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The full picture gets worse the more you look into it. The largest home builders in the nation aren’t building homes at budgets that most can afford. So you’d

The full picture gets worse the more you look into it. The largest home builders in the nation aren’t building homes at budgets that most can afford. So you’d say to yourself, well clearly they’re targeting the affluent then. Except there are only so many high income Americans you can sell to, and not all of them want expensive homes. So what do these builders do? They build-to-rent! Yep. Those single-family homes you see in many large developments you can just think of as so-called “luxury” apartments by a different name. I suspect most developed nations experiencing this issue are effectively stuck and growth capped markets. Truly only dedicated policy targeting this problem will make a change, because the capital required to obtain land, rezone it for traditional residential building, then sell it requires either institutional capital, or small builders doing one-offs for select clients.

zbrozek 4y ago
It's a stifling regulatory environment that's landed us here. Zoning is restrictive, planning commissions are slow and restrictive, councils are slow and restrictive. All of the agencies involved want to capture value from construction projects. The net result is that very few projects pencil out, and the ones that do are expensive. We need to fix the root cause, which is lack of property rights.
- yummypaint 4y ago
  The claims about zoning and property rights can be examined in the US, as Texas has no zoning. Housing costs are not remarkably different there. The "capturing of value" that is actually happening is a net transfer of land and wealth from the general population to a handful of massive corporations and the people who control them. Once they own everything and have dismantled the market they can charge whatever they want.
- froggychairs 4y ago
  Zoning for who? America has no issue with single family zoning. I’m assuming you’re speaking about middle and high density zoning. Since the issues you're describing are extremely common for those zoning projects.
  - zbrozek 4y ago
    If you're the property owner it should be easy for you to build whatever level of residential density you want and think the market will make profitable. Why is it illegal for me to build townhouses on my land? I'm in an area where it takes, on average, 1.8 acres per single family home. The next town over would put 18 single family homes in that same space. Zoning is restrictive even for single-family homes.
    - josephcsible 4y ago
      > If you're the property owner it should be easy for you to build whatever level of residential density you want and think the market will make profitable. Why is it illegal for me to build townhouses on my land? Isn't the entire concept of externalities in economics that things aren't that simple? Presumably you agree that your neighbor shouldn't be able to build a sewage treatment plant next to your house.
      - imtringued 4y ago
        From what I can tell most economists will actively go out of their way to ignore externalities. For some externalities there are even market based methods for getting rid of them yet curiously almost no economist is interested in these types of institutions.
      - zbrozek 4y ago
        Sewage treatment plants are not residential construction.
    - yummypaint 4y ago
      Move to Texas and you can literally do this. There is no zoning. Go ahead and build those townhouses on your land. Your next door neighbors might build a strip club or pesticide manufacturing plant, though. Even if you luck out with your current neighbors, the addional risk will lead to worse terms for you if you need investors to finance the project.
    - rsj_hn 4y ago
jimrandomh 4y ago
This is a misunderstanding of how pricing works. The homes that are beig built aren't expensive because they're fancy, they're expensive because they're scarce and people need them, so they bid against each other. Every building markets itself as "luxury", but this is in fact just marketing. In principle you could make units cheaper by dividing them up into units with less floor space, but that people are already renting the larger units in groups.
- Gigachad 4y ago
  Expensive because they are new as well. Also even if you did constantly target the top end of the market. The people moving in moved out of somewhere else which has freed it up for others.
- theGnuMe 4y ago
  Agree. The luxury finishings are in fact quite cheap.
pydry 4y ago
>So you’d say to yourself, well clearly they’re targeting the affluent then. Except there are only so many high income Americans you can sell to They're targeting high net worth individuals looking for a store of value (or, in some cases, a foothold/bolthole from their repressive government). High income Americans are to these flats what jewellery/smartphones are to gold - the underlying use value that, combined with natural scarcity, drives the hoarding instinct. It's quite possible to pull the rug out from under the feet of the ultrawealthy by instituting a steep land value tax. This would kill the hoarding instinct, kill the NIMBY instinct and drive more efficient use of land.
- andrewmcwatters 4y ago
  I don’t know anyone buying new development housing as an alternative to marketable securities.
davidf18 4y ago

zbrozek 4y ago

It's a stifling regulatory environment that's landed us here. Zoning is restrictive, planning commissions are slow and restrictive, councils are slow and restrictive. All of the agencies involved want to capture value from construction projects. The net result is that very few projects pencil out, and the ones that do are expensive. We need to fix the root cause, which is lack of property rights.

yummypaint 4y ago
The claims about zoning and property rights can be examined in the US, as Texas has no zoning. Housing costs are not remarkably different there. The "capturing of value" that is actually happening is a net transfer of land and wealth from the general population to a handful of massive corporations and the people who control them. Once they own everything and have dismantled the market they can charge whatever they want.
froggychairs 4y ago
Zoning for who? America has no issue with single family zoning. I’m assuming you’re speaking about middle and high density zoning. Since the issues you're describing are extremely common for those zoning projects.
- zbrozek 4y ago
  If you're the property owner it should be easy for you to build whatever level of residential density you want and think the market will make profitable. Why is it illegal for me to build townhouses on my land? I'm in an area where it takes, on average, 1.8 acres per single family home. The next town over would put 18 single family homes in that same space. Zoning is restrictive even for single-family homes.
  - josephcsible 4y ago
    > If you're the property owner it should be easy for you to build whatever level of residential density you want and think the market will make profitable. Why is it illegal for me to build townhouses on my land? Isn't the entire concept of externalities in economics that things aren't that simple? Presumably you agree that your neighbor shouldn't be able to build a sewage treatment plant next to your house.
    - imtringued 4y ago
      From what I can tell most economists will actively go out of their way to ignore externalities. For some externalities there are even market based methods for getting rid of them yet curiously almost no economist is interested in these types of institutions.
    - zbrozek 4y ago
      Sewage treatment plants are not residential construction.
  - yummypaint 4y ago
    Move to Texas and you can literally do this. There is no zoning. Go ahead and build those townhouses on your land. Your next door neighbors might build a strip club or pesticide manufacturing plant, though. Even if you luck out with your current neighbors, the addional risk will lead to worse terms for you if you need investors to finance the project.
  - rsj_hn 4y ago

jimrandomh 4y ago

This is a misunderstanding of how pricing works. The homes that are beig built aren't expensive because they're fancy, they're expensive because they're scarce and people need them, so they bid against each other. Every building markets itself as "luxury", but this is in fact just marketing. In principle you could make units cheaper by dividing them up into units with less floor space, but that people are already renting the larger units in groups.

Gigachad 4y ago
Expensive because they are new as well. Also even if you did constantly target the top end of the market. The people moving in moved out of somewhere else which has freed it up for others.
theGnuMe 4y ago
Agree. The luxury finishings are in fact quite cheap.

pydry 4y ago

>So you’d say to yourself, well clearly they’re targeting the affluent then. Except there are only so many high income Americans you can sell to They're targeting high net worth individuals looking for a store of value (or, in some cases, a foothold/bolthole from their repressive government). High income Americans are to these flats what jewellery/smartphones are to gold - the underlying use value that, combined with natural scarcity, drives the hoarding instinct. It's quite possible to pull the rug out from under the feet of the ultrawealthy by instituting a steep land value tax. This would kill the hoarding instinct, kill the NIMBY instinct and drive more efficient use of land.

andrewmcwatters 4y ago
I don’t know anyone buying new development housing as an alternative to marketable securities.

davidf18 4y ago