5 ms·

> With no constraints on construction will there be a small boom in new development, tearing down virgin forest in order to make empty developments? Probably?

> With no constraints on construction will there be a small boom in new development, tearing down virgin forest in order to make empty developments? Probably? I live in Michigan, which (with the exception of two spots) has no meaningful limits on construction. Even the cities that technically have-and-enforce zoning, waive all the rules constantly anytime a developer asks. And yes -- it means developers can build almost anything they want, almost anywhere they want. (Truly anything, I live next to a 15-story concrete castle apartment building that a developer built on what was once a trailer park). Unfortunately, it does not mean you get lower cost of housing (prices here are still astronomical, and while they look cheaper in comparison to California, is only because of the severely reduced income locals make -- prices are still at record-all-time highs) But it does mean, developers routinely cut down entire forests or farmland for new suburbs anytime they'd like. If you want a house made of sticks and cardboard, we have loads and loads of them for 'just' $450k. Years worth of 'inventory' here.

OnlineGladiator 4y ago
> Unfortunately, it does not mean you get lower cost of housing You don't believe in supply and demand? I'm not saying you have cheap housing. I'm saying you would have more expensive housing if there were fewer of them, the same way GPUs are more valuable when there are fewer of them.
- nemo44x 4y ago
  What you're not factoring in is the cost of labor and materials. They are both already quite expensive and when you have a building boom the costs of both will skyrocket. What will happen is you'll end up with cheaply constructed housing made from the worst materials. And that's the good outcome. The bad outcome is the rich who are looking for alternate investments will buy up all the labor and materials and build construction for themselves and will build rentals. That's the bad outcome. The awful outcome, and likely outcome is that the labor and materials will be bought by newly formed real estate companies that will build rental property that is ugly and expensive - because they control the market more and more as they merge into 2 super landlord companys.
  - OnlineGladiator 4y ago
    The cost of the house itself is nothing compared to the cost of the land. Houses don't appreciate in value because of the houses (which deteriorate over time) - they appreciate because of the scarcity of land.
    - nemo44x 4y ago
      Sure, but houses don't depreciate as quickly as you might think. There's a few reasons for this: - Constructing a new building isn't as cheap as when the existing structure was built. For instance, my home cost about $15,000 to build 100 years ago. Today the structure itself is worth more than that. Inflation matters here. - People maintain and improve their homes. New kitchens, roofs, flooring, furnaces, siding, etc. In essence you are rebuilding a home 1 piece at a time from the day it is made. If you don't then the house gets to a point it can't be lived in. People who haven't looked at new build prices for 10 years are shocked at what it costs today.
      - OnlineGladiator 4y ago
        Nothing you're saying is wrong, but it doesn't change the fact that the land is an order of magnitude more valuable than the building (I'm speaking broadly and for residential real estate). We still have more lumber than land. In a very hand-wavy way we have more labor than land. The limiting factor is always what drives the price.
        timerol 4y ago
        This is not accurate outside of a handful of broken housing markets. In Philadelphia[1] land is often 1/5 of the total value. There are definitely some parcels that are undeveloped[2] or underdeveloped[3], but most properties are more balanced. [1] I chose Philly because of a good clickable property tax browser https://property.phila.gov/?p=881576550 https://property.phila.gov/?p=881576550, and because it keeps separate land vs. improvement assessments. [2] This is in no way a statement that Rittenhouse Square should be developed. Parks are good. https://property.phila.gov/?p=885705260 https://property.phila.gov/?p=885705260 [3] https://property.phila.gov/?p=881520352 https://property.phila.gov/?p=881520352
- dragonwriter 4y ago
  > You don't believe in supply and demand? Induced demand is a thing, as (and much more common) are demand curves that are flat enough that shifting the supply curve to the right by some large fraction of the current market clearing quantity has no discernable effect on the market clearing price. Real life supply and demand involves more than the simplest Econ 101 illustrative examples of the general direction of the ideal relation.
  - jvm-hn 4y ago
    While you are right that the dynamics are complex, research has clearly established that an increase in housing supply decreases its cost. See e.g. https://www.lewis.ucla.edu/research/market-rate-development-impacts/ https://www.lewis.ucla.edu/research/market-rate-development-...
zeroonetwothree 4y ago
There's a certain cost to build a house. It's not like the houses themselves are more in CA (well, maybe a little), it's the land. For example, my house is appraised around $300k but the land is appraised at $1.2 million.
- njarboe 4y ago
  My 4 bedroom house in Oakland had a replacement cost/value of about $400k. That seemed high but not unreasonable. Then the Santa Rosa fire burned down 1000 homes and insurers realized that construction costs in California are insane (especially when you are trying to build a thousand in a year). Replacement cost jumped to $750k in one year. The land used to be worth quite a good fraction of the property, and then it wasn't.
  - seanmcdirmid 4y ago
    My home’s replacement cost is way higher than what the insurer appraised it as, but asking for a higher appraisal counts as warning bells in their eyes (are they planning on burning down their home?).
- nemo44x 4y ago
  That may be what your used house is worth in an appraisal but if you wanted to build it new, it would cost significantly more I imagine. It depends a lot on finishes and framing complexity of course (number of windows, roof, etc). A lot of people I know in Colorado found this out when their homes burned down. They had the structure insured for like $500,000 and found out that rebuilding their home that was built 20 years ago would cost around $1,000,000. A friend recently had a multi story addition put on his house, and of course additions always cost more because there's some amount of demolition and working on an existing site, so the new footings have to be underpinned, etc. It's also a large kitchen and the existing kitchen space had to be demo'd and rebuilt into a new, basic room. The upstairs connected to a hallways but there was some work. Anyways, the cost, all in was over $500k. Even if he didn't use Marvin windows, Wold appliances, nice cabinetry, etc it would have been like $400k. And yes you can go lower. But don't be fooled. A lot of the cheaper construction you see is not only made with awful materials and lazy/inexperienced tradesmen, but is also track housing or similar no modifications allowed type things.
akiselev 4y ago
> Unfortunately, it does not mean you get lower cost of housing (prices here are still astronomical, and while they look cheaper in comparison to California, is only because of the severely reduced income locals make -- prices are still at record-all-time highs) Are you taking into account the inflation we've experienced? If the mental anchor against which you compare this "all time high" is 2015, for example, then we've seen over 20% inflation. Over 33% inflation since 2008.
- Dylan16807 4y ago
  https://fred.stlouisfed.org/series/MISTHPI https://fred.stlouisfed.org/series/MISTHPI By these numbers, up about 78% since 2008 and 2015, which almost matched. Up 50% since the previous peak in 2005, so yeah all-time high.
whimsicalism 4y ago
> (prices here are still astronomical, and while they look cheaper in comparison to California, is only because of the severely reduced income locals make -- prices are still at record-all-time highs) You are confusing cause & effect here.
tinglymintyfrsh 4y ago
I'm in Austin. I believe there to be inconsistency in zoning here because I'm on the top floor of a 10+ floor residential building looking down on a neighborhood park, single family homes, a motel, and smaller apartment buildings. The building occurring downtown is insane. I haven't seen anything like it since the booms in Shanghai and Dubai.
godtoldmetodoit 4y ago
> (Truly anything, I live next to a 15-story concrete castle apartment building that a developer built on what was once a trailer park). Ah, the good ol' Grandville castle. It boggles my mind every time I drive past that someone decided to spend tens of millions to build... whatever the hell this is. https://cdngeneral.rentcafe.com/dmslivecafe/3/610177/DJI_0188.jpg?&quality=85& https://cdngeneral.rentcafe.com/dmslivecafe/3/610177/DJI_018...
- crooked-v 4y ago
  My very first thought there was 'here's an example of what could have been ambitious, interesting architecture, except all the public space is devoted to cars instead of people'.
veec_cas_tant 4y ago
> Unfortunately, it does not mean you get lower cost of housing I think that I'm missing something here unless there happens to be an infinite supply of people looking to move to your city.

OnlineGladiator 4y ago

> Unfortunately, it does not mean you get lower cost of housing You don't believe in supply and demand? I'm not saying you have cheap housing. I'm saying you would have more expensive housing if there were fewer of them, the same way GPUs are more valuable when there are fewer of them.

nemo44x 4y ago
What you're not factoring in is the cost of labor and materials. They are both already quite expensive and when you have a building boom the costs of both will skyrocket. What will happen is you'll end up with cheaply constructed housing made from the worst materials. And that's the good outcome. The bad outcome is the rich who are looking for alternate investments will buy up all the labor and materials and build construction for themselves and will build rentals. That's the bad outcome. The awful outcome, and likely outcome is that the labor and materials will be bought by newly formed real estate companies that will build rental property that is ugly and expensive - because they control the market more and more as they merge into 2 super landlord companys.
- OnlineGladiator 4y ago
  The cost of the house itself is nothing compared to the cost of the land. Houses don't appreciate in value because of the houses (which deteriorate over time) - they appreciate because of the scarcity of land.
  - nemo44x 4y ago
    Sure, but houses don't depreciate as quickly as you might think. There's a few reasons for this: - Constructing a new building isn't as cheap as when the existing structure was built. For instance, my home cost about $15,000 to build 100 years ago. Today the structure itself is worth more than that. Inflation matters here. - People maintain and improve their homes. New kitchens, roofs, flooring, furnaces, siding, etc. In essence you are rebuilding a home 1 piece at a time from the day it is made. If you don't then the house gets to a point it can't be lived in. People who haven't looked at new build prices for 10 years are shocked at what it costs today.
    - OnlineGladiator 4y ago
      Nothing you're saying is wrong, but it doesn't change the fact that the land is an order of magnitude more valuable than the building (I'm speaking broadly and for residential real estate). We still have more lumber than land. In a very hand-wavy way we have more labor than land. The limiting factor is always what drives the price.
      - timerol 4y ago
        This is not accurate outside of a handful of broken housing markets. In Philadelphia[1] land is often 1/5 of the total value. There are definitely some parcels that are undeveloped[2] or underdeveloped[3], but most properties are more balanced. [1] I chose Philly because of a good clickable property tax browser https://property.phila.gov/?p=881576550 https://property.phila.gov/?p=881576550, and because it keeps separate land vs. improvement assessments. [2] This is in no way a statement that Rittenhouse Square should be developed. Parks are good. https://property.phila.gov/?p=885705260 https://property.phila.gov/?p=885705260 [3] https://property.phila.gov/?p=881520352 https://property.phila.gov/?p=881520352
dragonwriter 4y ago
> You don't believe in supply and demand? Induced demand is a thing, as (and much more common) are demand curves that are flat enough that shifting the supply curve to the right by some large fraction of the current market clearing quantity has no discernable effect on the market clearing price. Real life supply and demand involves more than the simplest Econ 101 illustrative examples of the general direction of the ideal relation.
- jvm-hn 4y ago
  While you are right that the dynamics are complex, research has clearly established that an increase in housing supply decreases its cost. See e.g. https://www.lewis.ucla.edu/research/market-rate-development-impacts/ https://www.lewis.ucla.edu/research/market-rate-development-...

zeroonetwothree 4y ago

There's a certain cost to build a house. It's not like the houses themselves are more in CA (well, maybe a little), it's the land. For example, my house is appraised around $300k but the land is appraised at $1.2 million.

njarboe 4y ago
My 4 bedroom house in Oakland had a replacement cost/value of about $400k. That seemed high but not unreasonable. Then the Santa Rosa fire burned down 1000 homes and insurers realized that construction costs in California are insane (especially when you are trying to build a thousand in a year). Replacement cost jumped to $750k in one year. The land used to be worth quite a good fraction of the property, and then it wasn't.
- seanmcdirmid 4y ago
  My home’s replacement cost is way higher than what the insurer appraised it as, but asking for a higher appraisal counts as warning bells in their eyes (are they planning on burning down their home?).
nemo44x 4y ago
That may be what your used house is worth in an appraisal but if you wanted to build it new, it would cost significantly more I imagine. It depends a lot on finishes and framing complexity of course (number of windows, roof, etc). A lot of people I know in Colorado found this out when their homes burned down. They had the structure insured for like $500,000 and found out that rebuilding their home that was built 20 years ago would cost around $1,000,000. A friend recently had a multi story addition put on his house, and of course additions always cost more because there's some amount of demolition and working on an existing site, so the new footings have to be underpinned, etc. It's also a large kitchen and the existing kitchen space had to be demo'd and rebuilt into a new, basic room. The upstairs connected to a hallways but there was some work. Anyways, the cost, all in was over $500k. Even if he didn't use Marvin windows, Wold appliances, nice cabinetry, etc it would have been like $400k. And yes you can go lower. But don't be fooled. A lot of the cheaper construction you see is not only made with awful materials and lazy/inexperienced tradesmen, but is also track housing or similar no modifications allowed type things.

akiselev 4y ago

> Unfortunately, it does not mean you get lower cost of housing (prices here are still astronomical, and while they look cheaper in comparison to California, is only because of the severely reduced income locals make -- prices are still at record-all-time highs) Are you taking into account the inflation we've experienced? If the mental anchor against which you compare this "all time high" is 2015, for example, then we've seen over 20% inflation. Over 33% inflation since 2008.

Dylan16807 4y ago
https://fred.stlouisfed.org/series/MISTHPI https://fred.stlouisfed.org/series/MISTHPI By these numbers, up about 78% since 2008 and 2015, which almost matched. Up 50% since the previous peak in 2005, so yeah all-time high.

whimsicalism 4y ago

> (prices here are still astronomical, and while they look cheaper in comparison to California, is only because of the severely reduced income locals make -- prices are still at record-all-time highs) You are confusing cause & effect here.

tinglymintyfrsh 4y ago

I'm in Austin. I believe there to be inconsistency in zoning here because I'm on the top floor of a 10+ floor residential building looking down on a neighborhood park, single family homes, a motel, and smaller apartment buildings. The building occurring downtown is insane. I haven't seen anything like it since the booms in Shanghai and Dubai.

godtoldmetodoit 4y ago

> (Truly anything, I live next to a 15-story concrete castle apartment building that a developer built on what was once a trailer park). Ah, the good ol' Grandville castle. It boggles my mind every time I drive past that someone decided to spend tens of millions to build... whatever the hell this is. https://cdngeneral.rentcafe.com/dmslivecafe/3/610177/DJI_0188.jpg?&quality=85& https://cdngeneral.rentcafe.com/dmslivecafe/3/610177/DJI_018...

crooked-v 4y ago
My very first thought there was 'here's an example of what could have been ambitious, interesting architecture, except all the public space is devoted to cars instead of people'.

veec_cas_tant 4y ago

> Unfortunately, it does not mean you get lower cost of housing I think that I'm missing something here unless there happens to be an infinite supply of people looking to move to your city.