3 ms·

> That would reduce the value of their real estate assets in places like SF and LA. does it actually work that way? a large part of land value seems to come fr

> That would reduce the value of their real estate assets in places like SF and LA. does it actually work that way? a large part of land value seems to come from network effects: the more densely populated a region, the more valuable each sqft. upzoning a plot often seems to be an immediate profit, too. SFH worth $1M, gets upzoned, suddenly a developer can pay $2M for the plot and tear down the house + build high-density units that are very valuable. maybe values fall once you overbuild, but i have yet to see that in my lifetime.

xondono 5y ago
Long term vs short term. Long term they’ll be worth more, but short term prices will go down. No one sees prices really go down because that could trigger another ‘08 style collapse. Banks are less leveraged, but there’s a lot of people with mortgages too big for their sake.
dragonwriter 5y ago
> does it actually work that way? Yes, density drives up the price of land, but much of the value of a home isn't land value; poorer people in the neighborhood drives down the value per square foot of existing dwelling because people with money don't want to live near people without money by and large, both directly and indirectly. (E.g., better off people want to, and will pay a premium to, live near “good schools”, but there is pretty solid evidence that almost none of the difference in the things which people look to to assess that is due to the school itself, it is almost entirely incidental consequences of the demographics of the students attending the school: “good schools” aren't ones that make better students, they are made by better students.) Until the potential realizable by dense redevelopment drives up the land value so much that the added land value exceeds the lost value of the existing improvements, it's a loss, and even then it's a gain that can only be realized by abandoning the home, which becomes a liability that needs to be dealt with to unlock the value. Homeowners want the value of their home to increase, but often what they more specifically want is to continue living in the home while leveraging greater equity to enhance their lifestyle. This is not served by land value increases (even if they reach the level of net property value increases after decrease in value of existing improvements) that are only accessible by redevelopment. People who live in homes they own are not like absentee owners and tend to ascribe significant value to existing community character and significant negative value to moving, on top of theit investment interests in the property.
nostrademons 5y ago
It increases the value of land for people who sell and build while pushing externalities onto people who hold. If your neighbor with a $1M home sells it to a developer for $2M, they make a cool extra mil. You, as a neighbor, get nothing. Meanwhile, you have to deal with additional traffic in the neighborhood; cars parked on the street; more people (quite possibly of a different socioeconomic strata) coming and going; construction noise; higher property taxes; usually uglier buildings; blocked views; more crowded schools; and more load on public infrastructure. This is also why the most vocal NIMBYs are often senior citizens who plan to live in their home till they die. They don't benefit from the higher land values at all, because they never intend to sell the property, and will be dead before somebody reaps the financial gains. However, they have to deal with all the community externalities, and they're often at a stage in their life where they're least suited for that.
- wallacoloo 5y ago
  > You, as a neighbor, get nothing. Meanwhile, you have to deal with additional traffic in the neighborhood; cars parked on the street; more people (quite possibly of a different socioeconomic strata) coming and going; construction noise; higher property taxes; usually uglier buildings; blocked views; more crowded schools; and more load on public infrastructure. there was a time in this scenario when those schools and public infrastructure didn't exist. presumably, the thing which justified their build-out was an earlier increase in density. one would therefore expect further increases in density to justify more forms of (or larger scale) public infrastructure. what scenarios would lead one to value the existing public infrastructure but not value the future public infrastructure? is it just a problem of time horizons/discounting (i.e. that the negative externalities of upscaling are immediate while the positives accrue over a longer time period)? that would seem to align with the anecdote about seniors, at least. but then i'm curious how the original community ever overcame these tradeoffs in order to achieve enough density and construct the earlier forms of public infrastructure.
  - nostrademons 5y ago
    Appropriate infrastructure for one scale usually isn't appropriate when the population grows 4-5x. A cluster of 4 1000-pop villages will usually share an elementary school, with students bussed 10-20 miles to it. A 4000-pop light suburban town will have its own elementary school, usually one where parents will drive their kids 1-2 miles to it. A 4000-pop dense suburban development will place a 1-2 story elementary school and associated park & fields inside the middle of the neighborhood, where most students can walk to it via footpaths without crossing major roads. A 4000-pop urban neighborhood will build a 4-6 story schoolhouse on a major avenue where all the students are close by. A cluster of villages or small towns will have 2-lane roads snaking between major village centers. A dense suburban neighborhood has a road hierarchy, 6-lane boulevards with commercial strip malls, fed by 2-lane residential streets. An urban neighborhood builds mass transit. In each case, you can't really upgrade the existing infrastructure to the point where it's appropriate for the new density. You have to tear it down and build it a different way, at a cost that's usually higher and more disruptive than just building it a different way in the first place. It makes me wonder why we don't have more bands of underhoused Millenials going off into the wilderness to found new cities. That's how we got the infrastructure in the first place: land developers generally subdivided undeveloped farm/ranch/wilderness land, and sold it to people living in overcrowded tenements in the city. Or in the case of Europe/Japan/Russia/China, bombed the hell out of each other until all the infrastructure was destroyed and then built new infrastructure from scratch to house the survivors. Perhaps a tongue-in-cheek-yet-actually-practical way of looking at this might be to treat cities as disposable, with a lifetime of a few generations, and then once the people outgrow them it's time to abandon the city and build a new one.

xondono 5y ago

Long term vs short term. Long term they’ll be worth more, but short term prices will go down. No one sees prices really go down because that could trigger another ‘08 style collapse. Banks are less leveraged, but there’s a lot of people with mortgages too big for their sake.

dragonwriter 5y ago

> does it actually work that way? Yes, density drives up the price of land, but much of the value of a home isn't land value; poorer people in the neighborhood drives down the value per square foot of existing dwelling because people with money don't want to live near people without money by and large, both directly and indirectly. (E.g., better off people want to, and will pay a premium to, live near “good schools”, but there is pretty solid evidence that almost none of the difference in the things which people look to to assess that is due to the school itself, it is almost entirely incidental consequences of the demographics of the students attending the school: “good schools” aren't ones that make better students, they are made by better students.) Until the potential realizable by dense redevelopment drives up the land value so much that the added land value exceeds the lost value of the existing improvements, it's a loss, and even then it's a gain that can only be realized by abandoning the home, which becomes a liability that needs to be dealt with to unlock the value. Homeowners want the value of their home to increase, but often what they more specifically want is to continue living in the home while leveraging greater equity to enhance their lifestyle. This is not served by land value increases (even if they reach the level of net property value increases after decrease in value of existing improvements) that are only accessible by redevelopment. People who live in homes they own are not like absentee owners and tend to ascribe significant value to existing community character and significant negative value to moving, on top of theit investment interests in the property.

nostrademons 5y ago

It increases the value of land for people who sell and build while pushing externalities onto people who hold. If your neighbor with a $1M home sells it to a developer for $2M, they make a cool extra mil. You, as a neighbor, get nothing. Meanwhile, you have to deal with additional traffic in the neighborhood; cars parked on the street; more people (quite possibly of a different socioeconomic strata) coming and going; construction noise; higher property taxes; usually uglier buildings; blocked views; more crowded schools; and more load on public infrastructure. This is also why the most vocal NIMBYs are often senior citizens who plan to live in their home till they die. They don't benefit from the higher land values at all, because they never intend to sell the property, and will be dead before somebody reaps the financial gains. However, they have to deal with all the community externalities, and they're often at a stage in their life where they're least suited for that.

wallacoloo 5y ago
> You, as a neighbor, get nothing. Meanwhile, you have to deal with additional traffic in the neighborhood; cars parked on the street; more people (quite possibly of a different socioeconomic strata) coming and going; construction noise; higher property taxes; usually uglier buildings; blocked views; more crowded schools; and more load on public infrastructure. there was a time in this scenario when those schools and public infrastructure didn't exist. presumably, the thing which justified their build-out was an earlier increase in density. one would therefore expect further increases in density to justify more forms of (or larger scale) public infrastructure. what scenarios would lead one to value the existing public infrastructure but not value the future public infrastructure? is it just a problem of time horizons/discounting (i.e. that the negative externalities of upscaling are immediate while the positives accrue over a longer time period)? that would seem to align with the anecdote about seniors, at least. but then i'm curious how the original community ever overcame these tradeoffs in order to achieve enough density and construct the earlier forms of public infrastructure.
- nostrademons 5y ago
  Appropriate infrastructure for one scale usually isn't appropriate when the population grows 4-5x. A cluster of 4 1000-pop villages will usually share an elementary school, with students bussed 10-20 miles to it. A 4000-pop light suburban town will have its own elementary school, usually one where parents will drive their kids 1-2 miles to it. A 4000-pop dense suburban development will place a 1-2 story elementary school and associated park & fields inside the middle of the neighborhood, where most students can walk to it via footpaths without crossing major roads. A 4000-pop urban neighborhood will build a 4-6 story schoolhouse on a major avenue where all the students are close by. A cluster of villages or small towns will have 2-lane roads snaking between major village centers. A dense suburban neighborhood has a road hierarchy, 6-lane boulevards with commercial strip malls, fed by 2-lane residential streets. An urban neighborhood builds mass transit. In each case, you can't really upgrade the existing infrastructure to the point where it's appropriate for the new density. You have to tear it down and build it a different way, at a cost that's usually higher and more disruptive than just building it a different way in the first place. It makes me wonder why we don't have more bands of underhoused Millenials going off into the wilderness to found new cities. That's how we got the infrastructure in the first place: land developers generally subdivided undeveloped farm/ranch/wilderness land, and sold it to people living in overcrowded tenements in the city. Or in the case of Europe/Japan/Russia/China, bombed the hell out of each other until all the infrastructure was destroyed and then built new infrastructure from scratch to house the survivors. Perhaps a tongue-in-cheek-yet-actually-practical way of looking at this might be to treat cities as disposable, with a lifetime of a few generations, and then once the people outgrow them it's time to abandon the city and build a new one.