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If there’s demand for a hundred fancy houses and two hundred plain houses, but the government only permits twenty houses to be built, all twenty are going to be
by erik_seaberg 6y ago
If there’s demand for a hundred fancy houses and two hundred plain houses, but the government only permits twenty houses to be built, all twenty are going to be fancy. There’s profit to support building every variety of house, but we need to stop making it illegal.
- AnthonyMouse 6y ago> If there’s demand for a hundred fancy houses and two hundred plain houses, but the government only permits twenty houses to be built, all twenty are going to be fancy. On top of that, it's not even obvious that this is true. If you build a multi-story building with 30,000 square feet of housing, you can either make it ten 3000 square foot units or thirty 1000 square foot units. Which is more profitable? It depends on the local market but it's not inherently the smaller number of larger units.
- imtringued 6y agoUnfortunately in the face of property taxes both are the same or maybe it is worse. 30 small apartments that cost $200k (to build) or 15 big apartments that cost $400k both can end up paying the same amount of property tax. Replacing property tax with land value tax would push the profit calculation 100% in favor of lots of smaller units because you would only pay a fixed tax for the land. If the LVT is $360k/y the landlord would pay $1k tax per month in the small apartments. In the larger apartments he would pay $2k. The tax is a pure loss for the landlord so he wants to pay as little as possible by building more units.