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Housing can be both affordable and profitable with a organized system of infill development. eg: You buy a single family home in an inner ring suburb in 1990 fo

Housing can be both affordable and profitable with a organized system of infill development. eg: You buy a single family home in an inner ring suburb in 1990 for $150K. You sell it in 2021 to a developer for $2.1M (9% RoR), the developer tears it down and spends $1.5M to build 12 apartments on the same footprint of land that sell for $350K each (~400K profit net transaction costs). People in 2021 are paying the same amount for housing as you did in 1990 but you also made a good return on your investment.

handmodel 5y ago
That sounds like it is affordable and profitable if you are in the top half of incomes. In that situation - a renter who made ~40k a year (in today's dollars - probably 30k in 1990 dollars) in 1990 could not afford a single family home and had to deal with expensive rents (because the city didn't allowed apartments buildings where there was demand).
ryankupyn 5y ago
The critical thing is that this also requires a growing population - which is not guaranteed in all places/timeframes!
nicoburns 5y ago
So what you're saying is housing was affordable in the 1990, but not you're paying twice as much for a much smaller space.
- handmodel 5y ago
  It is also worth noting that in the example above (assuming we accept the 150k as normal and that growth as typical) that 150k was a solid amount of money. In 1990 the median income for someone with a a high school diploma was 26k. For someone with a masters degree it was still 50k. An educational attainment was lower across the board. So if you didn't have 150k then I guess you're screwed since they weren't going to let apartments to be built for so long? The only situation where you'd get that ROI is if the supply of houses had been constrained strictly for so long - which almost by definition means that rents grew at that rate too.
arkh 5y ago
Apartments are not family homes.
- foxpurple 5y ago
  That’s funny because I see lots of families in my apartment building. It seems like many westerners aren’t aware that there are high quality 3-4 bedroom apartments available with easy access to schools, parks, everything else.
  - coliveira 5y ago
    The parent is displaying typical American thinking, i.e., a family requires a suburban house with grass lawn and two cars to go anywhere.
    - cpursley 5y ago
      Two? More like one for each member age 16 and up. That's how it was in my family. I'm glad these days to live in a human scale city and car free.
    - foobar33333 5y ago
      There is so much ignorance about apartments in Australia as well. I moved in to one recently after living in the suburbs my whole life and knowing no one in an apartment. Basically everyone tried to tell me it was a horrible idea and it would be super noisy, annoying neighbors, "shoebox", etc. I did it anyway and I can't believe how everything I was told was wrong. With the high quality construction and double glazed windows, I have never heard such a level of silence. I keep the windows open because its so quiet you would go insane. It was a month before I even worked out the neighboring apartment was even occupied when I saw them exit at the same time as me. I have never heard a single sound from them. And the best part is how liberating it is to live without needing a car. I have just walked everywhere and only use the car to visit my parents but I will likely get rid of it soon and have them come here instead.
    - arkh 5y ago
      > The parent is displaying typical American thinking The parent has lived in a country house than decades in multiple apartments. The joy of having neighbors next wall, ceiling or floor. The lack of air conditioning if you're in a country where it's not usual and you have to fight to get the authorization to install it. The sound of cars, bars etc.
jjoonathan 5y ago
Right, and then you subdivide again and sell to squirrels, and then subdivide and sell to ants, and so on until you are selling to subatomic particles. What then?
- andrewmcwatters 5y ago
  This is just uncreative thinking. Diversify outside of the physical world. Ideas live rent free! Are you seriously going to sit there and tell me that that's acceptable?
  - vidanay 5y ago
    Time And Relative Dimensions In Space
- Tenobrus 5y ago
  An alternate progression could involve exponential height growth, leading to every suburb eventually looking like a cluster of space elevators (and beyond).
- nl 5y ago
  You build up and down. Have a look at Hong Kong - it's amazing seeing the 1960s building, the 1980s building and the more recent buildings next to each other and the height increase.
jerry1979 5y ago
I think your calculation includes a yearly inflation rate of 9% for property, and also it includes an inflation rate for housing of about 34% if you consider that 1 apartment may equate to perhaps 1/8th of a single family home on the same plot of land.

handmodel 5y ago

That sounds like it is affordable and profitable if you are in the top half of incomes. In that situation - a renter who made ~40k a year (in today's dollars - probably 30k in 1990 dollars) in 1990 could not afford a single family home and had to deal with expensive rents (because the city didn't allowed apartments buildings where there was demand).

ryankupyn 5y ago

The critical thing is that this also requires a growing population - which is not guaranteed in all places/timeframes!

nicoburns 5y ago

So what you're saying is housing was affordable in the 1990, but not you're paying twice as much for a much smaller space.

handmodel 5y ago
It is also worth noting that in the example above (assuming we accept the 150k as normal and that growth as typical) that 150k was a solid amount of money. In 1990 the median income for someone with a a high school diploma was 26k. For someone with a masters degree it was still 50k. An educational attainment was lower across the board. So if you didn't have 150k then I guess you're screwed since they weren't going to let apartments to be built for so long? The only situation where you'd get that ROI is if the supply of houses had been constrained strictly for so long - which almost by definition means that rents grew at that rate too.

arkh 5y ago

Apartments are not family homes.

foxpurple 5y ago
That’s funny because I see lots of families in my apartment building. It seems like many westerners aren’t aware that there are high quality 3-4 bedroom apartments available with easy access to schools, parks, everything else.
- coliveira 5y ago
  The parent is displaying typical American thinking, i.e., a family requires a suburban house with grass lawn and two cars to go anywhere.
  - cpursley 5y ago
    Two? More like one for each member age 16 and up. That's how it was in my family. I'm glad these days to live in a human scale city and car free.
  - foobar33333 5y ago
    There is so much ignorance about apartments in Australia as well. I moved in to one recently after living in the suburbs my whole life and knowing no one in an apartment. Basically everyone tried to tell me it was a horrible idea and it would be super noisy, annoying neighbors, "shoebox", etc. I did it anyway and I can't believe how everything I was told was wrong. With the high quality construction and double glazed windows, I have never heard such a level of silence. I keep the windows open because its so quiet you would go insane. It was a month before I even worked out the neighboring apartment was even occupied when I saw them exit at the same time as me. I have never heard a single sound from them. And the best part is how liberating it is to live without needing a car. I have just walked everywhere and only use the car to visit my parents but I will likely get rid of it soon and have them come here instead.
  - arkh 5y ago
    > The parent is displaying typical American thinking The parent has lived in a country house than decades in multiple apartments. The joy of having neighbors next wall, ceiling or floor. The lack of air conditioning if you're in a country where it's not usual and you have to fight to get the authorization to install it. The sound of cars, bars etc.

jjoonathan 5y ago

Right, and then you subdivide again and sell to squirrels, and then subdivide and sell to ants, and so on until you are selling to subatomic particles. What then?

andrewmcwatters 5y ago
This is just uncreative thinking. Diversify outside of the physical world. Ideas live rent free! Are you seriously going to sit there and tell me that that's acceptable?
- vidanay 5y ago
  Time And Relative Dimensions In Space
Tenobrus 5y ago
An alternate progression could involve exponential height growth, leading to every suburb eventually looking like a cluster of space elevators (and beyond).
nl 5y ago
You build up and down. Have a look at Hong Kong - it's amazing seeing the 1960s building, the 1980s building and the more recent buildings next to each other and the height increase.

jerry1979 5y ago

I think your calculation includes a yearly inflation rate of 9% for property, and also it includes an inflation rate for housing of about 34% if you consider that 1 apartment may equate to perhaps 1/8th of a single family home on the same plot of land.