4 ms·

In a situation where there is already too little affordable housing and relatively finite construction infrastructure or land, then it seems plausible that an i

In a situation where there is already too little affordable housing and relatively finite construction infrastructure or land, then it seems plausible that an increase in the construction of luxury housing will result in a decrease in the construction of affordable housing.

jolux 4y ago
That assumes that construction of affordable housing is happening, which it isn’t in most cases.
avalys 4y ago
The wealthy people demanding luxury housing are the ones driving housing prices up. They’re going to buy a house no matter what - would you rather they “overpay” for an existing house in an established neighborhood and drive gentrification, or move into new construction? If you meet their demand with new housing, the demand and price pressure on existing housing inventory will decrease, even if you don’t build any new “affordable” housing.
- 1letterunixname 4y ago
  The Bay Area is a perfect example. NIMBYs don't want new construction of anything. They might look the other way if it were luxury construction away from them, but cannot have affordable homes anywhere. The rich from all over the world will continue to be attracted to the area, compete with less well-off people already there who are priced out of the market. This is why there are so many homeless and people living vehicles who cannot afford housing. I make $300k but cannot afford to buy my grandparents' home that is $2.5M now but was $30k in 1968 ($260k in today's money, an order-of-magnitude increase in price. $50k is the average income today but it was $74.5k ($8.6k) in today's money then. That's 3.5x housing/income to 50x.).
- derefr 4y ago
  > would you rather they “overpay” for an existing house in an established neighborhood and drive gentrification, or move into new construction? How are those the two options? Aren't you forgetting about new construction in established neighbourhoods? I.e. buying up two or three low-density lots, or a older/decrepit low-land-value condo building, to replace these lot(s) with a modern, high-density mixed-use condo building, composed mostly of high-sqft condos that cost more than most SFHs? There are more units on the new lot than there were on the old lot(s), so the people buying these units are definitely "moving into new construction"; but at the same time, the creation of these units displaced previous low-cost rentals. This is 99% of what people in my city (Vancouver) are complaining about when they talk about gentrification through "luxury construction": being priced out of a neighbourhood they previously rented in, as buildings containing low-price rental units are torn down and replaced by buildings containing only high-price rental units.
- patrakov 4y ago
  I didn't demand luxury housing! In fact, I was planning to buy something 3x cheaper, but a "nice" sales girl has convinced me that the alternative that I was considering is not good enough - "that's just an apartment in a 20-story house, and look what's around there, no school, no Italian restaurant (and I know you like Italian food), no nothing, and we have it all here, and also this nice shadowed alley".
twoodfin 4y ago
Even under those constraints, the added supply at the high end will make existing housing stock cheaper.
zmnd 4y ago
Why affordable housing should be new?
- guhidalg 4y ago
  Because building construction standards change, the cost of continuous maintenance can exceed the cost of building something new, and people move around. Would you like to live in an expensive new house or is cheap old house?
- oneplane 4y ago
  It doesn't have to be new, but adding more housing generally requires you to build buildings, and when a building is built where there used to be no building, it is generally referred to as new construction and thus new (or newly added) housing. You could evict a bunch of people from existing houses and then re-sell those within the constraints of affordable housing parameters, but I doubt that is a feasible method of significantly scaled up expansion the pool of available affordable housing.
- 1letterunixname 4y ago
  Because the inventory of it shrinks and shrinks more. What little existing inventory of AH there is will not suddenly reduce in price because castles appear.
  - letitbeirie 4y ago
    Suddenly? No. Gradually? That's roughly what's happening in Denver right now - nobody's been building anything but luxury castles for years, but we saw our average rent drop last quarter for the first time since the recession. Reason? There were 11,000 more units available than there were this time last year and there are 40k more on the way, so apartment managers are having to think about vacancy rates instead of myopically focusing on profit per unit for the first time since... probably the recession again. https://www.denverpost.com/2023/01/25/apartments-metro-denver-vacancy-rate-falling-rents/ https://www.denverpost.com/2023/01/25/apartments-metro-denve...
- harimau777 4y ago
rs999gti 4y ago
> finite construction infrastructure or land Let's refine this statement, there's plenty of land and housing, but not enough near the jobs or attractions that middle and upper class desire or that the lower class can afford, who provide support for the middle and upper class.
snapplebobapple 4y ago
It's the other way around. In a situation where there is finite construction infrastructure or land it doesn't matter what you build, affordable housing will decrease because pricing power allows price raises for all building types. The good news is there is basically no place in North America where there is a finite construction infrastructure or land causing housing shortages, except for maybe very low population remote areas and maybe Manhattan. The vast majority of shortage is driven by bad government zoning and approvals policy (looking especially hard at you San Francisco). If you fix the policy in a way that developers will be reasonably sure it won't revert back and be used to punish them for what they did under new policy, your shortage problem would sort itself out in a decade or two as the massive building boom led to a glut and lower prices.

jolux 4y ago

That assumes that construction of affordable housing is happening, which it isn’t in most cases.

avalys 4y ago

The wealthy people demanding luxury housing are the ones driving housing prices up. They’re going to buy a house no matter what - would you rather they “overpay” for an existing house in an established neighborhood and drive gentrification, or move into new construction? If you meet their demand with new housing, the demand and price pressure on existing housing inventory will decrease, even if you don’t build any new “affordable” housing.

1letterunixname 4y ago
The Bay Area is a perfect example. NIMBYs don't want new construction of anything. They might look the other way if it were luxury construction away from them, but cannot have affordable homes anywhere. The rich from all over the world will continue to be attracted to the area, compete with less well-off people already there who are priced out of the market. This is why there are so many homeless and people living vehicles who cannot afford housing. I make $300k but cannot afford to buy my grandparents' home that is $2.5M now but was $30k in 1968 ($260k in today's money, an order-of-magnitude increase in price. $50k is the average income today but it was $74.5k ($8.6k) in today's money then. That's 3.5x housing/income to 50x.).
derefr 4y ago
> would you rather they “overpay” for an existing house in an established neighborhood and drive gentrification, or move into new construction? How are those the two options? Aren't you forgetting about new construction in established neighbourhoods? I.e. buying up two or three low-density lots, or a older/decrepit low-land-value condo building, to replace these lot(s) with a modern, high-density mixed-use condo building, composed mostly of high-sqft condos that cost more than most SFHs? There are more units on the new lot than there were on the old lot(s), so the people buying these units are definitely "moving into new construction"; but at the same time, the creation of these units displaced previous low-cost rentals. This is 99% of what people in my city (Vancouver) are complaining about when they talk about gentrification through "luxury construction": being priced out of a neighbourhood they previously rented in, as buildings containing low-price rental units are torn down and replaced by buildings containing only high-price rental units.
patrakov 4y ago
I didn't demand luxury housing! In fact, I was planning to buy something 3x cheaper, but a "nice" sales girl has convinced me that the alternative that I was considering is not good enough - "that's just an apartment in a 20-story house, and look what's around there, no school, no Italian restaurant (and I know you like Italian food), no nothing, and we have it all here, and also this nice shadowed alley".

twoodfin 4y ago

Even under those constraints, the added supply at the high end will make existing housing stock cheaper.

zmnd 4y ago

Why affordable housing should be new?

guhidalg 4y ago
Because building construction standards change, the cost of continuous maintenance can exceed the cost of building something new, and people move around. Would you like to live in an expensive new house or is cheap old house?
oneplane 4y ago
It doesn't have to be new, but adding more housing generally requires you to build buildings, and when a building is built where there used to be no building, it is generally referred to as new construction and thus new (or newly added) housing. You could evict a bunch of people from existing houses and then re-sell those within the constraints of affordable housing parameters, but I doubt that is a feasible method of significantly scaled up expansion the pool of available affordable housing.
1letterunixname 4y ago
Because the inventory of it shrinks and shrinks more. What little existing inventory of AH there is will not suddenly reduce in price because castles appear.
- letitbeirie 4y ago
  Suddenly? No. Gradually? That's roughly what's happening in Denver right now - nobody's been building anything but luxury castles for years, but we saw our average rent drop last quarter for the first time since the recession. Reason? There were 11,000 more units available than there were this time last year and there are 40k more on the way, so apartment managers are having to think about vacancy rates instead of myopically focusing on profit per unit for the first time since... probably the recession again. https://www.denverpost.com/2023/01/25/apartments-metro-denver-vacancy-rate-falling-rents/ https://www.denverpost.com/2023/01/25/apartments-metro-denve...
harimau777 4y ago

rs999gti 4y ago

> finite construction infrastructure or land Let's refine this statement, there's plenty of land and housing, but not enough near the jobs or attractions that middle and upper class desire or that the lower class can afford, who provide support for the middle and upper class.

snapplebobapple 4y ago

It's the other way around. In a situation where there is finite construction infrastructure or land it doesn't matter what you build, affordable housing will decrease because pricing power allows price raises for all building types. The good news is there is basically no place in North America where there is a finite construction infrastructure or land causing housing shortages, except for maybe very low population remote areas and maybe Manhattan. The vast majority of shortage is driven by bad government zoning and approvals policy (looking especially hard at you San Francisco). If you fix the policy in a way that developers will be reasonably sure it won't revert back and be used to punish them for what they did under new policy, your shortage problem would sort itself out in a decade or two as the massive building boom led to a glut and lower prices.