4 ms·

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.

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.