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If you could build 2 $100,000 apartments or 1 $1,000,000 apartments, which would you do? You know there's a massive shortage of housing and whatever you build w
by mattmanser 10y ago
If you could build 2 $100,000 apartments or 1 $1,000,000 apartments, which would you do? You know there's a massive shortage of housing and whatever you build will definitely sell. The cost of making the luxury apartment is not actually that much higher than making the other 2.
You'd be a complete idiot to build the affordable housing.
Planning laws and NIMBY are limiting the amount of buildings builders can make all around the world, so naturally the only buildings they bother making are the luxury ones with the big, fat, juicy returns, unless they are forced.
- Cthulhu_ 10y agoAlternatively: If you could build 1 $1,000,000 apartment or 20 $100,000 apartments, which would you do? A lot of things about the modern market are more about volume than quality; this explains how e.g. common electronics have become relatively cheap, but tend to die within 3-5 years - they're cheaper and the profit margins are lower, but in the long run you sell more of them. It's why smartphones will remain in the <$1000 range, so that, unlike e.g. a gold smartwatch, people will be more likely to replace them within 3 years. Or why the bio-industry is a thing - why make quality meat at a price point where people can only afford to have it once or twice a week, when you can make it dirt cheap so they eat it daily?
- mattmanser 10y agoYour argument is wrong because one luxury apartment will take up the space of 2 cheap ones, not 20. Also, the cost of making a luxury apartment vs a cheap one, fittings, etc. is trivial compared to the sale value in today's market in Paris. The choice isn't 1 v 20, it's 1 v 2. You can't make 20 cheap apartments in the space of one expensive one. Hence why I used 2 instead of 20.