4 ms·

You started off saying one thing: >You seem to be assuming that, by building more units and increasing density, normal supply/demand forces will normalize the h

You started off saying one thing: >You seem to be assuming that, by building more units and increasing density, normal supply/demand forces will normalize the housing market. And then proceeded to say a bunch of stuff that makes me think you don't believe this assumption. Think through your own example. Even if landlords collude, "still charging $3-4k a month rent", and more units open up, eventually some of those units will not be rented. Dormant units do not generate revenue, regardless of the asking price. If even more units are added, more landlords will continue to collect $0 on their dormant units. Landlords then have two options: continue to ask for $X dollars and get $0 or ask for $X-Y dollars and get $X-Y dollars. If $(X-Y) > $0, the law of large numbers, empirical studies, and common sense dictate that landlords will choose option B. Prices could stay high, however, if more people move to the area, increasing demand to match supply.

fragmede 8y ago
SF's strong renter's rights mean that $0 can be a better deal for the landlord. There exist values for X and Y where $X * 12 months < $Y * 8 months, and if the landlord believes the market will be that much higher in 4 months, then the unit stays empty.
- closeparen 8y ago
  >if the landlord believes the market will be that much higher in 4 months This is a well-founded belief only because demand is increasing faster than supply.
- lsc 8y ago
  You see this in commercial real-estate, too, where there is nothing like rent control, especially in downturns. in the late aughts/early teens I was looking for commercial space. Being a capitalist, I would target places that had been vacant for over a year, then offer 30-40% less than asking for a 1-3 year lease, with the value proposition being that I'd give them something for the downturn and they could kick me out if things picked up after a few years. No takers; the real-estate folks thought that prices were going back up and that they'd be better off with empty buildings, primed for when the economy recovered than accepting money from the likes of me. (The other bit is that rent control is not the whole of this... In california, rent control mostly doesn't apply to anything modern.) https://en.wikipedia.org/wiki/Costa%E2%80%93Hawkins_Rental_Housing_Act https://en.wikipedia.org/wiki/Costa%E2%80%93Hawkins_Rental_H... You really gotta understand that law to understand this debate; that law is essentially why the poor oppose most of these 'yimby' ordinances; the buildings that would be demolished are rent controlled in SF, and under that law would be replaced by units that are not rent control. If you don't understand that,the opposition from the poor simply doesn't make sense, because more units, in a free market, wouldn't drive up rents for anyone... but in a market with rent control, if you demolish rent control housing and replace it with market rate housing, you have less housing available for the poor. (scott wiener and other yimby types often respond by adding a certain number of affordable housing units and/or prohibit tearing down existing rent controlled places. The latter pushes new construction to more commercial/industrial spaces, which if you ask me, is just fine, as it usually means more mixed-use kind of construction)
selectodude 8y ago
This idea that the demand for housing in a certain area is literally infinite is so strange to me. Yes, it takes a long time to build 50,000 apartments, and prices will not immediately normalize. Yes, a very large percentage of the new construction will be luxury. But the prices will not keep going up the more units that are built that’s mathematically insane.
- elihu 8y ago
  To quote the last sentence of the comment you're replying to: > Prices could stay high, however, if more people move to the area, increasing demand to match supply. I think that's key. Places that are seen as the most desirable to live in tend to attract people. If housing got (temporarily) cheaper, more people would move in and it would return to a similar equilibrium. I think this problem is best fixed by creating more desirable places to live, not by trying to find a way to pack more people in (though efforts to reduce housing prices are admirable and worth doing). Something I've wondered a lot about is if it's possible to create desirable cities deliberately, rather than let them spring up naturally. (Obviously a lot of developers have tried to do that as a way of making money, but I suspect you could get better results if you set out with the primary aim of creating a pleasant place to live and work and structured it as a non-profit.)
  - closeparen 8y ago
    >by creating more desirable places to live, not by trying to find a way to pack more people in There's effectively infinitely much suburbia in America already. It's the "packed in" experience (walkable streetscapes, transit-connected mid- and high-rise housing, etc) that's scarce, and that we need more of.
- WillPostForFood 8y ago
  If one believes density is a good thing that makes for better living, then adding more units should make it a more desirable place to live, driving more demand, and increasing prices. SOMA might be an interesting example of this, where it used to be cheap and undesirable, but after a critical mass of housing was built, it became much more livable and expensive. Of course, there are hundreds of things having simultaneous impacts, so it is impossible to isolate the effects of one.

fragmede 8y ago

SF's strong renter's rights mean that $0 can be a better deal for the landlord. There exist values for X and Y where $X * 12 months < $Y * 8 months, and if the landlord believes the market will be that much higher in 4 months, then the unit stays empty.

closeparen 8y ago
>if the landlord believes the market will be that much higher in 4 months This is a well-founded belief only because demand is increasing faster than supply.
lsc 8y ago
You see this in commercial real-estate, too, where there is nothing like rent control, especially in downturns. in the late aughts/early teens I was looking for commercial space. Being a capitalist, I would target places that had been vacant for over a year, then offer 30-40% less than asking for a 1-3 year lease, with the value proposition being that I'd give them something for the downturn and they could kick me out if things picked up after a few years. No takers; the real-estate folks thought that prices were going back up and that they'd be better off with empty buildings, primed for when the economy recovered than accepting money from the likes of me. (The other bit is that rent control is not the whole of this... In california, rent control mostly doesn't apply to anything modern.) https://en.wikipedia.org/wiki/Costa%E2%80%93Hawkins_Rental_Housing_Act https://en.wikipedia.org/wiki/Costa%E2%80%93Hawkins_Rental_H... You really gotta understand that law to understand this debate; that law is essentially why the poor oppose most of these 'yimby' ordinances; the buildings that would be demolished are rent controlled in SF, and under that law would be replaced by units that are not rent control. If you don't understand that,the opposition from the poor simply doesn't make sense, because more units, in a free market, wouldn't drive up rents for anyone... but in a market with rent control, if you demolish rent control housing and replace it with market rate housing, you have less housing available for the poor. (scott wiener and other yimby types often respond by adding a certain number of affordable housing units and/or prohibit tearing down existing rent controlled places. The latter pushes new construction to more commercial/industrial spaces, which if you ask me, is just fine, as it usually means more mixed-use kind of construction)

selectodude 8y ago

This idea that the demand for housing in a certain area is literally infinite is so strange to me. Yes, it takes a long time to build 50,000 apartments, and prices will not immediately normalize. Yes, a very large percentage of the new construction will be luxury. But the prices will not keep going up the more units that are built that’s mathematically insane.

elihu 8y ago
To quote the last sentence of the comment you're replying to: > Prices could stay high, however, if more people move to the area, increasing demand to match supply. I think that's key. Places that are seen as the most desirable to live in tend to attract people. If housing got (temporarily) cheaper, more people would move in and it would return to a similar equilibrium. I think this problem is best fixed by creating more desirable places to live, not by trying to find a way to pack more people in (though efforts to reduce housing prices are admirable and worth doing). Something I've wondered a lot about is if it's possible to create desirable cities deliberately, rather than let them spring up naturally. (Obviously a lot of developers have tried to do that as a way of making money, but I suspect you could get better results if you set out with the primary aim of creating a pleasant place to live and work and structured it as a non-profit.)
- closeparen 8y ago
  >by creating more desirable places to live, not by trying to find a way to pack more people in There's effectively infinitely much suburbia in America already. It's the "packed in" experience (walkable streetscapes, transit-connected mid- and high-rise housing, etc) that's scarce, and that we need more of.
WillPostForFood 8y ago
If one believes density is a good thing that makes for better living, then adding more units should make it a more desirable place to live, driving more demand, and increasing prices. SOMA might be an interesting example of this, where it used to be cheap and undesirable, but after a critical mass of housing was built, it became much more livable and expensive. Of course, there are hundreds of things having simultaneous impacts, so it is impossible to isolate the effects of one.