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>I've come to believe it's simply unlikely that market incentives will ever make housing more affordable It isn't market incentives here, it's lack of market i
by scoofy 3y ago
>I've come to believe it's simply unlikely that market incentives will ever make housing more affordable
It isn't market incentives here, it's lack of market incentives.
The issue here is that much of this new housing will be turned into rental units. The ideas is to change the paradigm so that people know full well that we will never stop building. So much so that a rental unit will likely not be profitable because so much more housing will come online in future years that income will likely decline over the life of the mortgage.
We don't do this because that really makes existing stakeholders scared for their current property values (and they should be), and try and stop that type of legislation at every corner. This creates an effective cartel of stakeholders (property owners), which maintain it's control over housing availability because people who don't live in a city can't vote there.
This is coming to a tipping point now in CA (where I live) because home-ownership has dropped so precipitously in the last 20 years, that homeowners will soon be a minority demographic, and the ability to control land use on a political level as starting to crumble.
Californians are not living through a housing re-balancing. We are living through the beginning of a housing cascade. As more housing comes online, more people supporting more housing will move to the area. The reason why it doesn't look like market incentives are working is that much of America is on a demographic tipping point. When Prop 13 in CA has already started to crack in elections, you know something serious is happening.
- wwweston 3y ago> We don't do this because that really makes existing stakeholders scared for their current property values As far as I can tell, opposition that comes from concern for housing values tends to be hyperlocal rather than systemic -- most people don't oppose building substantial volumes of housing somewhere, it's mostly when it's not somewhere else. But the other thing is that the market doesn't like building housing above certain volumes either. Developers have limited capital and capacity and for any given outlay they'd like the highest return possible. Overproduce and you get diminishing marginal returns or maybe even unpurchased/unleased housing stock. Lagging demand some amount is probably the easiest way to optimize this.
- scoofy 3y ago>Lagging demand some amount is probably the easiest way to optimize this. I actually agree with this to some extent. The point is that we aren't lagging demand from $300K/unit to $400K/unit in dense areas. We've been lagging urban demand for literally 40 years (hell, "developers" were literally a popular villain archetype in media in the 80s-90s), so that we're at $1.5M/unit in some areas with $300K in construction cost and labor. Because of this, at this point, the profit incentive is so high, that we have local governments trying to extract significant amounts of these profits. This means instead of providing the financial resources to ramp up production capacity, we're actually just disincentivizing production in general.