4 ms·
> 1. Is it really the case? I don't expect developers to build something they cannot sell The main scenario I can imagine is if builders are operating psychoti
by setr 5y ago
> 1. Is it really the case? I don't expect developers to build something they cannot sell
The main scenario I can imagine is if builders are operating psychotically, due to external incentives (corruption, poorly incentivized regulations, inability to build in more optimal locations/configurations)
Alternatively the price/cost ratio for luxury homes greatly exceeds lower-cost homes (and a single luxury unit probably takes longer to build than x low-cost homes, so it doesn’t free up as much supply as you might hope). But you’d also expect such a market gap to be immediately identified and exploited.
But yeah you’d normally expect construction to be self-correcting, because they want to get paid.
- jeddy3 5y ago> The main scenario I can imagine is if builders are operating psychotically, due to external incentives (corruption, poorly incentivized regulations, inability to build in more optimal locations/configurations) Yeah, I suspect regulations play a role. There seems to be a lot of weird (IMHO) regulations when building new homes in the US. Size of house/yard, number of parking lots, size of road, et.c. This probably removes the variability for the developers. Note: I am not American nor a housing expert, so I might be talking out of my arse.