4 ms·

Why affordable housing should be new?

by zmnd 3y ago

guhidalg 3y 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 3y 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 3y 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 3y 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 3y ago
If there is too little housing, then resolving that requires building more housing. You are correct, that it would be possible to build new luxury housing and then lower the cost of old luxury housing until it becomes affordable. However, that seems unlikely to actually happen since the owners of the old luxury housing are likely to resist losing money. In some cases, luxury housing may have features (size, density, amenities, etc.) that make is economically unviable to price it as affordable housing.
- zmnd 3y ago
  That wasn't my experience at all, feels like a theoretical discussion. Let's take something like SoCal, "luxury" housing built 30-50 years ago is not considered luxury. Even if those still advertise as "luxury", they definitely can't ask for the same prices despite companies having monopolies on certain regions. Reality is that it's too expensive to stay a "luxury" housing, all the labor costs and major renovations just don't make sense from a financial perspective. The fundamental issue that people miss is that the cost of building a "luxury" housing and "affordable" is not that different. Throwing quartz countertops and a tiny gym with outdated cheap equipment for a few extra k is nothing when the place costs 500k+. Sizes are also not relevant, since newer apartments are smaller than older ones. We can't just build an old affordable house, that's it. We need to start building as much as we can and impact the demand by evaluating the impact of new businesses coming to the area.
rs999gti 3y ago
And who says it has to be in the hot, desirable areas? See Oakland.

Why affordable housing should be new?

by zmnd 3y ago

Why affordable housing should be new?

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 3y 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 3y 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 3y 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 3y ago

If there is too little housing, then resolving that requires building more housing. You are correct, that it would be possible to build new luxury housing and then lower the cost of old luxury housing until it becomes affordable. However, that seems unlikely to actually happen since the owners of the old luxury housing are likely to resist losing money. In some cases, luxury housing may have features (size, density, amenities, etc.) that make is economically unviable to price it as affordable housing.

zmnd 3y ago
That wasn't my experience at all, feels like a theoretical discussion. Let's take something like SoCal, "luxury" housing built 30-50 years ago is not considered luxury. Even if those still advertise as "luxury", they definitely can't ask for the same prices despite companies having monopolies on certain regions. Reality is that it's too expensive to stay a "luxury" housing, all the labor costs and major renovations just don't make sense from a financial perspective. The fundamental issue that people miss is that the cost of building a "luxury" housing and "affordable" is not that different. Throwing quartz countertops and a tiny gym with outdated cheap equipment for a few extra k is nothing when the place costs 500k+. Sizes are also not relevant, since newer apartments are smaller than older ones. We can't just build an old affordable house, that's it. We need to start building as much as we can and impact the demand by evaluating the impact of new businesses coming to the area.

rs999gti 3y ago

And who says it has to be in the hot, desirable areas? See Oakland.