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Part of the problem with the first item you mentioned is that developers don’t really want to build cheap housing (I guess this is an assumption, but it makes s

Part of the problem with the first item you mentioned is that developers don’t really want to build cheap housing (I guess this is an assumption, but it makes sense financially.) They can make way more money catering to the people who can “afford” to build a $500k home, and people who want a very custom design and lots of space. On the renting end, “luxury” apartments will make more money than really basic cheap units. So most of the new housing stock doesn’t help address the problem for people new to housing. Even if you want to build out a very basic, small house, you have to have cash to DIY without a bank, or find some way to finance a builder (increasing the significant labor cost) without having existing equity. So the part of the market that does want cheap, basic housing doesn’t even have a way to influence those units. There is loads of demand for them (young people without money make up a huge portion of the population), but no developers willing to meet that demand when they can just make expensive units. And not enough developers so that some need to chase the cheap market. And in cities, the lot cost is very prohibitive too, before even getting into building a very basic house.

JamesBarney 5y ago
We have the same problem with the car market. I can only afford a $5,000 car, but the car manufacturers make all their money building $20,000 cars. I just can't see how Honda making another $20,000 fit is going to help me afford a $5,000 car.
- arcticbull 5y ago
  I mean VW makes $100,000 Porsches and $20,000 Jettas. At some point it’s not economical to make cheaper cars due to materials and workmanship. You can certainly buy an e-bike for half that, I did. The cost of construction in America is $150/sqft. We’re not even close in cities. Off by an order of magnitude.
  - JamesBarney 5y ago
    Sorry I guess I was more obtuse than I intended. My point was I can buy a used car for $5,000, and Honda building new cars allows that even if the new cars are out of my price range.
    - arcticbull 5y ago
      Ah I see, that makes sense, I misread!
- letitbeirie 5y ago
  The problem from the manufacturers' perspective is that the gear required to meet 2021 safety, emissions, and fleet efficiency standards by itself almost pushes a new car's price over $5000, and that's without leaving any budget left over to make it a car anybody would want to buy. They do sell vehicles at that price which get around all of those standards, but they lose two wheels in the process.
  - nine_k 5y ago
    You can still easily buy a decent used car for $5k. Try buying a half-decent used home for 25% of its initial sticker price.
    - gogopuppygogo 5y ago
      You used to be able to buy a decent used car for $5k but as of recent you can't find any without connections. I've been telling folks interested in Japanese cars that it's $10k at this time to buy used with low mileage for a sedan and $15k to buy used with low mileage for an SUV.
      - jjav 5y ago
        Is is true that the used car market has gone way up, but it is nowhere near that bad yet. Tons of perfectly good used cars for under 5K on CL. And this is SF Bay area where prices tend to higher. https://sfbay.craigslist.org/search/cto?purveyor-input=owner&min_price=1&max_price=5000 https://sfbay.craigslist.org/search/cto?purveyor-input=owner...
- imtringued 5y ago
  Are you forgetting that used housing and cars are cheaper? Nobody is forcing you to buy a brand new car.
  - JamesBarney 5y ago
    This was my point, that like cars, luxury homes and apts turn into affordable housing over time.
- yourapostasy 5y ago
  Some analysts believe that in another 5-10 years in the US, you'll get if not quite a $5K USD car off the Internet, a $10K USD car from a Chinese manufacturer, and the Detroit automakers will reprise their arrogance-into-bankruptcy role from the 70's again when Japanese cars entered the US market, when they famously remarked the new entrants can have that cheap unit market. Watching the Detroit product roadmaps, I'm inclined to agree with that analysis at this time.
arcticbull 5y ago
It doesn't really matter if you add new stock at the top end or at the bottom end, people from the bottom move up, and make space at the bottom for new entrants. Any new stock you add increases supply, which leads to lower prices across the board. [edit] and btw, I think builders aren't tripping over their shoelaces to service the low end of the market because they know the city is so aggressively capping how much they can build. This means they will only build the most profitable units, the high end today. But once the high end is saturated, the low end ones will be the profitable ones anyways.
- seanmcdirmid 5y ago
  > It doesn't really matter if you add new stock at the top end or at the bottom end, people from the bottom move up, and make space at the bottom for new entrants. Only if the old housing stock isn't torn down to make room for the new housing stock. Thankfully property taxes aren't driven in the potential value of land (rather, they are tied to actual value), but most small scale landlords of affordable housing right in it are in it for property appreciation, not rents. Their exit plans are often to sell to a developer as tear downs. > This means they will only build the most profitable units, the high end today. There are costs are too high (to acquire property and build) to justify anything but going after the highest end of the market. Once the high end is say satisfied, money (investment) could simply move away from housing if it can't make any money there. Money chases the highest returns between all of the markets, not just one market.
  - wan23 5y ago
    > Only if the old housing stock isn't torn down to make room for the new housing stock This is about zoning too. Normally, if the demand is there for it a smart land owner would build more housing on the same plot, e.g. turning a single family into a two family, but of course that is illegal in many places.
    - seanmcdirmid 5y ago
      Yes, that is exactly what is happening in Ballard (Seattle area) right now. Those cheap 100 year old low income housing complexes (one or two stories) are being raised for a bunch fo three story townhomes, smart developers can sell each of those town homes for $1 million each, and they could get much less if they kept it as a hotel-like complex. I just bought one of those town homes, so I'm not going to complain too much, but I'm self aware about what is going on here. So poor people are still getting screwed. My daily walk to the grocery store passes by a few places that are pretty shabby (so low income) and right across the street they are building a bunch of luxury town homes. It doesn't take a rocket scientist to figure out what will happen to those shabby places in a year or so.
TulliusCicero 5y ago
> Part of the problem with the first item you mentioned is that developers don’t really want to build cheap housing (I guess this is an assumption, but it makes sense financially.) This is like saying that Toyota would rather sell Lexuses than Camrys. Yes, it's true, but they sell Camrys anyway. Why? Because the market for luxury is only so big. They can make more money total addressing other parts of the market. So why doesn't this apply to housing? Land + zoning. Imagine if Toyota was only allowed to produce 10,000 cars a year. What kind of models would they choose to make?
- eyelidlessness 5y ago
  Can only speak for my city (Seattle), but no one’s building Camrys and building is constant. It’s not because any zoning prevents building affordable units. It’s because there’s limited land to develop at all and demand for property of any kind is extraordinarily high. All of the development in residential neighborhoods is already zoned for everything that could accommodate 4-10 times as many tenants. But they’re building luxury units anyway. Doesn’t surprise me but this zoning explanation ain’t it.
  - loeg 5y ago
    Seattle development is absolutely constrained by zoning. Not sure why you think otherwise. https://www.seattle.gov/opcd/population-and-demographics/about-seattle#housing https://www.seattle.gov/opcd/population-and-demographics/abo... > As of 2019, there were 367,806 housing units in Seattle, representing a 19 percent increase since 2010 (according to Washington State Office of Financial Management). The growth in the number of housing units in Seattle from 2010 to 2019 surpassed the 14 percent growth seen between 2000 and 2010. However, even with the rapid increase this decade, expansion of our housing stock has not kept up with Seattle's population growth of 22 percent between 2010 and 2019. And here's Seattle's land zoning ("Land Use" tab on the same website): https://www.seattle.gov/Images/Departments/OPCD/Demographics/AboutSeattle/Existing%20Land%20Use%20Full%20Size.png https://www.seattle.gov/Images/Departments/OPCD/Demographics... 50% is zoned SFH. Only 14% is zoned for any kind of (residential) density.
  - RyanCavanaugh 5y ago
shiftpgdn 5y ago
In cities with no zoning todays luxury housing is tomorrows affordable housing. For example in Houston apartments and houses that were touted as luxury in the 80s are slums now.
- brewdad 5y ago
  This also holds for smaller cities in the Rust Belt. My childhood home, purchased almost new in 1980, is only worth about 2x what my parents paid at a time of 20% interest rates. It has been very well kept and sits on about an acre and a half. Everyone with means has moved away. Retirees and people with no better options are all that's left.
MomoXenosaga 5y ago
We're seeing a massive demographic shift to single person households all across the first world countries from Canada to Korea. But for some reason the housing market is still geared towards families.
- DocTomoe 5y ago
  Households with two or more incomes are more likely to be able to afford real estate than single-income households - both in absolute income levels as well as in economic crisis where it is less likely all family is losing their all of their income simultaneously than a single person..

JamesBarney 5y ago

We have the same problem with the car market. I can only afford a $5,000 car, but the car manufacturers make all their money building $20,000 cars. I just can't see how Honda making another $20,000 fit is going to help me afford a $5,000 car.

arcticbull 5y ago
I mean VW makes $100,000 Porsches and $20,000 Jettas. At some point it’s not economical to make cheaper cars due to materials and workmanship. You can certainly buy an e-bike for half that, I did. The cost of construction in America is $150/sqft. We’re not even close in cities. Off by an order of magnitude.
- JamesBarney 5y ago
  Sorry I guess I was more obtuse than I intended. My point was I can buy a used car for $5,000, and Honda building new cars allows that even if the new cars are out of my price range.
  - arcticbull 5y ago
    Ah I see, that makes sense, I misread!
letitbeirie 5y ago
The problem from the manufacturers' perspective is that the gear required to meet 2021 safety, emissions, and fleet efficiency standards by itself almost pushes a new car's price over $5000, and that's without leaving any budget left over to make it a car anybody would want to buy. They do sell vehicles at that price which get around all of those standards, but they lose two wheels in the process.
- nine_k 5y ago
  You can still easily buy a decent used car for $5k. Try buying a half-decent used home for 25% of its initial sticker price.
  - gogopuppygogo 5y ago
    You used to be able to buy a decent used car for $5k but as of recent you can't find any without connections. I've been telling folks interested in Japanese cars that it's $10k at this time to buy used with low mileage for a sedan and $15k to buy used with low mileage for an SUV.
    - jjav 5y ago
      Is is true that the used car market has gone way up, but it is nowhere near that bad yet. Tons of perfectly good used cars for under 5K on CL. And this is SF Bay area where prices tend to higher. https://sfbay.craigslist.org/search/cto?purveyor-input=owner&min_price=1&max_price=5000 https://sfbay.craigslist.org/search/cto?purveyor-input=owner...
imtringued 5y ago
Are you forgetting that used housing and cars are cheaper? Nobody is forcing you to buy a brand new car.
- JamesBarney 5y ago
  This was my point, that like cars, luxury homes and apts turn into affordable housing over time.
yourapostasy 5y ago
Some analysts believe that in another 5-10 years in the US, you'll get if not quite a $5K USD car off the Internet, a $10K USD car from a Chinese manufacturer, and the Detroit automakers will reprise their arrogance-into-bankruptcy role from the 70's again when Japanese cars entered the US market, when they famously remarked the new entrants can have that cheap unit market. Watching the Detroit product roadmaps, I'm inclined to agree with that analysis at this time.

arcticbull 5y ago

It doesn't really matter if you add new stock at the top end or at the bottom end, people from the bottom move up, and make space at the bottom for new entrants. Any new stock you add increases supply, which leads to lower prices across the board. [edit] and btw, I think builders aren't tripping over their shoelaces to service the low end of the market because they know the city is so aggressively capping how much they can build. This means they will only build the most profitable units, the high end today. But once the high end is saturated, the low end ones will be the profitable ones anyways.

seanmcdirmid 5y ago
> It doesn't really matter if you add new stock at the top end or at the bottom end, people from the bottom move up, and make space at the bottom for new entrants. Only if the old housing stock isn't torn down to make room for the new housing stock. Thankfully property taxes aren't driven in the potential value of land (rather, they are tied to actual value), but most small scale landlords of affordable housing right in it are in it for property appreciation, not rents. Their exit plans are often to sell to a developer as tear downs. > This means they will only build the most profitable units, the high end today. There are costs are too high (to acquire property and build) to justify anything but going after the highest end of the market. Once the high end is say satisfied, money (investment) could simply move away from housing if it can't make any money there. Money chases the highest returns between all of the markets, not just one market.
- wan23 5y ago
  > Only if the old housing stock isn't torn down to make room for the new housing stock This is about zoning too. Normally, if the demand is there for it a smart land owner would build more housing on the same plot, e.g. turning a single family into a two family, but of course that is illegal in many places.
  - seanmcdirmid 5y ago
    Yes, that is exactly what is happening in Ballard (Seattle area) right now. Those cheap 100 year old low income housing complexes (one or two stories) are being raised for a bunch fo three story townhomes, smart developers can sell each of those town homes for $1 million each, and they could get much less if they kept it as a hotel-like complex. I just bought one of those town homes, so I'm not going to complain too much, but I'm self aware about what is going on here. So poor people are still getting screwed. My daily walk to the grocery store passes by a few places that are pretty shabby (so low income) and right across the street they are building a bunch of luxury town homes. It doesn't take a rocket scientist to figure out what will happen to those shabby places in a year or so.

TulliusCicero 5y ago

> Part of the problem with the first item you mentioned is that developers don’t really want to build cheap housing (I guess this is an assumption, but it makes sense financially.) This is like saying that Toyota would rather sell Lexuses than Camrys. Yes, it's true, but they sell Camrys anyway. Why? Because the market for luxury is only so big. They can make more money total addressing other parts of the market. So why doesn't this apply to housing? Land + zoning. Imagine if Toyota was only allowed to produce 10,000 cars a year. What kind of models would they choose to make?

eyelidlessness 5y ago
Can only speak for my city (Seattle), but no one’s building Camrys and building is constant. It’s not because any zoning prevents building affordable units. It’s because there’s limited land to develop at all and demand for property of any kind is extraordinarily high. All of the development in residential neighborhoods is already zoned for everything that could accommodate 4-10 times as many tenants. But they’re building luxury units anyway. Doesn’t surprise me but this zoning explanation ain’t it.
- loeg 5y ago
  Seattle development is absolutely constrained by zoning. Not sure why you think otherwise. https://www.seattle.gov/opcd/population-and-demographics/about-seattle#housing https://www.seattle.gov/opcd/population-and-demographics/abo... > As of 2019, there were 367,806 housing units in Seattle, representing a 19 percent increase since 2010 (according to Washington State Office of Financial Management). The growth in the number of housing units in Seattle from 2010 to 2019 surpassed the 14 percent growth seen between 2000 and 2010. However, even with the rapid increase this decade, expansion of our housing stock has not kept up with Seattle's population growth of 22 percent between 2010 and 2019. And here's Seattle's land zoning ("Land Use" tab on the same website): https://www.seattle.gov/Images/Departments/OPCD/Demographics/AboutSeattle/Existing%20Land%20Use%20Full%20Size.png https://www.seattle.gov/Images/Departments/OPCD/Demographics... 50% is zoned SFH. Only 14% is zoned for any kind of (residential) density.
- RyanCavanaugh 5y ago

shiftpgdn 5y ago

In cities with no zoning todays luxury housing is tomorrows affordable housing. For example in Houston apartments and houses that were touted as luxury in the 80s are slums now.

brewdad 5y ago
This also holds for smaller cities in the Rust Belt. My childhood home, purchased almost new in 1980, is only worth about 2x what my parents paid at a time of 20% interest rates. It has been very well kept and sits on about an acre and a half. Everyone with means has moved away. Retirees and people with no better options are all that's left.

MomoXenosaga 5y ago

We're seeing a massive demographic shift to single person households all across the first world countries from Canada to Korea. But for some reason the housing market is still geared towards families.

DocTomoe 5y ago
Households with two or more incomes are more likely to be able to afford real estate than single-income households - both in absolute income levels as well as in economic crisis where it is less likely all family is losing their all of their income simultaneously than a single person..