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> The question is then /why/ would companies only build Lamborghinis and Ferraris when there is such a huge market for Hondas and Fords. Because the market for

> The question is then /why/ would companies only build Lamborghinis and Ferraris when there is such a huge market for Hondas and Fords. Because the market for high end is much more profitable. The question isn't "how do we ensure builders are profitable as possible". We know how to do that, everywhere does that every single day. The question (from the article) is "how do we prevent cities from eroding opportunities for ordinary, middle-class people". My answer is "we need to just start building housing for ordinary middle-class people". Everyone wants to frame this in economic terms that make it rational for a for-profit company to do this. That seems silly to me, we all already agree it's not the most profitable action. But that's ok -- a city government's goals are supposed to be in the interest for it's citizens and region, not in the interest of profitability. > if all manufacturers were collectively allowed to build only 10,000 cars a year, and each one of those were subject to neighborhood review and potential lawsuits, /of course/ they will build only luxury cars! This assumes everywhere is San Francisco. Even where there is no building limits, there is no shortage of land, and there's comparatively no review process -- density is still 2x-4x the cost. Even out here, developers make so much more money selling 1 high-end unit, than 5 mid-range units, that the vast majority never bother with low-end. Most "free markets fix everything" arguments hinge on this future hope that builders eventually exhaust the high-end market and look to the working-class market. I don't think that will ever happen -- every builder in the nation could continue building high-end-only indefinitely and still never run out of work in our lifetimes.

Kalium 10y ago
The City and County of San Francisco currently pays roughly a million dollars a unit to build apartments. Not luxury apartments - apartments in general. This is perhaps less than ideally scalable. We don't need to build housing for "ordinary middle-class people". We need to build housing, period. There's not any need for builders to "exhaust the high-end market and look to the working-class market". There's already huge swaths of SF full of units perfect for the working-class market. That's what they would be if there were other units for people at the high-end of the market to be in. If you don't know SF at all, just be aware that there are very large neighborhoods that are stuffed absolutely full of what in a sane market would be working-class units.
hx87 10y ago
> Because the market for high end is much more profitable. Builders will build wherever there is profit, not only where profit is only the highest. Otherwise every watch manufacturer will be building bespoke Phillip Breugets and nobody will build $1 Walmart quartz watches, which obviously isn't the case. > density is still 2x-4x the cost Well of course where density is high, construction is more expensive. That's true in San Francisco and true in Houston. It's just that demand and supply in SF justifies more density than in Houston. > every builder in the nation could continue building high-end-only indefinitely and still never run out of work in our lifetimes Are you saying that demand for high-end housing is effectively infinite? I haven't seen any evidence for it, but if so, we could sure use the tax revenue to build state of the art public transit systems so suburban commutes wouldn't be so terrible...

Kalium 10y ago

The City and County of San Francisco currently pays roughly a million dollars a unit to build apartments. Not luxury apartments - apartments in general. This is perhaps less than ideally scalable. We don't need to build housing for "ordinary middle-class people". We need to build housing, period. There's not any need for builders to "exhaust the high-end market and look to the working-class market". There's already huge swaths of SF full of units perfect for the working-class market. That's what they would be if there were other units for people at the high-end of the market to be in. If you don't know SF at all, just be aware that there are very large neighborhoods that are stuffed absolutely full of what in a sane market would be working-class units.

hx87 10y ago

> Because the market for high end is much more profitable. Builders will build wherever there is profit, not only where profit is only the highest. Otherwise every watch manufacturer will be building bespoke Phillip Breugets and nobody will build $1 Walmart quartz watches, which obviously isn't the case. > density is still 2x-4x the cost Well of course where density is high, construction is more expensive. That's true in San Francisco and true in Houston. It's just that demand and supply in SF justifies more density than in Houston. > every builder in the nation could continue building high-end-only indefinitely and still never run out of work in our lifetimes Are you saying that demand for high-end housing is effectively infinite? I haven't seen any evidence for it, but if so, we could sure use the tax revenue to build state of the art public transit systems so suburban commutes wouldn't be so terrible...