing into real estate in those cities. As such, all new construction is hyper-luxury because those are the only buildings that are worth building in this political climate of NIMBY-ism. The new construction going up was never intended to be purchased by people who need a 30-year fixed to pay for it. If new construction was going up that was priced in a normal bracket, affordable for mere normal people who had 150k to put down for a mortgage, I would consider that a massive improvement.
- mrec 10y ago
  There's actually quite a lot of new construction in London, to the extent that some areas have a serious glut with many many years' worth of supply sitting on the market not selling. The problem here isn't just that what's being built is unaffordable - although it definitely is that - but that it's not what inhabitants want. It's being built to appeal to mostly Asian investors who like shiny high-rise newbuild and will probably never even see their purchases, much less live in them, so you end up with minuscule unit sizes, poor build quality, overheating, insufficient elevators and boilers, all the obvious corners to cut. Not sure what you mean by "mere normal people who had 150k to put down for a mortgage" - with median London incomes somewhere around £30k, needing a £150k deposit doesn't sound especially normal-friendly. If you meant total price, yes, now you're talking.
  - selectodude 10y ago
    >Not sure what you mean by "mere normal people who had 150k to put down for a mortgage" - with median London incomes somewhere around £30k, needing a £150k deposit doesn't sound especially normal-friendly. If you meant total price, yes, now you're talking. I was being facetious, $750,000 is a totally insane cost for a condo unit, but even that would be far more affordable than what's been going up in San Francisco over the last 10 years.
ktRolster 10y ago
You may be surprised to learn that investment vehicles act like normal goods, too. They respond directly to supply and demand.
- st3v3r 10y ago
  But if you buy an apartment as an investment, and just sit on it, you're not doing anything to affect the price of housing, nor anything to help the housing crisis.
  - ktRolster 10y ago
    But if you buy an apartment as an investment, and just sit on it, you're not doing anything to affect the price of housing You are definitely affecting the price of housing by doing that
    - st3v3r 10y ago
      You're right. I should have said, "You're not doing anything to help lower the price of housing."
- mrec 10y ago
  Demand for normal goods goes down when prices rise. Supply of normal goods goes up when prices rise. Neither is consistently true of housing in the markets we're talking about.
  - ktRolster 10y ago
    Neither of those is consistently true of any product, you are doing it wrong. Drawing supply and demand curves as a straight line is the economics equivalent of a frictionless surface, or a perfect sphere.

geebee 10y ago

Not the OP, but I actually think there's a chance greater density might, long term, increase housing costs in SF, though this is kind of an artifact of borders. SF isn't taking full advantage of the business opportunity that greater housing density presents. It could be that more density, especially if handled well (better public transportation, proper infrastructure) would lead to even more economic activity, more high paying jobs, and so forth. Keep in mind, the cities that are more expensive than SF tend to be denser as well. People actually do like dense neighborhoods under the right circumstances - dense parts of Brooklyn and Manhattan are more expensive than SF, and some of SF's dense neighborhoods are more expensive than the low density ones (russian or nob hill vs excelsior or outer sunset). I figure that the desirability of higher density housing with good public transportation, combined by the increase in economic activity from greater density and a larger population... yeah, it could happen. Not saying it would, but I don't think it's all that outlandish a thesis. Also, this is partly a trick of borders, since lower cost housing would probably be built outside SF's proper, so taken as a region, costs could drop even thought they went up in SF. Kind of like Manhattan vs New York generally.