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The problem is that if the housing supply is already too small there is little incentive to build anything other than luxury homes, since the margin is inevitab

The problem is that if the housing supply is already too small there is little incentive to build anything other than luxury homes, since the margin is inevitably highest on those.

afarrell 9y ago
And yet many of the cities where this is true, politicians celebrate adding high-paying jobs but not adding housing to accommodate the highly-paid workers. Whenever a new office building is approved, housing construction permits should be issued until there is at least 1 bed for every desk.
ajmurmann 9y ago
That's OK though isn't it? Even having more luxury housing will eventually drive all prices down if we build enough housing. I don't care which end of the spectrum we want to tackle first. We need a huge amount of additional housing. If there is more incentive to build luxury housing first, so be it. But let's just start to actually build significant(!) amounts of any housing. Of love to see a lot of high rise buildings added all over the bay area. The avenues in SF for example are very low density and the houses aren't historically significant or anything either. Let's build a dozen or so 60+ floors apartment or condo buildings there and the prices are gonna come down.
- ctulek 9y ago
  AFAIK from history, this is what Manhattan thought too but didn’t turn out that way. So...
asabjorn 9y ago
Wealthy people that can afford luxury units only rents one unit, and if that unit is in a luxury building then they won't compete for the rest of the housing stock. An old building should have decreasing rent over time if the quality of the landlord does not invest in getting the units up to standard, unlike in the bay area where even moldy out-of-date units are going for about he same as a new luxury building unit.
dionidium 9y ago
Yes, and if Toyota were only allowed to build 1000 cars a year, you can be damn sure they'd only build Lexuses. But since 1) they're allowed to build as many cars as the market will buy; and 2) because they want to sell a car to every single person they can; and because 3) not everybody can afford a Lexus, then; 4) they end up making a lot of Camrys and Corollas, too. Now imagine they were currently constrained to just those 1000 cars and lobbying to build more. The car NIMBYs would be saying, "But look! They only build Lexuses! They'll just build more Lexuses!" But we know that's not what actually happens. And it won't be true with homes either.
- himlion 9y ago
  But realistically they won't be able to build an unlimited amount of houses. So in your example let's say they're suddenly allowed to build 10000 cars, an order of magnitude increase. I think those 10.000 will still be just Lexuses. I agree with the sentiment that luxury apartments is a start/ better than nothing, but I think the benefits for the lower end of the housing is overstated.
  - dionidium 9y ago
    "But realistically they won't be able to build an unlimited amount of houses" Unlimited is quite the stretch goal, but, frankly, why not? We've done it before. San Francisco doesn't need to be Midtown Manhattan to drastically increase its population. It just needs to look like most of Queens (or Brooklyn, which would be even better). We've built Queens before. We've built Brooklyn before. It's not impossible, assuming you don't make it illegal.
  - jstanley 9y ago
    If all they're building is Lexuses, the problem isn't that they're allowed to build too many cars and therefore you shouldn't let them build more. The problem is that they're not allowed to build enough cars.

The problem is that if the housing supply is already too small there is little incentive to build anything other than luxury homes, since the margin is inevitably highest on those.

afarrell 9y ago

And yet many of the cities where this is true, politicians celebrate adding high-paying jobs but not adding housing to accommodate the highly-paid workers. Whenever a new office building is approved, housing construction permits should be issued until there is at least 1 bed for every desk.

ajmurmann 9y ago

That's OK though isn't it? Even having more luxury housing will eventually drive all prices down if we build enough housing. I don't care which end of the spectrum we want to tackle first. We need a huge amount of additional housing. If there is more incentive to build luxury housing first, so be it. But let's just start to actually build significant(!) amounts of any housing. Of love to see a lot of high rise buildings added all over the bay area. The avenues in SF for example are very low density and the houses aren't historically significant or anything either. Let's build a dozen or so 60+ floors apartment or condo buildings there and the prices are gonna come down.

ctulek 9y ago
AFAIK from history, this is what Manhattan thought too but didn’t turn out that way. So...

asabjorn 9y ago

Wealthy people that can afford luxury units only rents one unit, and if that unit is in a luxury building then they won't compete for the rest of the housing stock. An old building should have decreasing rent over time if the quality of the landlord does not invest in getting the units up to standard, unlike in the bay area where even moldy out-of-date units are going for about he same as a new luxury building unit.

dionidium 9y ago

Yes, and if Toyota were only allowed to build 1000 cars a year, you can be damn sure they'd only build Lexuses. But since 1) they're allowed to build as many cars as the market will buy; and 2) because they want to sell a car to every single person they can; and because 3) not everybody can afford a Lexus, then; 4) they end up making a lot of Camrys and Corollas, too. Now imagine they were currently constrained to just those 1000 cars and lobbying to build more. The car NIMBYs would be saying, "But look! They only build Lexuses! They'll just build more Lexuses!" But we know that's not what actually happens. And it won't be true with homes either.

himlion 9y ago
But realistically they won't be able to build an unlimited amount of houses. So in your example let's say they're suddenly allowed to build 10000 cars, an order of magnitude increase. I think those 10.000 will still be just Lexuses. I agree with the sentiment that luxury apartments is a start/ better than nothing, but I think the benefits for the lower end of the housing is overstated.
- dionidium 9y ago
  "But realistically they won't be able to build an unlimited amount of houses" Unlimited is quite the stretch goal, but, frankly, why not? We've done it before. San Francisco doesn't need to be Midtown Manhattan to drastically increase its population. It just needs to look like most of Queens (or Brooklyn, which would be even better). We've built Queens before. We've built Brooklyn before. It's not impossible, assuming you don't make it illegal.
- jstanley 9y ago
  If all they're building is Lexuses, the problem isn't that they're allowed to build too many cars and therefore you shouldn't let them build more. The problem is that they're not allowed to build enough cars.