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Regarding my last statement: People like to invest into multi residentials now, but are those investments still profitable when the zoning changes? How do you

Regarding my last statement: People like to invest into multi residentials now, but are those investments still profitable when the zoning changes? How do you protect your investment when there is innovative pressure and housing units compete on price? Say you have a building and you try to monetize your investment over 20 years but after ten years, due to innovation, competing units can be built for half your costs. Then your tenants will move if you don't halve your rent which destroys your profits. In a city with nimby's, that's never a problem because rent remains high, even if costs are reduced. >All we need to do is force cities to zone land this way This requires the vote of the nimby's which means that you need other options.

snapplebobapple 4y ago
regarding your last point first: no, it doesn't require the vote of the nimbys. The state and/or province could force this very easily and that group of politicians is beholden to a group of people with more varied interests so are less under nimby pressure. regarding your first point:The loss from rezoning will happen at the time of rezoning and will primarily affect the currently zoned high density land. With newly repriced lower, non scarce multi unit residential land it is unlikely to end up in a large downward risk situation because the sophisticated reits will be pricing what they will pay now for land off of what they think will happen over the next twenty years and will likely be pricing in a rent drop (which is what drives the drop in land prices for high density). You also aren't really at risk of technological disruption because the total turnover/increase in units is low relative to total housing stock even if we ented a building boom. If it suddenly costs half as much to build a high density residential building, it's still going to take decades for that to erode rental costs by half because you don't suddenly have enough supply of that cheaper to build stock to house everyone.

snapplebobapple 4y ago

regarding your last point first: no, it doesn't require the vote of the nimbys. The state and/or province could force this very easily and that group of politicians is beholden to a group of people with more varied interests so are less under nimby pressure. regarding your first point:The loss from rezoning will happen at the time of rezoning and will primarily affect the currently zoned high density land. With newly repriced lower, non scarce multi unit residential land it is unlikely to end up in a large downward risk situation because the sophisticated reits will be pricing what they will pay now for land off of what they think will happen over the next twenty years and will likely be pricing in a rent drop (which is what drives the drop in land prices for high density). You also aren't really at risk of technological disruption because the total turnover/increase in units is low relative to total housing stock even if we ented a building boom. If it suddenly costs half as much to build a high density residential building, it's still going to take decades for that to erode rental costs by half because you don't suddenly have enough supply of that cheaper to build stock to house everyone.