5 ms·
I don’t think this is necessarily true. The value of the land you own can increase over time, but the cost of a square foot of housing decrease, as long as dens
by dcolkitt 5y ago
I don’t think this is necessarily true. The value of the land you own can increase over time, but the cost of a square foot of housing decrease, as long as density keeps increasing.
Say I bought a house on a half acre for $500k. Then someone buys it for $750k and builds four houses on eight acre lots and sells them each for $300k. Owner occupied housing as an investment has produced a positive return but the cost of housing has gone down.
- loeg 5y agoSure, density is a good lever for reducing the cost of housing despite increased demand for land. In your example, if local government instead forbids that development (via zoning), maybe you can sell your house for $1M instead of $750k, because those 8 prospective buyers are now bidding on the only available property. Homeowners that view housing as an investment would prefer to see housing costs rise further (beyond benefiting solely from land value increases), and so they advocate their local governments to constrain housing supply via zoning. On the west coast, and particularly in California, they've been very successful.