7 ms·

Is there any city that is actually managing to provide enough housing inventory these days? SF, London, NY, Vancouver, Toronto etc - all seem to have low invent

Is there any city that is actually managing to provide enough housing inventory these days? SF, London, NY, Vancouver, Toronto etc - all seem to have low inventories. Is it simply that there is a multiyear lag before inventory starts coming on stream, or is there some fundamental reason why these larger cities can't provide enough housing?

codersbrew 10y ago
We are having bidding wars in Los Angeles on properties :( Not even in good school areas.
tmnvix 10y ago
I'm not convinced that all of these places are suffering a shortage of accommodation (a shortage of property investment opportunities, certainly). It's worth remembering that a speculative boom creates extra demand. As far as I recall it was almost universally accepted that Ireland had a shortage of supply ten years ago. Then the GFC happened and it very quickly became apparent that the shortage was of investment opportunities, not homes. EDIT: For some actual data related to this phenomenon, consider the Speculative Vacancies Report[0] published each year by Melbourne group Prosper Australia. Melbourne is, like many major anglosphere cities (London, Sydney, Vancouver, Auckland, etc), suffering something of a property price crisis. Each year Prosper Australia determines which Melbourne properties are vacant using water consumption data provided by the city's water utilities[1]. If you accept the narrative that is usually presented in the media; "prices are high because of a shortage of homes", then you would expect areas with the highest capital gains to be closely correlated with the areas that have the lowest vacancy rates. In actual fact the correlation is unintuitively the other way around - the areas with the highest capital gains have the highest vacancy rates (approaching 30% in the case of Melbourne's Docklands area). [0] https://www.prosper.org.au/2015/12/09/speculative-vacancies-8/ https://www.prosper.org.au/2015/12/09/speculative-vacancies-... [1] Compare with the method for determining vacancy rates that is typically reported in the media: asking property managers what proportion of properties on their books are currently vacant.
- deleted 10y ago
  [deleted]
- sengork 10y ago
  Good info. Just to add onto the speculation as to why so many new places are vacant at Docklands I would say that it has to do with foreign owners who want to park (secure) their money outside of their country. We've never had so many empty properties and at the same time so many homeless people around the city area (there seems to be direct correlation between the two).
patrickaljord 10y ago
Zoning laws and building heights restrictions and other regulations are to blame. Basically, it's hard to provide enough inventory when doing so in a way that would help (build more buildings and higher ones that can receive more people) is illegal. Why do such regulations exist? Several reasons: * nepotism, current owners want to keep the inventory low so the price of their property and demand remain high * nepotism, because owners are afraid tall building will make their city less appealing and lower the price of their property. * silly zoning laws, because many believe central planning is actually a good thing despite the ridiculous amount of evidence that it doesn't work. * simple inertia, bad laws and regulations are created all the time but almost never repealed. I'm probably missing a few other reasons I'm sure others will point them out. Also something worth saying, owners love to say that adding taller buildings and more buildings and people would kill the spirit of the city. But preventing new buildings has a effect of super high prices that makes it impossible to live in the city, in the end only billionaires can buy homes as investment and don't even live there while the few other building are rented to a few lucky high salary people which creates tension with the rest of the population. So you get a city full of empty houses, super rich people, high salary folks and regular people who are getting kicked out. Real people start living outside the city and its spirit is gone anyway.
- jonstewart 10y ago
  "Nepotism" is favoritism shown to family relatives. I think the word you're looking for "NIBMYism".
  - ikeyany 10y ago
    NIMBYism itself is just a friendlier way of saying "selfish, greedy, and exclusionary".
    - jonstewart 10y ago
      I'm not sure it's friendlier... I think it's plenty pejorative. Regardless, it's not the same thing as nepotism.
- 10y ago
deleted 10y ago
[deleted]
godzillabrennus 10y ago
Chicago is doing a good job. Lots of construction, lots of good returns for investors, and a lot of perks associated with being a large city. The media focused on the south side murder rate but if you are north of the city there are plenty of safe and wonderful places to live.
HorizonXP 10y ago
Toronto and SF are very different cities with different housing problems. My interpretation is that in SF, NIMBYism and city council members have blocked most efforts to build high-density housing. This means that it forces the prices on available housing up. SF is experiencing a huge influx of people wanting to live there, and there just aren't enough houses. Affordability is a big issue, and probably the biggest, but there are people that are able to afford the high prices. That line won't go on forever though. Toronto has not shunned construction, far from it. We've built thousands of condo units. The problem is that they were built for investors in mind. Oh sure, if you're single or a couple, you could manage to get by in a 450-600 sf. 1BD 1BA condo, but as soon as you start to have a family, it feels cramped. A 2BR unit helps, and they exist, but there are not that many. Furthermore, our mentality in Toronto is that to raise a family, you must live in a house. That means moving out to suburbia. A single-family home, townhouse, semi-detached, or detached, is always going to be in high demand, no matter where you are. In Toronto, it's what most of us were raised in. Getting us to move families into condos is a huge undertaking, and it's made impossible by the fact that developers don't want to build these units simply because no one buys them. It's a vicious cycle. So Toronto's issue isn't a lack of construction, it's a lack of foresight. Finally, all large cities have this issue because of commuting. In Toronto, your options to get to work in the city are: 1) Live downtown, close to work to walk, bus, or subway in 2) Live in suburbia and spend 0.75-1.5 hours each way driving and/or commuting by bus or train If you try to find more affordable housing by living further from the city, you start hating your life as you commute the 2+ hours in. It's like trying to live in Walnut Creek and work in SF. It can be done, but why? Housing is a multi-faceted problem that isn't simply solved by just building more houses. You need to adjust people's expectations, habits, and start building viable transportation options to help move people.
- martinald 10y ago
  Surely for a growing city what you need is 1bed apartments, for young workers moving to the city? At least in London 1 or 2bed apartments go very quickly off plan, but 3 and 4 bed apartments are really slow to move.
- joshlemer 10y ago
  I don't quite understand the often made claim that there is simultaneously a dearth of 2+ bedroom apartments in Toronto, as well as a huge demand for them, as well as them being unprofitable for developers. Shouldn't savvy investors be able to see the market opportunity and put money into larger units?
selectodude 10y ago
Chicago is doing a pretty good job. In fact, condo values in the downtown area are flat over the last 5 years because of all the new inventory that comes on every 6 months. We could do so much better here, but it's a start.
deleted 10y ago
[deleted]
ggcdn 10y ago
I can't speak about other places, but the design and construction industry in Vancouver is working flat-out and has been since the slowdown in 2008-2010. My employer (engineering consultant) has a backlog of several months of design work. And if the developers want it sooner? Nothing they can do, because all our competitors are the same way. And if they somehow got it sooner? Still nothing they can do, because all the supply chain is also backlogged! You need to contract with a rebar installer now if you want to start building your fancy new condo in 2019.
- Tiktaalik 10y ago
  This is why the "just add more supply" argument is so flimsy. It assumes that cities aren't adding more supply, and it assumes that there are no real physical constraints to growth. The City of Vancouver raised development fees in order to hire more people to approve development faster. Some will say they're still apparently not adding supply fast enough. Maybe the rate of supply creation isn't the problem here...
ng12 10y ago
I think New York is doing great. They're rezoning neighborhoods in Queens and Brooklyn to allow for more high-density housing. One of my favorite little factoids is that Brooklyn had four different tallest buildings in 2016 and they were all residential. And it's working -- average rents in Brooklyn are dropping.
Apocryphon 10y ago
Montréal?
- titanomachy 10y ago
  Definitely. I think Berlin as well, the housing there seems remarkably affordable relative to incomes.
- simlevesque 10y ago
  No Montréal is horrible don't go there you won't like it.
  - Apocryphon 10y ago
    Is that to prevent people from gentrifying MTL next, or is that a serious comment? Having visited, I think the sentiment can easily swing either way.
    - simlevesque 10y ago
      It was totally to prevent gentrification. After Vancouver and Toronto, Montreal is on that same path. Just a bit farther from Asia.
      - Apocryphon 10y ago
        Aren't the French-language laws a powerful barrier against an influx of outsiders?
jseliger 10y ago
Tokyo: http://www.ft.com/cms/s/0/023562e2-54a6-11e6-befd-2fc0c26b3c60.html?siteedition=intl http://www.ft.com/cms/s/0/023562e2-54a6-11e6-befd-2fc0c26b3c.... Houston and Dallas: http://time.com/80005/why-texas-is-our-future/ http://time.com/80005/why-texas-is-our-future/ or, somewhat less usefully, http://www.forbes.com/sites/scottbeyer/2016/08/31/why-is-austins-housing-more-expensive-than-other-texas-cities/ http://www.forbes.com/sites/scottbeyer/2016/08/31/why-is-aus.... The big problem is zoning: https://object.cato.org/sites/cato.org/files/serials/files/regulation/2002/10/v25n3-7.pdf https://object.cato.org/sites/cato.org/files/serials/files/r... as it was implemented in the '70s: http://www.amazon.com/Zoning-Rules-Economics-Land-Regulation/dp/155844288X http://www.amazon.com/Zoning-Rules-Economics-Land-Regulation... By the way, there is much heat in discussions about housing prices and urban development, but very little light and much misunderstanding. A good rule of thumb is simple: If you don't see any reliable sources being cited, there's a good chance that the assertions aren't true or don't encapsulate the most important parts of the supply-demand picture.
- amyjess 10y ago
  The real reason Dallas and Houston are growing fast while remaining affordable is because we can sprawl forever. The Dallas area has no natural boundaries whatsoever; there are no mountains and no coast, nothing to stop development from sprawling out constantly. I was born in 1984, and I've lived in Dallas my entire life. I've seen the suburbs balloon in size like you wouldn't believe; and I'm not just talking population here, but area. The idea that we have continuous suburban development extending all the way north to Prosper (and soon Celina) blows my mind. Suburban development used to peter out in the northern half of Plano, and honestly southern Plano wasn't fully built-out either (there even used to be huge unincorporated enclaves in Plano). Another is business culture; companies, especially tech companies, have largely chosen to avoid the central business district and instead locate their offices in the edge cities [0] and the boomburbs [1]. Blame historical happenstance: this phenomenon was entirely thanks to two companies who decided in the 1950s to locate their offices in Richardson instead of Dallas. One was Texas Instruments, which was founded as a startup in Richardson (none of the founders were native Texans, oddly enough), and the other was Collins Radio (now Rockwell-Collins), an established company from Iowa who decided to put their Texas campus in Richardson. Between the two of them, anyone in North Texas who wanted into the tech industry worked in Richardson. After that, the founders of TI decided to start a technology-oriented university so they can grow their own talent right there in Richardson. Soon, they handed over the university to the state, who promptly renamed it the University of Texas at Dallas (despite it actually being in Richardson). Since then, UTD has become the most prominent school for engineering and computer science in the entire southwest (when I went there, the phrase "MIT of the southwest" was bandied about a lot), cementing Richardson as the home of the tech industry in North Texas. I find it interesting; housing prices actually have spiked in the Dallas area thanks to an unexpected surge of demand (I expect prices to go down soon, as new sprawl catches up to the demand), but Richardson is still one of the most affordable cities in the Dallas area, and it's still recognized as being one of the best cities in the US to live. That combination of affordability and quality of life is rare; usually, the two are inversely proportional. You can still find a good house in Richardson for under $300k, and if you look carefully, you can go below $250k. Now, I don't know too much about Houston, but it's pretty low on natural boundaries. Sure, it's not too far from a coast, but that's only to the south, and right now Houston's sprawling north and west. No mountains, either. I don't know much about how the business culture evolved, though. [0] https://en.wikipedia.org/wiki/Edge_city https://en.wikipedia.org/wiki/Edge_city [1] https://en.wikipedia.org/wiki/Boomburb https://en.wikipedia.org/wiki/Boomburb
branchless 10y ago
Fiat supply is infinite. Give the banker overlords your labour. Now.
glbrew 10y ago
Cleveland!
Tiktaalik 10y ago
I think there's lots of cities that are providing "enough" housing inventory, and I'd put Vancouver and Toronto into that category. These cities have more housing starts than ever before. They are building aggressively. The problem is that of speculative investment driven demand that is detached from local realities. This sort of irrational demand is endless and cities can't possibly be expected to keep up. At this point this new housing supply is being partially left empty due to absentee owner/investors. It doesn't make sense. Cities need to keep adding supply, but higher levels of government also have to have a look at new tools to control demand, such as more stringent lending rules and unoccupied housing taxes. In Canada foreign capital is an issue that has fuelled the housing bubble, but lax lending requirements and low residential taxes have also contributed.

codersbrew 10y ago

We are having bidding wars in Los Angeles on properties :( Not even in good school areas.

tmnvix 10y ago

I'm not convinced that all of these places are suffering a shortage of accommodation (a shortage of property investment opportunities, certainly). It's worth remembering that a speculative boom creates extra demand. As far as I recall it was almost universally accepted that Ireland had a shortage of supply ten years ago. Then the GFC happened and it very quickly became apparent that the shortage was of investment opportunities, not homes. EDIT: For some actual data related to this phenomenon, consider the Speculative Vacancies Report[0] published each year by Melbourne group Prosper Australia. Melbourne is, like many major anglosphere cities (London, Sydney, Vancouver, Auckland, etc), suffering something of a property price crisis. Each year Prosper Australia determines which Melbourne properties are vacant using water consumption data provided by the city's water utilities[1]. If you accept the narrative that is usually presented in the media; "prices are high because of a shortage of homes", then you would expect areas with the highest capital gains to be closely correlated with the areas that have the lowest vacancy rates. In actual fact the correlation is unintuitively the other way around - the areas with the highest capital gains have the highest vacancy rates (approaching 30% in the case of Melbourne's Docklands area). [0] https://www.prosper.org.au/2015/12/09/speculative-vacancies-8/ https://www.prosper.org.au/2015/12/09/speculative-vacancies-... [1] Compare with the method for determining vacancy rates that is typically reported in the media: asking property managers what proportion of properties on their books are currently vacant.

deleted 10y ago
[deleted]
sengork 10y ago
Good info. Just to add onto the speculation as to why so many new places are vacant at Docklands I would say that it has to do with foreign owners who want to park (secure) their money outside of their country. We've never had so many empty properties and at the same time so many homeless people around the city area (there seems to be direct correlation between the two).

patrickaljord 10y ago

Zoning laws and building heights restrictions and other regulations are to blame. Basically, it's hard to provide enough inventory when doing so in a way that would help (build more buildings and higher ones that can receive more people) is illegal. Why do such regulations exist? Several reasons: * nepotism, current owners want to keep the inventory low so the price of their property and demand remain high * nepotism, because owners are afraid tall building will make their city less appealing and lower the price of their property. * silly zoning laws, because many believe central planning is actually a good thing despite the ridiculous amount of evidence that it doesn't work. * simple inertia, bad laws and regulations are created all the time but almost never repealed. I'm probably missing a few other reasons I'm sure others will point them out. Also something worth saying, owners love to say that adding taller buildings and more buildings and people would kill the spirit of the city. But preventing new buildings has a effect of super high prices that makes it impossible to live in the city, in the end only billionaires can buy homes as investment and don't even live there while the few other building are rented to a few lucky high salary people which creates tension with the rest of the population. So you get a city full of empty houses, super rich people, high salary folks and regular people who are getting kicked out. Real people start living outside the city and its spirit is gone anyway.

jonstewart 10y ago
"Nepotism" is favoritism shown to family relatives. I think the word you're looking for "NIBMYism".
- ikeyany 10y ago
  NIMBYism itself is just a friendlier way of saying "selfish, greedy, and exclusionary".
  - jonstewart 10y ago
    I'm not sure it's friendlier... I think it's plenty pejorative. Regardless, it's not the same thing as nepotism.
10y ago

deleted 10y ago

[deleted]

godzillabrennus 10y ago

Chicago is doing a good job. Lots of construction, lots of good returns for investors, and a lot of perks associated with being a large city. The media focused on the south side murder rate but if you are north of the city there are plenty of safe and wonderful places to live.

HorizonXP 10y ago

Toronto and SF are very different cities with different housing problems. My interpretation is that in SF, NIMBYism and city council members have blocked most efforts to build high-density housing. This means that it forces the prices on available housing up. SF is experiencing a huge influx of people wanting to live there, and there just aren't enough houses. Affordability is a big issue, and probably the biggest, but there are people that are able to afford the high prices. That line won't go on forever though. Toronto has not shunned construction, far from it. We've built thousands of condo units. The problem is that they were built for investors in mind. Oh sure, if you're single or a couple, you could manage to get by in a 450-600 sf. 1BD 1BA condo, but as soon as you start to have a family, it feels cramped. A 2BR unit helps, and they exist, but there are not that many. Furthermore, our mentality in Toronto is that to raise a family, you must live in a house. That means moving out to suburbia. A single-family home, townhouse, semi-detached, or detached, is always going to be in high demand, no matter where you are. In Toronto, it's what most of us were raised in. Getting us to move families into condos is a huge undertaking, and it's made impossible by the fact that developers don't want to build these units simply because no one buys them. It's a vicious cycle. So Toronto's issue isn't a lack of construction, it's a lack of foresight. Finally, all large cities have this issue because of commuting. In Toronto, your options to get to work in the city are: 1) Live downtown, close to work to walk, bus, or subway in 2) Live in suburbia and spend 0.75-1.5 hours each way driving and/or commuting by bus or train If you try to find more affordable housing by living further from the city, you start hating your life as you commute the 2+ hours in. It's like trying to live in Walnut Creek and work in SF. It can be done, but why? Housing is a multi-faceted problem that isn't simply solved by just building more houses. You need to adjust people's expectations, habits, and start building viable transportation options to help move people.

martinald 10y ago
Surely for a growing city what you need is 1bed apartments, for young workers moving to the city? At least in London 1 or 2bed apartments go very quickly off plan, but 3 and 4 bed apartments are really slow to move.
joshlemer 10y ago
I don't quite understand the often made claim that there is simultaneously a dearth of 2+ bedroom apartments in Toronto, as well as a huge demand for them, as well as them being unprofitable for developers. Shouldn't savvy investors be able to see the market opportunity and put money into larger units?

selectodude 10y ago

Chicago is doing a pretty good job. In fact, condo values in the downtown area are flat over the last 5 years because of all the new inventory that comes on every 6 months. We could do so much better here, but it's a start.

deleted 10y ago

[deleted]

ggcdn 10y ago

I can't speak about other places, but the design and construction industry in Vancouver is working flat-out and has been since the slowdown in 2008-2010. My employer (engineering consultant) has a backlog of several months of design work. And if the developers want it sooner? Nothing they can do, because all our competitors are the same way. And if they somehow got it sooner? Still nothing they can do, because all the supply chain is also backlogged! You need to contract with a rebar installer now if you want to start building your fancy new condo in 2019.

Tiktaalik 10y ago
This is why the "just add more supply" argument is so flimsy. It assumes that cities aren't adding more supply, and it assumes that there are no real physical constraints to growth. The City of Vancouver raised development fees in order to hire more people to approve development faster. Some will say they're still apparently not adding supply fast enough. Maybe the rate of supply creation isn't the problem here...

ng12 10y ago

I think New York is doing great. They're rezoning neighborhoods in Queens and Brooklyn to allow for more high-density housing. One of my favorite little factoids is that Brooklyn had four different tallest buildings in 2016 and they were all residential. And it's working -- average rents in Brooklyn are dropping.

Apocryphon 10y ago

Montréal?

titanomachy 10y ago
Definitely. I think Berlin as well, the housing there seems remarkably affordable relative to incomes.
simlevesque 10y ago
No Montréal is horrible don't go there you won't like it.
- Apocryphon 10y ago
  Is that to prevent people from gentrifying MTL next, or is that a serious comment? Having visited, I think the sentiment can easily swing either way.
  - simlevesque 10y ago
    It was totally to prevent gentrification. After Vancouver and Toronto, Montreal is on that same path. Just a bit farther from Asia.
    - Apocryphon 10y ago
      Aren't the French-language laws a powerful barrier against an influx of outsiders?

jseliger 10y ago

Tokyo: http://www.ft.com/cms/s/0/023562e2-54a6-11e6-befd-2fc0c26b3c60.html?siteedition=intl http://www.ft.com/cms/s/0/023562e2-54a6-11e6-befd-2fc0c26b3c.... Houston and Dallas: http://time.com/80005/why-texas-is-our-future/ http://time.com/80005/why-texas-is-our-future/ or, somewhat less usefully, http://www.forbes.com/sites/scottbeyer/2016/08/31/why-is-austins-housing-more-expensive-than-other-texas-cities/ http://www.forbes.com/sites/scottbeyer/2016/08/31/why-is-aus.... The big problem is zoning: https://object.cato.org/sites/cato.org/files/serials/files/regulation/2002/10/v25n3-7.pdf https://object.cato.org/sites/cato.org/files/serials/files/r... as it was implemented in the '70s: http://www.amazon.com/Zoning-Rules-Economics-Land-Regulation/dp/155844288X http://www.amazon.com/Zoning-Rules-Economics-Land-Regulation... By the way, there is much heat in discussions about housing prices and urban development, but very little light and much misunderstanding. A good rule of thumb is simple: If you don't see any reliable sources being cited, there's a good chance that the assertions aren't true or don't encapsulate the most important parts of the supply-demand picture.

amyjess 10y ago
The real reason Dallas and Houston are growing fast while remaining affordable is because we can sprawl forever. The Dallas area has no natural boundaries whatsoever; there are no mountains and no coast, nothing to stop development from sprawling out constantly. I was born in 1984, and I've lived in Dallas my entire life. I've seen the suburbs balloon in size like you wouldn't believe; and I'm not just talking population here, but area. The idea that we have continuous suburban development extending all the way north to Prosper (and soon Celina) blows my mind. Suburban development used to peter out in the northern half of Plano, and honestly southern Plano wasn't fully built-out either (there even used to be huge unincorporated enclaves in Plano). Another is business culture; companies, especially tech companies, have largely chosen to avoid the central business district and instead locate their offices in the edge cities [0] and the boomburbs [1]. Blame historical happenstance: this phenomenon was entirely thanks to two companies who decided in the 1950s to locate their offices in Richardson instead of Dallas. One was Texas Instruments, which was founded as a startup in Richardson (none of the founders were native Texans, oddly enough), and the other was Collins Radio (now Rockwell-Collins), an established company from Iowa who decided to put their Texas campus in Richardson. Between the two of them, anyone in North Texas who wanted into the tech industry worked in Richardson. After that, the founders of TI decided to start a technology-oriented university so they can grow their own talent right there in Richardson. Soon, they handed over the university to the state, who promptly renamed it the University of Texas at Dallas (despite it actually being in Richardson). Since then, UTD has become the most prominent school for engineering and computer science in the entire southwest (when I went there, the phrase "MIT of the southwest" was bandied about a lot), cementing Richardson as the home of the tech industry in North Texas. I find it interesting; housing prices actually have spiked in the Dallas area thanks to an unexpected surge of demand (I expect prices to go down soon, as new sprawl catches up to the demand), but Richardson is still one of the most affordable cities in the Dallas area, and it's still recognized as being one of the best cities in the US to live. That combination of affordability and quality of life is rare; usually, the two are inversely proportional. You can still find a good house in Richardson for under $300k, and if you look carefully, you can go below $250k. Now, I don't know too much about Houston, but it's pretty low on natural boundaries. Sure, it's not too far from a coast, but that's only to the south, and right now Houston's sprawling north and west. No mountains, either. I don't know much about how the business culture evolved, though. [0] https://en.wikipedia.org/wiki/Edge_city https://en.wikipedia.org/wiki/Edge_city [1] https://en.wikipedia.org/wiki/Boomburb https://en.wikipedia.org/wiki/Boomburb

branchless 10y ago

Fiat supply is infinite. Give the banker overlords your labour. Now.

glbrew 10y ago

Cleveland!

Tiktaalik 10y ago

I think there's lots of cities that are providing "enough" housing inventory, and I'd put Vancouver and Toronto into that category. These cities have more housing starts than ever before. They are building aggressively. The problem is that of speculative investment driven demand that is detached from local realities. This sort of irrational demand is endless and cities can't possibly be expected to keep up. At this point this new housing supply is being partially left empty due to absentee owner/investors. It doesn't make sense. Cities need to keep adding supply, but higher levels of government also have to have a look at new tools to control demand, such as more stringent lending rules and unoccupied housing taxes. In Canada foreign capital is an issue that has fuelled the housing bubble, but lax lending requirements and low residential taxes have also contributed.