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There are a lot of people out there who argue that building more houses won't help solve the high cost of housing. I have also found a lot of those people compl

There are a lot of people out there who argue that building more houses won't help solve the high cost of housing. I have also found a lot of those people complain Airbnb is driving up pricing. To not acknowledge the supply problem ( and the supply solution ), but to say the minimal change in demand caused by Airbnb is the problem to me is just dishonest.

seanmcdirmid 7y ago
Name one mega city with lots of housing where the prices have actually gone down. It isn't rocket science: add more supply in a hot area, it attracts more demand. Kind of like how building wider highways doesn't really do anything for traffic jams. Most cities would like to keep their growth in check somehow so they have the appropriate infrastructure ready for it. Things that distort that (AirBNB, Chinese speculators, etc...) throw all of that off.
- fjsolwmv 7y ago
  Chinese speculators reduce growth by keeping property vacant. Airbnb doesn't affect growth. House prices are not growth, and they generate the tax revenue that you say helps get the infrastructure ready.
  - seanmcdirmid 7y ago
    Building more supply to keep up with demand, no matter how real, would be growth.
- aesthesia 7y ago
  Induced demand is not an infinitely scalable effect. There is some point at which adding more lanes will in fact reduce traffic congestion (ignoring logistical issues with extremely wide roads, which isn't the point of the induced demand argument). With housing, the induced demand is mediated by housing prices. More housing lowers prices, which attracts more demand, which raises prices. But it's not going to raise prices above where they would have been had no new housing been built. (If prices were higher in the more housing scenario, what's stopping the person who moved to the city at those higher prices from moving in the less housing scenario?)
- cpitman 7y ago
  Induced Demand (ie "bigger highways leads to more traffic") depends on having an alternative. IE, traffic can take a different route, people can take public transit, people can stay home, etc. It sounds like you are claiming that it is impossible to out build housing demand. This cannot be true. There is a finite population of people that want to live in any one place.
  - Spooky23 7y ago
    You are correct and the argument you are responding to is evidence of the boom period we are in. The NY Metro area is the definitive example of what you are talking about. Every lane of highway or bridge built increased traffic because it enabled someone to get the house they wanted cheaper somewhere else. Now, construction costs are too high and land is in tight supply. The result? Infill of formerly blighted areas (aka gentrification).
- dkhenry 7y ago
  So what you just claimed here is that adding more supply attracts more demand. With that logic by removing supply we reduce demand. So Airbnb would be reducing demand, especially on infrastructure since part time residents don't use the most expensive infrastructure ( schools ). Also there are cities where housing prices have stayed in check, and generally they have done it by building more supply. Here is a ink to a graph that show the difference between Dallas and Atlanta and San Francisco ( https://fred.stlouisfed.org/graph/?g=oe8E https://fred.stlouisfed.org/graph/?g=oe8E ). For reference Atlata had over twice as many new units constructed per year as San Francisco with half the population. This is why I say denying the supply side fix is dishonest. There is no reasonable measure where what you claim about supply attracting demand is true.
  - seanmcdirmid 7y ago
    Eventually it would right? If rents shoot up and people can’t make a living at it in that city, they will simply go elsewhere. AirBNB also doesn’t need public schools or the other businesses and services that are dedicated to residents, so those would go away also (and do in Airbnb heavy areas). Dallas and Atlanta are nit great examples, as they basically have unlimited land to expand on.
carapace 7y ago
> building more houses won't help solve the high cost of housing It won't: > Building enough housing to roll back prices to the "good old days" is probably not realistic, because the necessary construction rates were never achieved even when planning and zoning were considerably less restrictive than they are now. Building enough to compensate for the growing economy is a somewhat more realistic goal and would keep things from getting worse. https://experimental-geography.blogspot.com/2016/05/employment-construction-and-cost-of-san.html https://experimental-geography.blogspot.com/2016/05/employme... Unless we do something dramatic and Bucky Fuller-istic like... https://www.berkeleyside.com/2018/08/02/prefab-housing-complex-for-uc-berkeley-students-built-in-four-days https://www.berkeleyside.com/2018/08/02/prefab-housing-compl...
- dkhenry 7y ago
  It will and your links even say that > If the (first) model is correct, it would take a 53% increase in the housing supply (200,000 new units) ... to cut prices by two thirds There is no reason you couldn't build that many new units over a ten year period. In fact if San Francisco increased its construction to match D.C. it would have that many new units in less then a decade edit: Just to clarify, the only limitation is political. People don't want to allow the construction required and would rather pass protectionist laws that effectively lead to the Housing and Homeless crisis you see in SF and LA. In so much that you can convince Rich San Franciscans that those poor people they keep saying they care about should be able to have a reasonable path to getting housing you could fix it in less then a decade
  - carapace 7y ago
    Assuming the model has that predictive power is there really the physical capacity to build that much without adopting radical methods like the instant dorm? And if there is, is that really the best option? One the one hand, I grew up in SF and it's been hard coming to terms with the idea that I'll never be able to own my own home here. At this point I'm just glad that there's still (relatively) cheap land in the eastern part of the state. One the other hand, I don't want the city I love to be changed for the worse by rampant growth with the admixture of profit-driven decision-making to make the situation even more complicated. I've already got the futureshock[0], I don't think more-of-the-same accelerated 10x would result in a great place to live. One the gripping hand, I'd love to renovate the mega-structure of the Bay Area, clear off and revitalize the old creeks and replace the lost housing with arcologies[1]. [0] https://en.wikipedia.org/wiki/Future_Shock https://en.wikipedia.org/wiki/Future_Shock [1] https://en.wikipedia.org/wiki/Arcology https://en.wikipedia.org/wiki/Arcology

seanmcdirmid 7y ago

Name one mega city with lots of housing where the prices have actually gone down. It isn't rocket science: add more supply in a hot area, it attracts more demand. Kind of like how building wider highways doesn't really do anything for traffic jams. Most cities would like to keep their growth in check somehow so they have the appropriate infrastructure ready for it. Things that distort that (AirBNB, Chinese speculators, etc...) throw all of that off.

fjsolwmv 7y ago
Chinese speculators reduce growth by keeping property vacant. Airbnb doesn't affect growth. House prices are not growth, and they generate the tax revenue that you say helps get the infrastructure ready.
- seanmcdirmid 7y ago
  Building more supply to keep up with demand, no matter how real, would be growth.
aesthesia 7y ago
Induced demand is not an infinitely scalable effect. There is some point at which adding more lanes will in fact reduce traffic congestion (ignoring logistical issues with extremely wide roads, which isn't the point of the induced demand argument). With housing, the induced demand is mediated by housing prices. More housing lowers prices, which attracts more demand, which raises prices. But it's not going to raise prices above where they would have been had no new housing been built. (If prices were higher in the more housing scenario, what's stopping the person who moved to the city at those higher prices from moving in the less housing scenario?)
cpitman 7y ago
Induced Demand (ie "bigger highways leads to more traffic") depends on having an alternative. IE, traffic can take a different route, people can take public transit, people can stay home, etc. It sounds like you are claiming that it is impossible to out build housing demand. This cannot be true. There is a finite population of people that want to live in any one place.
- Spooky23 7y ago
  You are correct and the argument you are responding to is evidence of the boom period we are in. The NY Metro area is the definitive example of what you are talking about. Every lane of highway or bridge built increased traffic because it enabled someone to get the house they wanted cheaper somewhere else. Now, construction costs are too high and land is in tight supply. The result? Infill of formerly blighted areas (aka gentrification).
dkhenry 7y ago
So what you just claimed here is that adding more supply attracts more demand. With that logic by removing supply we reduce demand. So Airbnb would be reducing demand, especially on infrastructure since part time residents don't use the most expensive infrastructure ( schools ). Also there are cities where housing prices have stayed in check, and generally they have done it by building more supply. Here is a ink to a graph that show the difference between Dallas and Atlanta and San Francisco ( https://fred.stlouisfed.org/graph/?g=oe8E https://fred.stlouisfed.org/graph/?g=oe8E ). For reference Atlata had over twice as many new units constructed per year as San Francisco with half the population. This is why I say denying the supply side fix is dishonest. There is no reasonable measure where what you claim about supply attracting demand is true.
- seanmcdirmid 7y ago
  Eventually it would right? If rents shoot up and people can’t make a living at it in that city, they will simply go elsewhere. AirBNB also doesn’t need public schools or the other businesses and services that are dedicated to residents, so those would go away also (and do in Airbnb heavy areas). Dallas and Atlanta are nit great examples, as they basically have unlimited land to expand on.

carapace 7y ago

> building more houses won't help solve the high cost of housing It won't: > Building enough housing to roll back prices to the "good old days" is probably not realistic, because the necessary construction rates were never achieved even when planning and zoning were considerably less restrictive than they are now. Building enough to compensate for the growing economy is a somewhat more realistic goal and would keep things from getting worse. https://experimental-geography.blogspot.com/2016/05/employment-construction-and-cost-of-san.html https://experimental-geography.blogspot.com/2016/05/employme... Unless we do something dramatic and Bucky Fuller-istic like... https://www.berkeleyside.com/2018/08/02/prefab-housing-complex-for-uc-berkeley-students-built-in-four-days https://www.berkeleyside.com/2018/08/02/prefab-housing-compl...

dkhenry 7y ago
It will and your links even say that > If the (first) model is correct, it would take a 53% increase in the housing supply (200,000 new units) ... to cut prices by two thirds There is no reason you couldn't build that many new units over a ten year period. In fact if San Francisco increased its construction to match D.C. it would have that many new units in less then a decade edit: Just to clarify, the only limitation is political. People don't want to allow the construction required and would rather pass protectionist laws that effectively lead to the Housing and Homeless crisis you see in SF and LA. In so much that you can convince Rich San Franciscans that those poor people they keep saying they care about should be able to have a reasonable path to getting housing you could fix it in less then a decade
- carapace 7y ago
  Assuming the model has that predictive power is there really the physical capacity to build that much without adopting radical methods like the instant dorm? And if there is, is that really the best option? One the one hand, I grew up in SF and it's been hard coming to terms with the idea that I'll never be able to own my own home here. At this point I'm just glad that there's still (relatively) cheap land in the eastern part of the state. One the other hand, I don't want the city I love to be changed for the worse by rampant growth with the admixture of profit-driven decision-making to make the situation even more complicated. I've already got the futureshock[0], I don't think more-of-the-same accelerated 10x would result in a great place to live. One the gripping hand, I'd love to renovate the mega-structure of the Bay Area, clear off and revitalize the old creeks and replace the lost housing with arcologies[1]. [0] https://en.wikipedia.org/wiki/Future_Shock https://en.wikipedia.org/wiki/Future_Shock [1] https://en.wikipedia.org/wiki/Arcology https://en.wikipedia.org/wiki/Arcology