4 ms·
Upzoning would not make a place like manhattan more affordable, there have been studies (https://www.federalreserve.gov/econres/feds/files/2018035pap.pdf https:
by zjaffee 7y ago
Upzoning would not make a place like manhattan more affordable, there have been studies (https://www.federalreserve.gov/econres/feds/files/2018035pap.pdf https://www.federalreserve.gov/econres/feds/files/2018035pap...) that evaluate what up to a 20% increase in housing supply would bring to any one given area and they never say it would fall by anything more than 2% (and that would be if the supply was introduced all at once in todays current environment).
What is shown by this is that, when you build more housing in desirable areas, people will always move in to fill it. The value of which being that more people can now experience such desirable areas. In fact, the price decreases aren't coming from the actual housing supply increase directly, but that prices fall when there is a bigger competitive pool of those seeking housing and those supplying it even with 1:1 increases on both sides.
So what's the solution?
The truth is there isn't one, in our current political environment we will neither see a command economy that seriously solves housing issues (or even something like what singapore does). We won't see national multifamily by right zoning/building codes that enable economies of scale for high density construction. We won't see every suburb in America allow density increases to the level that automotive travel becomes a serious hassle. Additionally, we won't see major financing efforts come about for new housing production at the scale of a trillion dollars a year (which is the level of investment needed from a debt financing perspective).
Within the broader market, the cost of financing and construction are just too high right now for housing prices to fall on the production side of the equation. It is not possible to build 1000 sqft apartments in existing dense parts of the US that cost $100k on the production side (what it would cost to build a similar sized average single family home) in any of these major cities, and that's before land acquisition costs.
The truth is, that the most viable way for creating affordable housing in this country right now would be to build an entirely new city made up of moderately sized row homes that would have the ability to sprawl as such for 60 miles in any direction from its center.
- granshaw 7y agoSounds like a great environment to invest in Real estate!
- hash872 7y agoWas with you until that last sentence. The most viable way to create affordable housing is to admit that a very small number of Tier 1 US cities are effectively full- and encourage smart young people to move to Denver and Charlotte and Miami and Raleigh and Indianapolis and Phoenix and Burlington and Madison and..... But yeah, everything else you said is spot on. I previously worked in commercial real estate, and I find the Matt Yglesias-types' understanding of how property development works to be bordering on magical. I mean, again, I fundamentally agree with the YIMBY movement, and that many zoning laws are glorified rent seeking. But the affordability issue is fast leaving rational discussion and entering belief system territory. Manhattan & the Bay Area & LA are expensive because the demand to live there is 10,000x or 20,000x what it is to live in, say, Milwaukee. This is the root of the problem- you cannot possibly build enough to sate demand in a non-command economy
- wbl 7y agoExplain Tokyo then.
- hash872 7y agoNo lol. Teasing out how housing prices or rents are connected to macroeconomic conditions & public policy & developer sentiment & the interest rate environment is already complex enough- way more complex than these YIMBY 'supply and demand, it's economics 101 brah!' type arguments. Adding in another country with its own laws and policies and customs and macroeconomic environment is way too complex. My point is that YIMBY/Matt Yglesias-types are already making complex concepts way too simple- we don't need to add in another country that (frankly) virtually no one on Hacker News is qualified to explain on an economic & policy level. Like, Japan famously hasn't grown in years and years and is arguably suffering from deflation. Does that affect their housing prices as much as anything else? Does anyone here have a PhD to help explain these complex multi-causal factors? Probably not
- zjaffee 7y agoTokyo is able to solve affordability with massive economies of scale around prefabricated buildings (that include multifamily buildings). To develop a comparable economy of scale, the US would need to significantly relax zoning rules and develop national by right standards.
- rory096 7y ago>evaluate what up to a 20% increase in housing supply would bring to any one given area and they never say it would fall by anything more than 2% Hold on. That study is about an increase in the housing stock of a single neighborhood in a city, only for the top decile of expensive neighborhoods, and the resulting effect on rents within that same neighborhood. Its counterfactual is somehow taking the entire private expenditure used to build that housing and putting into public works projects in the bottom 9 deciles of neighborhoods in order to attract demand there instead.
- zjaffee 7y agoNotice how I said in my comment that it would not make manhattan affordable, I never said it wouldn't make the broader region more affordable.