2 ms·

> If homes are to be affordable that means more need to be built. I'm not convinced it's that simple. Houses aren't widgets that you can flood the market with

by jjav 4y ago

> If homes are to be affordable that means more need to be built. I'm not convinced it's that simple. Houses aren't widgets that you can flood the market with an unlimited supply to drop the price as much as desired. Homes cost a lot to build and use limited resources, which means at a certain point building more increases the cost. Picture a city that is building only 1000 homes a year and then they decide to start building 10,000 a year. Will the prices drop? If the prices were very high due to excess demand, probably not because there is enough demand to absorb those 10k units without meeting all the demand, so prices won't drop. Ok then, let's go all out and build a million units (let's imagine that land is somehow available for that in this thought exercise). Will prices go down? No, prices will go up! Ask anyone trying to build a home in a tight market, labor prices are extremely high because there is so much demand for a limited supply of labor. If this hypotetical city tried to build a million units, labor costs will skyrocket and so will the price per unit. There are no efficiencies of scale left in a mature industry like house builing. Building more doesn't make the per unit cost cheaper, it actually makes it higher due to labor availability.

mlyle 4y ago
> If the prices were very high due to excess demand, probably not because there is enough demand to absorb those 10k units without meeting all the demand, so prices won't drop. Supply and demand aren't quantities, they're functions. You may be trying to say that demand is inelastic around the present point, but I suspect it actually isn't.
pas 4y ago
Housing is still a very conservative industry, productivity is very low, because any transformative technology only works at scale, but the US is super big and even the population centers are low-density, in many jurisdictions, zoning basically mandated labor intensive low density housing for decades, etc. Land is available. What's not is infrastructure, and economic surplus to maintain all the required new homes and infrastructure (roads, pipes, power grid, etc). Housing suffers from the same curse as the transit infrastructure, or the nuclear industry, enormous economic and political inertia keeping/prefering the status quo, any new projects are small, low-efficiency, lack economies of scale, lack innovation (because copy-paste building just one more is the lowest risk thing). Look at the recent California zoning remedy program, so few real estate developers are taking it, because it turns out that those small local markets are basically incompetitive cronyist distopias, and it makes no sense for them to get into a fight with the zoning/approval board.

by jjav 4y ago

mlyle 4y ago

> If the prices were very high due to excess demand, probably not because there is enough demand to absorb those 10k units without meeting all the demand, so prices won't drop. Supply and demand aren't quantities, they're functions. You may be trying to say that demand is inelastic around the present point, but I suspect it actually isn't.

pas 4y ago

Housing is still a very conservative industry, productivity is very low, because any transformative technology only works at scale, but the US is super big and even the population centers are low-density, in many jurisdictions, zoning basically mandated labor intensive low density housing for decades, etc. Land is available. What's not is infrastructure, and economic surplus to maintain all the required new homes and infrastructure (roads, pipes, power grid, etc). Housing suffers from the same curse as the transit infrastructure, or the nuclear industry, enormous economic and political inertia keeping/prefering the status quo, any new projects are small, low-efficiency, lack economies of scale, lack innovation (because copy-paste building just one more is the lowest risk thing). Look at the recent California zoning remedy program, so few real estate developers are taking it, because it turns out that those small local markets are basically incompetitive cronyist distopias, and it makes no sense for them to get into a fight with the zoning/approval board.