5 ms·
> If zoning restrictions were relaxed, could house prices collapse? I don't see how that could be the case. The property value of a plot of land on which a 50,
by ProblemFactory 7y ago
> If zoning restrictions were relaxed, could house prices collapse?
I don't see how that could be the case. The property value of a plot of land on which a 50, or even 5 story building can be built is much higher than the property value of a single-family home.
- nostrademons 7y agoThere's a substitution effect. If zoning restrictions are relaxed and developer turns an acre into a 50 unit condo complex, that developer reaps a huge windfall. But everyone else who owns an Eichler on a 1/4 acre has fewer buyers competing for their property. It's sorta like when labor unions go away. The company that hires non-unionized labor at half the price and double the productivity reaps an enormous windfall. So do the employees, who were presumably in other, less well-paying jobs. Everyone else who chooses not to play the new game ends up out of a job.
- i_am_proteus 7y agoIs this correct? Or is this correct: As housing prices rise, it becomes cost effective to replace simplexes with duplexes, threeplexes, etc., causing the value of all simplexes to rise.
- kradroy 7y agoThe latter is correct. The price per sq ft will be at parity during development. Then buyers will compete for the smaller units that replaced the SFH properties. $/sq-ft will rise and pass over to existing, neighboring SFHs.
- CPLX 7y agoThat logic is literally ridiculous. Midtown Manhattan used to have single family homes too, now a half acre costs a hundred million dollars.
- maxsilver 7y ago> If zoning restrictions are relaxed and developer turns an acre into a 50 unit condo complex, that developer reaps a huge windfall. But everyone else who owns an Eichler on a 1/4 acre has fewer buyers competing for their property. That's not completely accurate. Yes, demand might fall, but even so price and value will still rise regardless. If you build a 50 unit complex next door, as long as some of those 50 units sell, then everyone elses 1/4th acre will become more valuable, even if no one ever actually buys them, because land value in the US has very little to do with buyers or demand, and is exclusively valued by whatever property transactions happen to occur nearby it.
- deleted 7y ago[deleted]
- jonny_eh 7y agoPlus the single family home will be just as desirable. New condos are still less desirable in comparison.
- DrScump 7y agoland value in the US has very little to do with buyers or demand, and is exclusively valued by whatever property transactions happen to occur nearby it I don't understand the distinction you seek to make here. Those transaction values are specifically the result of buyers and demand. Most residential properties here could have been snapped up in 2009 for about 60% of current costs... because demand was lower. (Probably several hundred percent in areas like Mission Bay.)
- pcwalton 7y agoThought experiment: If 500,000 new homes were suddenly available in San Francisco tomorrow, would prices decrease? Land value in the US obviously has to do with buyers and demand.
- mktmkr 7y agoI'd like to point out this is true only if the developer held the property during the regulatory change. Otherwise the developer makes their customary razor-thin profits and it is the seller of the land who reaps the huge windfall.
- MiroF 7y agoIt's just basic supply and demand
- JamesBarney 7y agoDo we care much about the price of land or do we care how much it costs for someone to live there? I believe it's the latter. So yes the price of land would go up, but the price of livable space would fall. And the cost of livable space is what we care about with regards to affordable housing.