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Personally I’ve never believed that adding more houses decreases prices. Though that is true in theory, in practice what happens is: 1. Major housing developme

Personally I’ve never believed that adding more houses decreases prices. Though that is true in theory, in practice what happens is: 1. Major housing developments are accompanied by more jobs than the units being built could serve. 2. Developments are accompanied by local initiatives to improve the neighborhood that take effect soon after. 3. The quality disparity in a given area results in people far higher than the neighborhood median income moving in, resulting in (2) and eventually (1). I’ve yet to see anywhere on earth that’s both dense and cheap which I believe more or less proves the point. If building more houses really made things cheaper it would be trivial to prove: cities, which are denser, would be cheaper than the nearby suburbs. Across virtually every region this is not true, when adjusted for square footage. The problem with the United States isn't that housing is too expensive - it's that housing is too big. To that end I agree with this article. The area that has people leaving their (presumably less dense) locales will become cheaper, but those areas will also become less desirable and ultimately have fewer people. If that’s the case, the price decreases is not really relevant in the same way the price of housing in Oklahoma City is irrelevant to someone in Brooklyn. That being said, post COVID is very different as commercial real estate is not nearly as lucrative. Who knows what will happen now.

raybb 4y ago
How would you take into account Vienna in the denseness and cheapness dimensions?
- endisneigh 4y ago
  I'm not familiar with Austria. I'd be shocked if Vienna is cheaper than random parts of Austria, though.
konschubert 4y ago
Even if it didn’t slow the price increases - just the fact that building more housing means that more people get to live where they want to live- isn’t that a good thing and enough reason to build? And as you said, the neighbourhood gets improved - isn’t that a good thing? Or are you saying that the solution to the housing crisis is to make cities as inhospitable as possible such that people are forced to live in the countryside? Have you considered the effects that dense cities have on the ecological footprint, the welfare and the technological progress of a society? Have you considered how allowing free movement - including into cities - increases human welfare and happiness?
- endisneigh 4y ago
  I am not against building more. I am simply saying that if you look at the data, there is no evidence what so ever that building more decreases the price of housing. What it does is slow the price increases, but the very demand that is driving price increases was generated by the density, that is exacerbated by building more. We need a better metric. If you have some number to describe the quality of a city, perhaps let's call it fun, then the fun/$ is probably much higher than in a cheap suburb, for sure.
  - s1artibartfast 4y ago
    Density doesn't drive price. Nobody pays more for "density". Density and price are both simply measures that track other desirable factors like jobs. It is correlation, not causation.
    - endisneigh 4y ago
      agreed that it's correlation. however that's all you're going to get. no one is going to run a city wide experiment in this way. however if you look at the trend it's clear that cities have seen higher median price increases than suburbs. you can search yourself.
      - s1artibartfast 4y ago
        Cities have a long list of attractive qualities that drive prices up. Being in a tiny box with high density is not one of them. Nobody is going to choose the 500 ft apartment downtown when they could have price. Every city has already run this natural experiment. You have units that are high density and low density that are completely paid off. People will pay more for a larger space in an urban center. If people wanted density for its own sake, rent would be higher for a tiny apartment in a large house in the same location. It is not the density that they want, it is the short commute and high paid job. This is what I mean by causality.
    - maxsilver 4y ago
stale2002 4y ago
> 1. Major housing developments are accompanied by more jobs than the units being built could serve. Lets take your theory to be true. Even if this is the case, it would still effectively cause housing prices to decrease, relative to the amount of money that people are making. So, if density causes people's income to double, by having all these awesome and cool jobs, but housing prices only go up by 50%, this is still a massive win for the residents.
- endisneigh 4y ago
  > Even if this is the case, it would still effectively cause housing prices to decrease, relative to the amount of money that people are making. This isn't true at all, though, empirically. Trivially you can look at the minimum wage in the top 10 most expensive cities vs the bottom 10 and see this. > So, if density causes people's income to double, by having all these awesome and cool jobs, but housing prices only go up by 50%, this is still a massive win for the residents. Why exactly would that happen? Ironically denser places result in lower wages, relative to the rent. Your theory is empirically false. This is why people like remote work, so they can better arbitrage.
  - stale2002 4y ago
    You can't have it both ways here. Either density is creating lots of high paying jobs in an area, that is driving up the price of housing, or it isn't. > Ironically denser places result in lower wages No it doesn't. The highest paid locations, in the US, are located in these high cost of living areas. > This is why people like remote work, so they can better arbitrage. Yes, they work remote, because dense locations have high salaries. That supports my point. You just agreed with me. If people had high paying jobs, where they live, they wouldn't work remote, to get the highly paid jobs in dense cities.
    - endisneigh 4y ago
      > It should be almost self evidently true that they pay more money, than random jobs, in the middle of nowhere, in the US. I'm talking about the wage relative to the price sq/ft. You're laughably wrong. Just google Median NYC salary and look at the median NYC sq/ft, and do the same with say, Dallas, TX. It's not even close. I'm not talking about nominal wages, I'm talking about sq/ft monthly rent adjusted wages. When you look at that, the densest places do not have the highest wages. People are sacrificing earning potential to be in a more fun area, which makes sense.
s1artibartfast 4y ago
I agree that housing being big is a primary driver, if not the primary driver of price, along with quality, in most markets. That said, I think the fundamental claim that adding houses doesn't reduce prices is pretty absurd. You simply have to ask what would happen if we stopped building houses. Of course density is not the driver of price. Houses in urban center are not more expensive because they are denser. They are more expensive due to proximity to jobs. Build a high density structure in the middle of the desert and it will be cheap and dense.
tivert 4y ago
> I’ve yet to see anywhere on earth that’s both dense and cheap which I believe more or less proves the point. If building more houses really made things cheaper it would be trivial to prove: cities, which are denser, would be cheaper than the nearby suburbs. Across virtually every region this is not true, when adjusted for square footage. After a certain point, density probably increases unit costs, which would mean the densest housing can't be the cheapest. I'm reminded of an all-hands meeting years ago, where employees were asking for parking improvements in very office building large building (surrounded by very large parking lots). They wanted a parking garage, and the management said flat out that wasn't going to happen because it would cost 10x+ more per parking space.
- jethro_tell 4y ago
  Sure, building a structure is cheaper than not building a structure, bit to an extent, usually height above 7-8 stories, it gets cheaper per SQ ft to build as you go up. That's before you factor in the cost of land which tends to be one of the most expensive parts of building in a city, that also goes down per unit built. I'm not sure, 'should we build a structure or just pave a field is really a good comparison here'

raybb 4y ago

How would you take into account Vienna in the denseness and cheapness dimensions?

endisneigh 4y ago
I'm not familiar with Austria. I'd be shocked if Vienna is cheaper than random parts of Austria, though.

konschubert 4y ago

Even if it didn’t slow the price increases - just the fact that building more housing means that more people get to live where they want to live- isn’t that a good thing and enough reason to build? And as you said, the neighbourhood gets improved - isn’t that a good thing? Or are you saying that the solution to the housing crisis is to make cities as inhospitable as possible such that people are forced to live in the countryside? Have you considered the effects that dense cities have on the ecological footprint, the welfare and the technological progress of a society? Have you considered how allowing free movement - including into cities - increases human welfare and happiness?

endisneigh 4y ago
I am not against building more. I am simply saying that if you look at the data, there is no evidence what so ever that building more decreases the price of housing. What it does is slow the price increases, but the very demand that is driving price increases was generated by the density, that is exacerbated by building more. We need a better metric. If you have some number to describe the quality of a city, perhaps let's call it fun, then the fun/$ is probably much higher than in a cheap suburb, for sure.
- s1artibartfast 4y ago
  Density doesn't drive price. Nobody pays more for "density". Density and price are both simply measures that track other desirable factors like jobs. It is correlation, not causation.
  - endisneigh 4y ago
    agreed that it's correlation. however that's all you're going to get. no one is going to run a city wide experiment in this way. however if you look at the trend it's clear that cities have seen higher median price increases than suburbs. you can search yourself.
    - s1artibartfast 4y ago
      Cities have a long list of attractive qualities that drive prices up. Being in a tiny box with high density is not one of them. Nobody is going to choose the 500 ft apartment downtown when they could have price. Every city has already run this natural experiment. You have units that are high density and low density that are completely paid off. People will pay more for a larger space in an urban center. If people wanted density for its own sake, rent would be higher for a tiny apartment in a large house in the same location. It is not the density that they want, it is the short commute and high paid job. This is what I mean by causality.
  - maxsilver 4y ago

stale2002 4y ago

> 1. Major housing developments are accompanied by more jobs than the units being built could serve. Lets take your theory to be true. Even if this is the case, it would still effectively cause housing prices to decrease, relative to the amount of money that people are making. So, if density causes people's income to double, by having all these awesome and cool jobs, but housing prices only go up by 50%, this is still a massive win for the residents.

endisneigh 4y ago
> Even if this is the case, it would still effectively cause housing prices to decrease, relative to the amount of money that people are making. This isn't true at all, though, empirically. Trivially you can look at the minimum wage in the top 10 most expensive cities vs the bottom 10 and see this. > So, if density causes people's income to double, by having all these awesome and cool jobs, but housing prices only go up by 50%, this is still a massive win for the residents. Why exactly would that happen? Ironically denser places result in lower wages, relative to the rent. Your theory is empirically false. This is why people like remote work, so they can better arbitrage.
- stale2002 4y ago
  You can't have it both ways here. Either density is creating lots of high paying jobs in an area, that is driving up the price of housing, or it isn't. > Ironically denser places result in lower wages No it doesn't. The highest paid locations, in the US, are located in these high cost of living areas. > This is why people like remote work, so they can better arbitrage. Yes, they work remote, because dense locations have high salaries. That supports my point. You just agreed with me. If people had high paying jobs, where they live, they wouldn't work remote, to get the highly paid jobs in dense cities.
  - endisneigh 4y ago
    > It should be almost self evidently true that they pay more money, than random jobs, in the middle of nowhere, in the US. I'm talking about the wage relative to the price sq/ft. You're laughably wrong. Just google Median NYC salary and look at the median NYC sq/ft, and do the same with say, Dallas, TX. It's not even close. I'm not talking about nominal wages, I'm talking about sq/ft monthly rent adjusted wages. When you look at that, the densest places do not have the highest wages. People are sacrificing earning potential to be in a more fun area, which makes sense.

s1artibartfast 4y ago

I agree that housing being big is a primary driver, if not the primary driver of price, along with quality, in most markets. That said, I think the fundamental claim that adding houses doesn't reduce prices is pretty absurd. You simply have to ask what would happen if we stopped building houses. Of course density is not the driver of price. Houses in urban center are not more expensive because they are denser. They are more expensive due to proximity to jobs. Build a high density structure in the middle of the desert and it will be cheap and dense.

tivert 4y ago

> I’ve yet to see anywhere on earth that’s both dense and cheap which I believe more or less proves the point. If building more houses really made things cheaper it would be trivial to prove: cities, which are denser, would be cheaper than the nearby suburbs. Across virtually every region this is not true, when adjusted for square footage. After a certain point, density probably increases unit costs, which would mean the densest housing can't be the cheapest. I'm reminded of an all-hands meeting years ago, where employees were asking for parking improvements in very office building large building (surrounded by very large parking lots). They wanted a parking garage, and the management said flat out that wasn't going to happen because it would cost 10x+ more per parking space.

jethro_tell 4y ago
Sure, building a structure is cheaper than not building a structure, bit to an extent, usually height above 7-8 stories, it gets cheaper per SQ ft to build as you go up. That's before you factor in the cost of land which tends to be one of the most expensive parts of building in a city, that also goes down per unit built. I'm not sure, 'should we build a structure or just pave a field is really a good comparison here'