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Is the bigger problem availability or pricing? Where I live (in the US) increasing housing availability drives up housing prices proportionally. The way that w

Is the bigger problem availability or pricing? Where I live (in the US) increasing housing availability drives up housing prices proportionally. The way that works is that demand is fairly constant due to people moving in driving up the population (about 22.4% decade over decade) but there aren’t geographic limitations on construction. Real estate is a fixed resource though and you can only build so many houses before filling an area and pushing out the commute. In the spaces left over, after large scale housing developments, come the numerous large apartment complexes. The increased number of multi family dwellings drives up the price of single family houses. I have seen this pattern repeated various times in both median and extremely wealthy areas. Consequently, avoiding new construction either results in depreciation or merely delays the same pattern even by up 15 years.

lotsofpulp 5y ago
> The increased number of multi family dwellings drives up the price of single family houses. Increased demand for single family homes drives up price of single family homes. People moving in drives up price of land and dwelling units, obviously because people need a place to live. The only thing that can move price down is demand decreasing (which will not happen if people are migrating in) or supply increasing sufficiently to accommodate demand. You obviously live in one of the most in demand places in the US right now, and so almost no amount of supply will keep up with demand to cause prices to stop going up. But at the end of the day, price is always a function of supply and demand. > Consequently, avoiding new construction either results in depreciation or merely delays the same pattern even by up 15 years. Places that are not desirable to live in simply do not have construction. Why would people want to invest in areas that they predict will depreciate or stagnate? There is no construction in Cairo, IL, but they are not avoiding construction to prevent prices from increasing.
- austincheney 5y ago
  Increased demand drives up construction rates before it drives up prices. The only thing close to what you are describing is approximate commute distance.
  - lotsofpulp 5y ago
    I do not know what commute distance has to do with anything. You can build a million dwelling units 5 hours west of Austin in the desert, and they will not sell for much if at all. > Increased demand drives up construction rates before it drives up prices. The rate of construction will go up if prices are going up, or the entities doing the construction believe prices will go up (and there is capacity to increase rate of construction, of course). These are all very fluid measures, but all are a function of supply and demand. There is no situation where increase in supply of a good alone by itself causes the price of the good to increase.
    - austincheney 5y ago
      None of that reflects reality here. Higher prices slow construction rates in an immediate area only to drive construction further out.
      - lotsofpulp 5y ago
        If the probability that the cost of (land + permits (politics) + labor + supplies) will be more than the projected sale price is sufficiently high, then it can cause a decrease in construction. But that is irrelevant to the fact that more supply of a good relative to demand will not cause prices to rise. This might not be easily evident over 1 year, but on a longer timescale, if supply and demand is not behaving as expected, then there will be arbitrage that someone will likely take advantage of. It is possible that the high price of land in a highly desirable area is something there is a lot of demand for itself. The only way to bring prices of individual dwelling units down in this case is to build more dense housing, and that involves a lot of politics.
        austincheney 5y ago
        > The only way to bring prices of individual dwelling units down in this case is to build more dense housing, and that involves a lot of politics. That has never occurred here. Increased availability results in higher prices. The only exception was the housing crash of 2008 when banks found themselves holding tremendous quantities of properties they didn’t want. This isn’t the west coast. Geography for new construction is nearly unlimited. If the price of construction is too high in one area then nobody will build there when instead they can build everywhere else. If you want to decrease housing prices here you stop allowing construction, both residential and commercial, which redirects growth to other areas, but that only works if exclusivity does not set in. Perhaps it’s the inability of people on the west coast to tell the difference between pricing and availability that allows prices to run away to astronomical numbers.
greggman3 5y ago
Not sure where you're referring to but as an example the population density of the top 10 wards of Tokyo are 51k, 50k, 46k, 44k, 41k, 41k, 41k, 41k, 40k, 40k per square mile. San Francisco's is 17k. So arguably, by those comparisons, there's room for 2x to 3x the people in the same space. SF is more walkable than most USA cities. Tokyo is more walkable than SF.
- stackedinserter 5y ago
  Just a friendly reminder that walkability is not the only metric for quality of life.
- austincheney 5y ago
  Where I live is considerably larger than SF at well above 900,000 people but only a pop density of a bit above 2.5k per square mile and with plenty more land to grow into.
- ghaff 5y ago
  Tokyo has a great subway/rail system but it honestly doesn't feel especially more walkable than SF to me except for in some particular areas. (And, of course, SF walkability varies quite a bit by area as well.)

lotsofpulp 5y ago

> The increased number of multi family dwellings drives up the price of single family houses. Increased demand for single family homes drives up price of single family homes. People moving in drives up price of land and dwelling units, obviously because people need a place to live. The only thing that can move price down is demand decreasing (which will not happen if people are migrating in) or supply increasing sufficiently to accommodate demand. You obviously live in one of the most in demand places in the US right now, and so almost no amount of supply will keep up with demand to cause prices to stop going up. But at the end of the day, price is always a function of supply and demand. > Consequently, avoiding new construction either results in depreciation or merely delays the same pattern even by up 15 years. Places that are not desirable to live in simply do not have construction. Why would people want to invest in areas that they predict will depreciate or stagnate? There is no construction in Cairo, IL, but they are not avoiding construction to prevent prices from increasing.

austincheney 5y ago
Increased demand drives up construction rates before it drives up prices. The only thing close to what you are describing is approximate commute distance.
- lotsofpulp 5y ago
  I do not know what commute distance has to do with anything. You can build a million dwelling units 5 hours west of Austin in the desert, and they will not sell for much if at all. > Increased demand drives up construction rates before it drives up prices. The rate of construction will go up if prices are going up, or the entities doing the construction believe prices will go up (and there is capacity to increase rate of construction, of course). These are all very fluid measures, but all are a function of supply and demand. There is no situation where increase in supply of a good alone by itself causes the price of the good to increase.
  - austincheney 5y ago
    None of that reflects reality here. Higher prices slow construction rates in an immediate area only to drive construction further out.
    - lotsofpulp 5y ago
      If the probability that the cost of (land + permits (politics) + labor + supplies) will be more than the projected sale price is sufficiently high, then it can cause a decrease in construction. But that is irrelevant to the fact that more supply of a good relative to demand will not cause prices to rise. This might not be easily evident over 1 year, but on a longer timescale, if supply and demand is not behaving as expected, then there will be arbitrage that someone will likely take advantage of. It is possible that the high price of land in a highly desirable area is something there is a lot of demand for itself. The only way to bring prices of individual dwelling units down in this case is to build more dense housing, and that involves a lot of politics.
      - austincheney 5y ago
        > The only way to bring prices of individual dwelling units down in this case is to build more dense housing, and that involves a lot of politics. That has never occurred here. Increased availability results in higher prices. The only exception was the housing crash of 2008 when banks found themselves holding tremendous quantities of properties they didn’t want. This isn’t the west coast. Geography for new construction is nearly unlimited. If the price of construction is too high in one area then nobody will build there when instead they can build everywhere else. If you want to decrease housing prices here you stop allowing construction, both residential and commercial, which redirects growth to other areas, but that only works if exclusivity does not set in. Perhaps it’s the inability of people on the west coast to tell the difference between pricing and availability that allows prices to run away to astronomical numbers.

greggman3 5y ago

Not sure where you're referring to but as an example the population density of the top 10 wards of Tokyo are 51k, 50k, 46k, 44k, 41k, 41k, 41k, 41k, 40k, 40k per square mile. San Francisco's is 17k. So arguably, by those comparisons, there's room for 2x to 3x the people in the same space. SF is more walkable than most USA cities. Tokyo is more walkable than SF.

stackedinserter 5y ago
Just a friendly reminder that walkability is not the only metric for quality of life.
austincheney 5y ago
Where I live is considerably larger than SF at well above 900,000 people but only a pop density of a bit above 2.5k per square mile and with plenty more land to grow into.
ghaff 5y ago
Tokyo has a great subway/rail system but it honestly doesn't feel especially more walkable than SF to me except for in some particular areas. (And, of course, SF walkability varies quite a bit by area as well.)