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Here's why investors buy up houses: they know your neighbors will do the dirty work of artificially constraining the housing supply, which makes it a good inves

• spoonjim 5y ago
  After I spent my entire net worth plus a good chunk of my future net worth on this house you can be damn right I’m going to vote to protect its value.
  • symlinkk 5y ago
    “Screw you, I got mine!” The capitalistic attitude in a nutshell.
    • AQuantized 5y ago
      More like "I got screwed and I'd rather other people get screwed than get screwed further." Obviously not selfless, but I don't think the housing market is their fault.
      • symlinkk 5y ago
        Yeah why fix anything ever? If it was bad for me it should be bad for them too right?
        • kody 5y ago
          In fact, I'll actively try to make things worse for them to try and eke out a little profit.
        • rabuse 5y ago
          Do you own/mortgage a house you're willing to lose what you put in?
      • JAlexoid 5y ago
        BANANA results in higher homeless rates, that means that denying any building anywhere... you're actively supporting increase in homelessness.
  • CapmCrackaWaka 5y ago
    Hmmm this just seems like a bad decision on your part. I bought my house in 2018 and it was expensive, yes, but definitely manageable on my salary. I definitely would not buy a house right now, especially if it required spending 'my entire net worth plus a good chunk of my future net worth'.
    • jiux 5y ago
      What key metrics do you observe when it boils down to determining whether or not you feel it is a good or bad time to buy?
    • spoonjim 5y ago
      Almost everyone spends more than their present net worth on their house. It’s great for you that you didn’t have to but I’m not in the minority.
    • granshaw 5y ago
      It's a vicious cycle – OP and others are forced to commit most of their wealth to own a home because of all the NIMBYs that came before them, and on and on.
      • JAlexoid 5y ago
        Nah... That's just ignorance. It's like the American opposition to pedestrianization of blocks. Pedestrianized blocks increase local business footfall and increase high margin economic activity. New developments in your community increase value of your home, far better than restricting development.
        • rabuse 5y ago
          How's that? Genuinely curious.
          • JAlexoid 5y ago
            Opposition to development hurts the homeowners value, a lot. The value of your home doesn't only depend on the fact that it's in a rich neighborhood with beautiful lawns, but the services and proximity to said services. NYC is desireable, not because it's a big city... but because you can get services there. Take away the services - you take away all of the value proposition.
  • jMyles 5y ago
    If "protect its value" means maintain and strengthen it, retrofit it against likely disasters, plant gardens and craft way to preserve the products, add off-grid energey infrastructure, etc., then that's great. If it means try to use the heavy hand of the state to prevent others from living their best life, then you aren't protecting anything; you're violently stealing the future net worth of others and making it your own.
    • spoonjim 5y ago
      It’s all violent stealing back to the white people who took this land from its settlers at the wrong end of a gun. I got ripped off and I’m not going to be the bigger man and be the first person in this chain to say “it’s ok, I don’t mind losing a million dollars on this.”
      • starclerk 5y ago
        Hyperbole doesn't help here. Legalizing four-plexes in your neighborhood will almost never knock a million dollars off your home's value. I bet it'd be hard to find many examples of upzoning causing SFHs to drop significantly in price anywhere.
  • deleted 5y ago
    [deleted]
  • zip1234 5y ago
    Gambling your entire net worth on a single hyper-local investment is not a good idea.
    • TuringNYC 5y ago
      Sadly in many parts of the US, that is how one gets access to the best public schools -- via home purchases. Many of the best public schools are in districts w/o a large number of rentals.
    • spoonjim 5y ago
      It’s a great idea, it means that my kids will go to school with other kids whose parents care a lot about their education. A large amount of money shouldn’t be needed for that, but I didn’t see another way to achieve that outcome.
      • trainsplanes 5y ago
        Schools can go downhill pretty fast, and often do. Markets also go downhill. If you really went all out with paying for it, you also need to hope that your employment will remain stable. People who are very comfortable with their job and predict no downsides are often the ones getting bitten when the market changes, as it always does.
  • quadrifoliate 5y ago
    It is worthwhile to recognize that there is nothing unusual in this response, many homeowners feel this way. But then by same token we can also move to justifying other things, like not hiring people without CS degrees (I spent $xxx,xxx on my CS degree, I want to protect its value), only hiring other MBAs, only hiring people with prior experience in tech companies etc. – which can perpetuate and amplify inequality in opportunity among society. At what point do we move from that to a more altruistic viewpoint? I am genuinely not sure.
    • kody 5y ago
      There's "wanting to protect the value of your home" and there's "I'm going to vote NIMBY/BANANA and screw everybody else out of a place to live because I decided to 'invest' all my money in this house and expect it to be a nest egg that catapults me out of the working class." It sounds like the parent is in the latter category. Is the problem "losing value in my house" or "not realizing astronomical gains like my peers"? And if building much-needed housing does decrease your house's value then hey, maybe your house was overvalued at the price you paid and you made a bad 'investment'. Why punish everyone else and artificially strangle housing supply to cover your bad decision?
• runawaybottle 5y ago
  Also, the low supply of new houses already created a market for them to control. If there’s already a bottleneck, then half your job is already done. Buy everything up, and continue buying new ones at a decent rate to maintain the bottleneck. A veritable housing OPEC controlling the outflow and production of homes. Sinister stuff. Congress absolutely needs to do something about this.
• ChrisMarshallNY 5y ago
  In Queens and Brooklyn, before the Amazon NYC Headquarters was derailed, they had bus tours of Chinese investors, driving around, looking for for sale signs. It was crazy.
  • tootie 5y ago
    That has been very common for the last 30 years and AFAIK hasn't slowed down.
    • ChrisMarshallNY 5y ago
      30 years? That seems like a long time for China. Maybe the Japanese and/or Koreans?
      • pempem 5y ago
        30 years ago was only the 1990s, its on track.
• scotuswroteus 5y ago
  You lost me at the end. You lack political acumen if you think this is how politics works: " If there's a credible threat to build plenty of housing, they'll move on." The Yimbies supported Mayor Breed. She hasn't changed the political problems in SF that you're (for the most part, accurately) diagnosing here. The problem with most anti-activist government screeds like this is that they lack the same nuance and sophistication they would bring to, for example, commenting on a market analysis. I'm almost certain your position here is "end zoning." I'm fine with that. But it takes way more than shit posting, and the people who believe what you do are literally at the top of the city's government in San Francisco, and nothing has changed. You need a better understanding of politics and a sharper theory of change. Just applying your own premise to this comment, investors are actually relying on people like YOU failing to learn more about politics and failing to understand how to better communicate about politics. YOU are part of the problem, not above it.
  • davidw 5y ago
    I don't live in San Francisco, and our local YIMBY group is getting things done, thank you very much. We helped nudge our local representatives towards passing HB2001 in Oregon, which will add to the supply of more affordable homes. We've helped get apartments built locally. We speak regularly with our city councilors. It takes a lot more than being 'highly online' and YIMBY groups are doing that work.
    • zamfi 5y ago
      Now that duplexes are allowed, how long does it take to get one approved?
      • davidw 5y ago
        Still too long. The bill has not been fully implemented as cities have a few years to adapt it into their code. But you just keep pushing where you can.
        • OldGoodNewBad 5y ago
• jakub_g 5y ago
  Love CAVE and BANANA acronyms! Very good summary of world in 2021 (sadly).
  • dvh 5y ago
    DILDO (double income large dog owners)
• rcpt 5y ago
  I'd say the tax advantages have a lot to do with it to. A portfolio of several thousand Prop 13 jackpots is a pretty good situation to be in.
  • BizarroLand 5y ago
    Makes me wish that they would increase property taxes for multiple residence owners & make sure to include residential conglomerates. It should be that each additional house after the first has a tax penalty that increases on a logarithmic scale to make it financially unsavory for people to own more than one house. In an ideal world, owning multiple homes would be an ostentatious display of wealth and not a common investment vehicle.
    • kevin_thibedeau 5y ago
      The wealthy will just create a bunch of LLCs that own one house each.
      • mikepurvis 5y ago
        Indeed— like a lot of these things, it would punish upper-middle class families who inherit a cottage, but not affect anyone with >5 residences since at scale the work needed to evade becomes worthwhile.
      • jnosCo 5y ago
        There's already multiple rules for "primary residency", you could structure a progressive property tax off of that.
      • jbigelow76 5y ago
        Then single family homes owned by LLCs should be taxed out the ass. I know it's a cat and mouse game, but if a corporation is the owner of a home that should be a dead give away that it should be taxed at a higher rate than for one owned by an individual.
    • rcpt 5y ago
• erikerikson 5y ago
  Not only investment but also as a safe holding of value or shadow banking unit of account. Once you get enough money there's no safe place to keep it. While banks are relatively low friction, real estate ownership is like an account with the state, "guaranteed" by our attachment to the structure of our society and the government's "monopoly" on legitimate violence.
• brightball 5y ago
  I just experienced something similar to this and it makes me wonder if much of this is just perception. We recently dealt with an out of state builder pushing to have a property that was zoned Neighborhood Commercial to be rezoned to something more flexible so that he could build 49 town homes with 49 parking spots on 5 acres of land. Everybody opposed the rezoning and fought to defeat it. The project would have been the most dense townhome development in 4 counties. There is uniform agreement that people want commercial projects built there as zoned, but I wonder if the opposition would be classified as NIMBY?
  • davidw 5y ago
    Without knowing more, it sounds complicated: denser infill housing is good in so many ways. Mixed use, with commercial on the ground floor and housing above is even better in many situations, but not all developers do that kind of thing. So it kind of depends on what the alternatives are and what the housing situation is like where you live. There are places where "the perfect is the enemy of the good" in terms of what gets built. Commercial is critical for '15 minute neighborhoods': https://www.strongtowns.org/journal/2019/9/6/7-rules-for-creating-15-minute-neighborhoods https://www.strongtowns.org/journal/2019/9/6/7-rules-for-cre... - but without the density to support local commerce, it's tough to justify it. But I don't think 15 minute neighborhoods are likely what your angry neighbors had in mind, so most likely just NIMBYism.
    • milkytron 5y ago
      Where I live now is planned to be a 15 minute neighborhood. I moved into one of the first new developments of many, all residential, all within a 5-10 minute walk of a train station. There are about 1000 housing units being built, and there has been zero commercial development. It's great that they are building dwelling units here all around transit, but the only businesses that already exist are industrial, a gas station, and a dollar store. Commercial land owners have been refusing to sell to developers as they watch their land value increase. It's a real shame, but it does seem better than what existed before and the area certainly has potential.
  • MoosePirate 5y ago
• mumblemumble 5y ago
  How does this not play out like Archegos in the end? https://www.bloomberg.com/opinion/articles/2021-04-08/archegos-got-too-big-for-its-banks https://www.bloomberg.com/opinion/articles/2021-04-08/archeg...
  • deleted 5y ago
    [deleted]
  • the_optimist 5y ago
    If you’re politically connected and influential, you get bailed out. Also, Blackrock is intermediating people’s pensions, so they’re ultimately just levering up retirees against the future generations of home buyers (empowered by the Fed). Think the politically connected Fed/DC/Davos crowd is simply going to just hand over power and influence?
    • mumblemumble 5y ago
      Aha. So, basically, there are some failures in this particular market that make it more difficult for prices to correct themselves?
      • quickthrowman 5y ago
        The Fed buying $40B of MBS bonds a month sure isn’t helping
• an_opabinia 5y ago
  > Support groups like https://yimbyaction.org/ https://yimbyaction.org/ if you want to 'stick it to the investors'. I’m pretty sure you’re not sticking it to investors if you support development. You might be sticking it to different investors.
  • MoosePirate 5y ago
    Disincentivize the rent-seeking investors. Incentivize the investors creating and selling something of value.
    • davidw 5y ago
      Precisely. Also, really, the vast majority of benefits from housing scarcity accrue to existing homeowners: https://oregoneconomicanalysis.com/2021/03/16/who-benefits-from-the-housing-market-graph-of-the-week/ https://oregoneconomicanalysis.com/2021/03/16/who-benefits-f...
  • jimrandomh 5y ago
    The word "investor" is conflating two things. On one hand you've got "investment" where someone pays up front for materials, construction workers, and equipment, producing a building, and then makes money by selling or renting that building. This is good, because it resulted in a building that people can live in. On the other hand you've got "investment" where someone purchased a preexisting building, in a way that's disconnected from the process that caused it to get built in the first place. This is usually neutral or bad. So yes, it's sticking it to different investors. But that's a good thing! Stick it to the investors for whom "investment" means pushing dollars around, rather than the ones for whom investment means construction.
    • jlawson 5y ago
      A major reason the first investor built the building is because he/she knew someone else would buy it later. Otherwise people can only invest things they're ready to run themselves basically forever. This would destroy the economy.
• ta1234567890 5y ago
  And, at least in California, realtors will always push prices up. It’s pretty much never in their best interest to lower the price. Even the buyer’s agent gets paid a percentage of the sale price, so if they try to lower it they’d be essentially working against themselves. And this is without even accounting for all the schemes realtors create (like listing below market to get a lot of offers and create artificially high demand to put pressure on the top offers to increase their bids as high as possible, as well as make them waive their contingencies).
  • icyfox 5y ago
    Fun fact: Listings in California used to contain a unilateral offer of subagency by default. So _all_ realtors were legally bound to work in the seller's interest, even if a buyer had reached out to them in the first place. So you can imagine how often you would disclose your buying criteria to "your" agent only to have them utilize that against you.
  • nopeNopeNooope 5y ago
    That sounds insightful, but there's no point in screwing a buyer for a tiny today payday. Those agents work on volume, so if you think they're pushing you to not get the lowest price, it's so they can close the deal, not because their incentives aren't aligned with yours. If they're telling you to offer more, it's because they have better knowledge of the market and the game than you. They're banking on many commissions a month, not on the fractional share of that extra $10k you don't want to fork over.
    • pdpi 5y ago
      It’s similar (if symmetrical) to the situation with recruiters — most of their money comes from getting you an offer and you then accepting it. Negotiating a better salary gives them more money, but costs time that would’ve been better spent getting another person a job.
    • svachalek 5y ago
      The fact that they're focused on volume is exactly why their incentives are not aligned with yours.
• OldGoodNewBad 5y ago
  Why artificially? People move into single family dwelling neighborhoods because they have lower crime and better schools. There’s nothing artificial about selecting the best environment for yourself and your family. Is it necessary to artificially editorialize when you’re making what is, at its root, a thinly veiled socio-political point?
  • ryandrake 5y ago
    I agree. I moved to a suburban single family home neighborhood specifically because I like the environment of a neighborhood with suburban single family homes. That suits me and my family. Others might like low-rise apartment buildings and townhomes, and they should have access to neighborhoods with that type of housing. Others might like high-rise apartments, and those neighborhoods should be available too. Why is it so bad that many different types of neighborhoods exist?
    • OldGoodNewBad 5y ago
      As an Oregonian I’m a little disgusted with social activists in Portland couching their impending rape of many neighborhoods across the state as YIMBY when this policy was designed to attack rural Oregon specifically.
    • mixmastamyk 5y ago
      Nimbys fight against higher density housing everywhere. Read the BANANA definition up thread.
  • JAlexoid 5y ago
    So why would people like you oppose development of other single family homes in your area? Or go out of your way to oppose development of high density buildings around transit stations? (Don't take it personally, but you know that many people will in principle oppose a mixed density development in not far from their homes - 5-10miles. Or pedestrianization of a street, in the middle of their town) Look at the map of LA, where there's miles upon miles of low rise buildings... That need not be there, if a few high density blocks were created. Or the insanity of San Francisco...
• paganel 5y ago
  > they know your neighbors will do the dirty work of artificially constraining the housing supply And then the same middle-class (mostly white, with some Asian mix on the West Coast) plays the "revolt game" of supporting the Afro-American and Latino US population, blaming the latter's condition only on racism, totally ignoring the class war now unfolding in the States of which they (said middle-class) are the "baddies" part. Absolutely appalling.
  • mixmastamyk 5y ago
    This comment is too on the nose, but there is truth to it. In the hypocrisy of urban nimbys, oblivious to the fact that their actions directly contribute to income inequality.
• bennysomething 5y ago
  They know that the current government planning regulations mean that getting anything built is extremely difficult. They know that due to supply and demand that this makes property a wise investment. Blame planning regulations. I read recently that Japan and new Zealand scrapped various regulations and this led to stabilization / lower of property prices. Near me, someone is sticking up protest letters at bus stops complaining a developer wants to build flats. For heaven's sake, people need to live somewhere, please do build.
  • spunker540 5y ago
    It probably didn’t hurt that Japan has a declining population, so supply > demand
    • Drunk_Engineer 5y ago
      California and NYC have a declining population.
      • pixl97 5y ago
        Along with huge portions of the rural midwest. It all has to do with meeting the demand where the demand exists.
      • yawaworht1978 5y ago
        Just distorted number because of increases homelessness. Sarcasm , however, there is a bit truth to that.
      • viscanti 5y ago
        If you cherry pick data during COVID that's true. But it was the first year since 1900 with any decline and state forecasters say it's more to do with over 50,000 COVID related deaths and less migration from other countries (the largest source of population growth for CA for many years now) because other countries were locked down. As far as I know, no one expect that decline to be anything more than a very temporary thing.
• kerng 5y ago
  Another reason to consider: money printing and inflation
• swiley 5y ago
  This is a dumb investment. In order for the entier country to not descend into dysfunctional chaos there will have to be statewide laws that prevent this sort of brain damage. When that happens there will be nothing keeping the prices of individual housing units in these areas up.
  • notimetorelax 5y ago
    By that time - funds will have charged their fees, personnel will have earned their bonuses, etc.
• Guest42 5y ago
  I think also that high lumber prices combined with tariffs contribute quite a bit.
• jxramos 5y ago
  this is interesting, when supply is artificially limited so reliably you can bank long term investments on it. Pretty amazing.
• ClumsyPilot 5y ago
  Housing is not a normal rational market like a market for shoes, every ecobonist knows that much. Housing supply cannot, and never could fix the problem. There is no city or country in the world where this has ever succeeded. The house prices are rising because of increasing financialisation of our economy, cheap credit and low interest rates. 700,000 people left London during pandemic, put prices keep rising. If we offered 300 year long mortgages that get passed on to your next of kin, house prices would quadruple overnight. The price of a house has no relationship to it's utility, like it does for all other goods. You know you will always be able to sell it for more to the bext sucker.
  • mixmastamyk 5y ago
    False, false, and false. True, financialisation is a factor, combating that must be part of the solution.
    • ClumsyPilot 5y ago
      "False" is a hell of an elaborate argument, very convincing when placed against 50 years of data across 5 countries, all leading to same skyrocketing housing prices.
      • mixmastamyk 5y ago
        Nothing more needed to refute an argument of said quality. If I delivered one million finished apartments to your city anywhere in the world today, the average price would go down. How about ten or a hundred million? Q.E.D. Housing scarcity is real, whether you believe it or not.
        • nmfisher 5y ago
          I'm really not sure that's true. I don't know exactly how many were built, but Melbourne (Australia) added a lot of CBD apartments and the price continued to shoot up. Those were overwhelmingly tiny/cheap/low-quality/investor-bought apartments, but the fact is they were still there.
• zamfi 5y ago
  > they know your neighbors will do the dirty work of artificially constraining the housing supply, which makes it a good investment ...until your neighbors are all renters, at which point the tide turns?
  • mixmastamyk 5y ago
    A lot of renters are nimbys as well, due to misconceptions, or other factors such as rent-control affecting their outlook.
    • zamfi 5y ago
      Err…no one wants their neighborhood to suddenly have a bunch of new unknown people in it, right? You don’t have to be a nimby to be concerned about who you live next to. It’s not a “misconception” in that sense, especially if moving is impossible because of rent control, as you mention. Perhaps we need better protections around dealing with insufferable neighbors and other neighborhood changes’ negative impacts, and people will object less?
      • mixmastamyk 5y ago
        I live in a big city, and currently know maybe 1% of the neighbors if lucky. Unknown folks are not a concern.
        • zamfi 5y ago
          I believe you, on the other hand, you’re one data point, and apartment buildings have stricter rules about acceptable activities and behavior (as I propose above). Even in the biggest cities, apartment buildings often have board that approve sales and/or new residents.
• legulere 5y ago
  I would not call it artificially constrained supply. New construction in the vicinity has an effect on the quality of life in the existing houses/flats. In the end space is indeed physically constrained, especially where people want to live. Even from that scarcity perspective a lot of low density construction just seems like waste. I guess you could get both perspectives behind a Georgism type land value tax.
• joe_the_user 5y ago
  If you could unravel all perverse effects of American localist planning and regulation, it would be great. But if the idea is just "let the developers build where they want and that solves everything", that idea is wrong. Developers don't want to build the dense, affordable house that's needed. Developers want to take advantage of the existing housing and housing expectation and build one bigger house or bigger development one ring out among the suburbs. What's needed is dense construction near to cities and regulations to support that. And "Yimby" and so forth aren't supporting no regulations, they're supporting pure developer friendly regulations, which won't do anything but give them a piece of the present perverse "gold rush".
  • WalterBright 5y ago
    Developers make money by building what people want.
  • hilbertseries 5y ago
    What is this nonsense? Yimbys are support upzoning property, so denser housing can be built. They support removing parking minimums so denser housing can be built.
    • joe_the_user 5y ago
      Most places (where I live, Nevada City, for example) upzoning and reducing parking limits would just create problems. It's the actual central areas where you want to allow much greater density. A denser outlying suburb isn't a win.
      • jbay808 5y ago
        Outlying suburbs should see an increase in the sorts of things that make them "places". Cafes, bakeries, bars, restaurants, offices, markets, schools, plazas, bookstores, and so on. Then they can further densify without automatically driving more commute traffic into the city.
        • 5y ago
• rwcarlsen 5y ago
  I've been trying to build a house for myself. Going through all the hoops is not only cumbersome and expensive - but nearly impossible. I've run into legal tiff's between the county and nearby city. The city wants me to pay $40,000 for a sewer hookup for a single family dwelling when the sewer line is literally right along the road in front of where we will build the house. This is because the city has a beef to pick with the county and they are charging me based on the size of my parcel rather than the number of hookups I need. My house is actually in the county (but in the city impact zone). So now I'm spending my time combing through legal records, state supreme court case rulings, etc. all relevant to my situation to try to get things resolved. Literally everything is a fight. I even had to push and fight to get a build-right for the parcel - because it is currently zoned ag - which my country requires a max house density of 40 acres per house. I could rezone - but that would require me to get permission of all my neighbors to rezone so that my new residential zoning would be contiguous with existing residential zoning. I've had to fight to get permission to have an arch/rainbow driveway. Then I wanted to have an accessory dwelling, but ag zoning doesn't allow this either - never mind that this is totally allowed for all residential zoning types in the county and nearby city. And on and on. I've spent several hundreds of hours and tens of thousands of dollars trying to jump through all these hoops - and I haven't even started building anything yet!
  • slashdot2008 5y ago
    There is lots of ag zoned land around me. nobody wants it rezoned to residential as that means more people and most people don't want more people around. People always buy the ag lots cause they are cheap and have low taxes if you have ag activity, and then want to build more housing on them than the zoning allows, because that is lucrative. just use a septic field instead of the sewer hookup if the county won't play ball. then they can't increase your sewer rates every year.
    • rwcarlsen 5y ago
      Unfortunately, the health district won't issue a permit because of the existence of the "will serve" letter from the city. So this is turning into quite the ordeal to get sorted out. I'm really hoping to keep things out of the courts, but that is a very real possibility. And I live in a relatively low-regulation state. I don't know how anybody ever builds anything in CA or NY.
• srj 5y ago
  Consider that: - Most American households own their home. - Homeowners vote at substantially higher rates than renters. - Home equity is one of the largest components of American wealth (roughly equal with retirement accounts). Taken together it's difficult to see how home values will be allowed to fall.
  • dvdhnt 5y ago
    > Most American households own their home. Do you have a reference for that? I'm interested to see how it breaks down. I have to assume this is true because of America's aging population.
    • kregasaurusrex 5y ago
      There's data released directly by the US Census Bureau for this: https://fred.stlouisfed.org/series/RHORUSQ156N https://fred.stlouisfed.org/series/RHORUSQ156N
      • throwaway2037 5y ago
        Wiki says 64.2% in 2018. Ref: https://en.wikipedia.org/wiki/Home-ownership_in_the_United_States https://en.wikipedia.org/wiki/Home-ownership_in_the_United_S...
  • squiggleblaz 5y ago
    > Taken together it's difficult to see how home values will be allowed to fall. If you allow increased density, and you use it to provide actually valuable homes (rather than studio/one/two bed apartments or the like mostly intended as a store of wealth), then land value can go up while unit value goes down. This means people joining the market can buy for a couple of years salary, while people already in the market can exit and downsize for a decade's salary.
    • rch 5y ago
      I would very much like this to be true. Do you have a citable source?
• dionidium 5y ago
  This explains why the price per unit is very high, but the land itself is valuable in the first place because there's high demand for it and that land would be even more valuable if it were legal to build more units on it, which would lower the price per unit, but increase the overall value of the investment. This is what's called a win-win.
• majormajor 5y ago
  Is there a market in the US where density and population growth has made land cheaper? I can't think of one. Development increases the value of land in the long run, that's nearly tautological; investors in land will benefit from this increase just like the developers themselves do. I think there's a high likelihood that the markets for "home with land" and "condo" diverge further in the future. Increased demand and density only increases the scarcity of single family homes with actual plots of land in popular areas. There are a lot of vacant/under-utilized properties, especially ones zoned commercial, next to high-demand residential areas in my town. The owners seem to be just sitting on the property and waiting, vs actually fully making use of it currently. I'd go a step further: why are we arguing about single-family homes when we have homeless people camped out around unused commercial and industrial properties? That's the property that's being wasted and could most-easily be re-utilized. If you have continual high demand it will be difficult to add supply fast enough once you run out of empty surrounding land (that's the biggest difference between the big coastal cities and the Phoenix/Dallas/Atlantas of the world) because it requires demolition and higher-density construction), but at the very least if you're in that situation, attack the empty areas harder! (Whether or not there's ANY good sustainable long-term solution for perpetual demand growth is another question entirely...)
• dd36 5y ago
  It’s low rates and the realization that they can artificially constrict supply. It’s rent seeking and until a decade ago, it was absent in SFR.