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You are assuming that having low income housing somehow impacts the price of higher end housing, and I am not sure that this is true. Would a person with a mill

by issa 5y ago

You are assuming that having low income housing somehow impacts the price of higher end housing, and I am not sure that this is true. Would a person with a million dollar house be hurt if we built 100,000 more million dollar houses? Yes. Would that same homeowner be hurt if we built 100,000 cheap rental apartments? It certainly doesn't seem like it. However much property values fall due to less people looking for low-end housing, you would think they would go up due to not being surrounded by homeless camps. I would say the people who are incentivized to oppose cheap housing are the lower-end landlords.

MontyCarloHall 5y ago
> Would that same homeowner be hurt if we built 100,000 cheap rental apartments? Of course they would. Million dollar houses in many parts of the country are so insanely expensive not because they’re luxury goods; they’re expensive because supply is so constrained that even mediocre houses are extremely scarce relative to demand. People buying million dollar houses in e.g. the Bay Area know that their house is not particularly fancy, relative to other houses (that often sell for much less in other parts of the country). As an analogy, consider cars in communist countries. Russian Ladas and East German Trabants were objectively horrible cars, but they cost several years’ average salary because supply was so scarce. Introduce millions of even cheaper cars into the aforementioned communist countries and the prices of Ladas/Trabants would plummet. Likewise, introduce thousands of low income units into the Bay Area and the price of what used to be starter homes that now go for a million dollars would plummet.
- issa 5y ago
  I still think you are underappreciating the difference between people who buy homes and people who rent. To buy a house, you need a certain income, a down payment etc. The people who live in low income housing have none of those things and were never potential buyers anyway.
  - noahtallen 5y ago
    I don’t think that’s fair. Plenty of people rent because it’s the only option they can afford right now, even at high salaries. If you don’t yet own a home, making a meaningful down payment will take years and years of savings. To afford a mortgage on a $500k house in a west coast city, you’re looking at $100k of savings. The point is that loads of people would love to own a house or upgrade their living situation, but are priced out of it. These people are all competing for rentals, driving rent up. As a result, it’s not hard to simply not be able to afford rent, and end up on the street. This would be fixed by drastically increasing supply, so that housing at the low end of the market is more affordable, both rentals and ownership. The general point of this thread, though, is that everyone who already bought a house cannot afford to loose that value, as it’s likely the biggest financial risk and investment they have. This means there is essentially no pressure for the market to decrease prices. (I imagine developers wouldn’t want to ever make less rent either.) So long as housing is treated as an investment for the property owners, there is only pressure for prices to go up.
    - issa 5y ago
      I'm still not convinced of this. At least not among people who live in their houses. If you're not planning on moving, an underwater mortgage isn't a "problem" unless you lose your job, or have an other emergency. I don't think these people have a strong political view on housing prices one way or the other. People with INVESTMENT properties though...that's a different story.
- progre 5y ago
  Please don't compare Ladas with Trabants. Ladas are real cars. Simple, crude even, but robust. Trabants are shitty 4 weel mopeds.
glangdale 5y ago
This seems naive. I'm sure the people looking for SROs or other low income choices are not the people buying $1M houses, but they probably have a good deal of overlap with people who are buying houses that are at the lowest rung on the ladder, who themselves have overlap with the next cohort, etc. It's a market. Changing it in a major way at the bottom will have knock-on effects through the whole market. Of course, more directly, people with $1M houses might also be highly motivated to avoid "the wrong kind of person" being able to afford housing any where near them, their schools, etc.
marticode 5y ago
The market isn't so segmented. If there's a massive availability of cheap rental apartments, there will be less demand for cheap or far away houses, which in turn will reduce their prices, which will in turn reduce demand for million dollar houses. Additionally, land can be divided/merged to turn cheap/expensive houses into expensive/cheap houses.

by issa 5y ago

MontyCarloHall 5y ago

> Would that same homeowner be hurt if we built 100,000 cheap rental apartments? Of course they would. Million dollar houses in many parts of the country are so insanely expensive not because they’re luxury goods; they’re expensive because supply is so constrained that even mediocre houses are extremely scarce relative to demand. People buying million dollar houses in e.g. the Bay Area know that their house is not particularly fancy, relative to other houses (that often sell for much less in other parts of the country). As an analogy, consider cars in communist countries. Russian Ladas and East German Trabants were objectively horrible cars, but they cost several years’ average salary because supply was so scarce. Introduce millions of even cheaper cars into the aforementioned communist countries and the prices of Ladas/Trabants would plummet. Likewise, introduce thousands of low income units into the Bay Area and the price of what used to be starter homes that now go for a million dollars would plummet.

issa 5y ago
I still think you are underappreciating the difference between people who buy homes and people who rent. To buy a house, you need a certain income, a down payment etc. The people who live in low income housing have none of those things and were never potential buyers anyway.
- noahtallen 5y ago
  I don’t think that’s fair. Plenty of people rent because it’s the only option they can afford right now, even at high salaries. If you don’t yet own a home, making a meaningful down payment will take years and years of savings. To afford a mortgage on a $500k house in a west coast city, you’re looking at $100k of savings. The point is that loads of people would love to own a house or upgrade their living situation, but are priced out of it. These people are all competing for rentals, driving rent up. As a result, it’s not hard to simply not be able to afford rent, and end up on the street. This would be fixed by drastically increasing supply, so that housing at the low end of the market is more affordable, both rentals and ownership. The general point of this thread, though, is that everyone who already bought a house cannot afford to loose that value, as it’s likely the biggest financial risk and investment they have. This means there is essentially no pressure for the market to decrease prices. (I imagine developers wouldn’t want to ever make less rent either.) So long as housing is treated as an investment for the property owners, there is only pressure for prices to go up.
  - issa 5y ago
    I'm still not convinced of this. At least not among people who live in their houses. If you're not planning on moving, an underwater mortgage isn't a "problem" unless you lose your job, or have an other emergency. I don't think these people have a strong political view on housing prices one way or the other. People with INVESTMENT properties though...that's a different story.
progre 5y ago
Please don't compare Ladas with Trabants. Ladas are real cars. Simple, crude even, but robust. Trabants are shitty 4 weel mopeds.

glangdale 5y ago

This seems naive. I'm sure the people looking for SROs or other low income choices are not the people buying $1M houses, but they probably have a good deal of overlap with people who are buying houses that are at the lowest rung on the ladder, who themselves have overlap with the next cohort, etc. It's a market. Changing it in a major way at the bottom will have knock-on effects through the whole market. Of course, more directly, people with $1M houses might also be highly motivated to avoid "the wrong kind of person" being able to afford housing any where near them, their schools, etc.

marticode 5y ago

The market isn't so segmented. If there's a massive availability of cheap rental apartments, there will be less demand for cheap or far away houses, which in turn will reduce their prices, which will in turn reduce demand for million dollar houses. Additionally, land can be divided/merged to turn cheap/expensive houses into expensive/cheap houses.