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> Cities are becoming more expensive because of zoning. If this were true, then all the US cities without zoning should be getting cheaper. But they aren't. Th
by maxsilver 7y ago
> Cities are becoming more expensive because of zoning.
If this were true, then all the US cities without zoning should be getting cheaper. But they aren't. They are also getting more expensive, and at similar (sometimes even faster) rates as major coastal cities.
> If you build enough housing that demand equals supply prices will be stable.
If this were true, then all the cities losing population should be getting cheaper. (Demand falling with stable supply should decrease prices). But they aren't, these cities are also getting more expensive, and at similar (sometimes even faster) rates as major coastal cities, despite the drop in demand.
If this were true, then all the cities outbuilding their population growth (cities where new units exceed new residents) should be getting cheaper. (Supply greater than demand). But they aren't, these cities are also getting more expensive, at similar/faster rates as major coastal cities.
> (Tokyo) property prices and rents are basically flat because they’ve built more housing.
No, Tokyo property prices are flat because they allow housing and land to depreciate, they don't artificially prevent that from happening.
The US does prevent this. The US does everything it can in basically every city to prevent depreciation from happening (often at the city, county, state and federal level).
If we had let the banks fail in the mortgage crisis last decade, for example, we'd have a much more accurate housing market in the US. But since instead, all housing in every city is guaranteed to appreciate, and since the full faith of the federal government forever backs that guarantee over a long enough time, there's no reason for property values in general to not go up.
Every investor with cash who wants the highest risk-free returns is looking at this situation and thinking "it's free real estate".
- randallsquared 7y ago> If this were true, then all the US cities without zoning should be getting cheaper. ...by which you mean Houston, since it's the only one. Houston is also getting more expensive, so that doesn't invalidate your point, but a control size of one is concerning. :)
- maxsilver 7y ago> by which you mean Houston, since it's the only one. Well, and Minneapolis, and Grand Rapids (which has had no SFH zoning for over a decade straight now, but despite this, has had endured a ~2.5x increase in housing prices, and almost a 2x increase in rents). But yeah, Houston is a perfect example of this too. And of course, 70%+ of all cities in the Midwest have no enforced zoning. They have zoning laws on the books of course, but regularly waive them with variances for almost every project that requests one. I get that in California specifically, zoning rules actually have a little bit of bite, so in California specifically, fighting zoning rules might be a good thing, and HN is very California-centric, so people's opinions on topics are heavily influenced by their local situation. But California is not the whole of the US, that tactic won't work anywhere else, because by Californian standards, the rest of the country effectively already has almost no zoning. (Either literally, or effectively through waivers/variances). Every other mid-sized-or-larger city in the US is already in "build baby build" mode 24/7, and it's only ever increased prices everywhere it's happened. This should be clear to anyone who has ever paid for an property assessment -- property is valued almost entirely by the cost of the nearby property. The more valuable anything nearby gets, the higher prices everyone will have to pay.
- redisman 7y agoThe simple root-cause is that people are moving back to the cities right? Flight to the suburbs has reverted for now. Ironically the high prices are driving people back to the suburbs once they have kids.
- tathougies 7y agoA doubling over the course of a decade is not really concerning. That is the expected doubling time if prices increase 7% yoy, which is slightly under (some would argue a lot under, maybe almost half) the return on stocks. In so far as housing is a form of investment for those willing to buy and rent, then one would expect that the return is around the rate of (basically) risk free return on the stock market.
- lotsofpulp 7y agoSource for any of your claims? It’s extraordinary to claim that something is not subject to supply and demand.