4 ms·

Who cares? Once equilibrium is reached, prices will be lower (or at least, rise more slowly). That’s simple supply and demand. Those property developers are ta

Who cares? Once equilibrium is reached, prices will be lower (or at least, rise more slowly). That’s simple supply and demand. Those property developers are taking on a considerable amount of inventory risk. One hiccup in the housing market and they go bankrupt. If that’s the game they are willing to play, then so be it.

nitrogen 7y ago
There's not a whole lot of risk in being first in line to buy up all of the XBoxes and scalping them to desperate parents. Or to buying up enough aluminum that you can hoard it. Or owning enough land that you choose the price. When you control the supply of an essential resource, you can name your price. Great way to make money, terrible way to make a society.
- epistasis 7y ago
  What Oregon did here, massively increase the supply of buildable land in one fell swoop, is pretty much the antithesis of those shortages you talk about there though. The trend for cities in the past 75 years has been to down some continuously until there's not enough spare land that's zoned to account for the necessary population growth. Then, in that highly supply constrained environment, use political processes to upzone only a tiny amount of land. Typically this is the "blight," the few places that minorities where allowed to live when racist deed restrictions were allowed, the areas where city services were less, and that stayed that way. Societies would take the most undervalued land, force the huge backed up pressure into these vulnerable neighborhoods, and let the few lucky developers that were politically savvy enough to navigate the process make away with the profits. Now that it's everywhere, there will be more competition between developers and there will be far less exploitation of an artificially restricted resource. Land is already restricted enough, zoning for density just makes it all the more scarce and exploitable by the powerful.
  - podunkPDX 7y ago
    Living here in Portland, though, my fear is that it won’t be developers taking a flyer to build these homes, it will be the investor class bankrolling the developers to build permanent rental properties. Hoping I’m wrong, but the last few decades’ antics with investors tells me I’m not.
    - sjg007 7y ago
      Maybe. You may get owners who live in one duplex and rent the others out. Or two couple Buy two and rent the others out. Lots of options. I would do it. In fact seems like a good reason to move to Minneapolis.
      - ajxs 7y ago
        I'm a little speechless that so many people seem to think that this decision will empower the owners of these lots more so than investors. It takes a significant capital investment to convert a single dwelling into a duplex. At the very least for most people this will require incurring a significant mortgage, more likely than not just being outright prohibitively expensive. It's not like every piece of land will become twice as valuable in practice, that will take quite some time for the demand to catch up to the supply. In the meantime, the land is slowly purchased by developers and investors to build multi-tenant dwellings.
        sjg007 7y ago
        Banks will offer special financing, it will be straightforward once a model is proved. You can get remodeling loans. You can build a home with 3% down. You can buy into a neighborhood (crappy teardown where the property is basically the land value). This is not a difficult thing.
    - cycrutchfield 7y ago
      What’s with all the handwringing over investors and developers? Yes, some people will benefit from this decision, just as some people would have benefited from the opposite decision. Who cares? The only thing that will reduce housing prices is more housing being created.
- scarface74 7y ago
  There's not a whole lot of risk in being first in line to buy up all of the XBoxes and scalping them to desperate parents. There are external risks. In the case of XBox, Microsoft can either unexpectedly increase supply or the demand can be lower than expected.

nitrogen 7y ago

There's not a whole lot of risk in being first in line to buy up all of the XBoxes and scalping them to desperate parents. Or to buying up enough aluminum that you can hoard it. Or owning enough land that you choose the price. When you control the supply of an essential resource, you can name your price. Great way to make money, terrible way to make a society.

epistasis 7y ago
What Oregon did here, massively increase the supply of buildable land in one fell swoop, is pretty much the antithesis of those shortages you talk about there though. The trend for cities in the past 75 years has been to down some continuously until there's not enough spare land that's zoned to account for the necessary population growth. Then, in that highly supply constrained environment, use political processes to upzone only a tiny amount of land. Typically this is the "blight," the few places that minorities where allowed to live when racist deed restrictions were allowed, the areas where city services were less, and that stayed that way. Societies would take the most undervalued land, force the huge backed up pressure into these vulnerable neighborhoods, and let the few lucky developers that were politically savvy enough to navigate the process make away with the profits. Now that it's everywhere, there will be more competition between developers and there will be far less exploitation of an artificially restricted resource. Land is already restricted enough, zoning for density just makes it all the more scarce and exploitable by the powerful.
- podunkPDX 7y ago
  Living here in Portland, though, my fear is that it won’t be developers taking a flyer to build these homes, it will be the investor class bankrolling the developers to build permanent rental properties. Hoping I’m wrong, but the last few decades’ antics with investors tells me I’m not.
  - sjg007 7y ago
    Maybe. You may get owners who live in one duplex and rent the others out. Or two couple Buy two and rent the others out. Lots of options. I would do it. In fact seems like a good reason to move to Minneapolis.
    - ajxs 7y ago
      I'm a little speechless that so many people seem to think that this decision will empower the owners of these lots more so than investors. It takes a significant capital investment to convert a single dwelling into a duplex. At the very least for most people this will require incurring a significant mortgage, more likely than not just being outright prohibitively expensive. It's not like every piece of land will become twice as valuable in practice, that will take quite some time for the demand to catch up to the supply. In the meantime, the land is slowly purchased by developers and investors to build multi-tenant dwellings.
      - sjg007 7y ago
        Banks will offer special financing, it will be straightforward once a model is proved. You can get remodeling loans. You can build a home with 3% down. You can buy into a neighborhood (crappy teardown where the property is basically the land value). This is not a difficult thing.
  - cycrutchfield 7y ago
    What’s with all the handwringing over investors and developers? Yes, some people will benefit from this decision, just as some people would have benefited from the opposite decision. Who cares? The only thing that will reduce housing prices is more housing being created.
scarface74 7y ago
There's not a whole lot of risk in being first in line to buy up all of the XBoxes and scalping them to desperate parents. There are external risks. In the case of XBox, Microsoft can either unexpectedly increase supply or the demand can be lower than expected.