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While I agree building housing is a symptom, and not the core problem. But I'm skeptical that increasing building or density would actually lower housing costs.
by itake 2y ago
While I agree building housing is a symptom, and not the core problem. But I'm skeptical that increasing building or density would actually lower housing costs. If that were true, high dense cities like Beijing, Tokyo, Singapore, or Hong Kong would have much lower cost housing.
Housing more people in a concentrated area creates more demand for services, which creates more demand for housing which jacks up prices. Packing 1,000 people into an apartment build creates extremely high demand for plumbing, house cleaning etc, services, which jack up housing prices. But if cities were low-density with commerce centers decenteralized across many neighbhorhoods or towns, you don't create location demand hotspots (e.g. cities) that jack up prices.
Property taxes and interest rates are a forcing function to keep unoccupied properties in check, as long as the appreciation doesn't dramatically exceed the risks of being a LL. For Tier 1-3 markets in the USA, you can't cash flow properties as rent is drastically lags property ownership costs.
- rcpt 2y agoBeijing, Tokyo and Singapore are not that expensive to live in. Especially if you're renting. Hong Kong has all sorts of crazy building restrictions and is a different story
- itake 2y agoThe article is specifically about purchasing homes. Even the USA, it also is cheaper to rent than to buy. Buying a home in Singapore has a 6 year waiting list to access public housing with properties exceeding $1m SGD. Taxes, Transportation and food costs are cheap, but property is not.
- lostemptations5 2y agoSingapore is not really typical of anything anywhere, it's a small island nation with insane population pressure with regards to housing. Almost any other Asian city from Bangkok to Ha Noi has room to expand. In fact speaking of Bangkok buying a condo there is widely considered a bad investment because there is so much supply.
- gottorf 2y ago> Singapore is not really typical of anything anywhere Not to mention, it's about the only extant example of a benevolent dictatorship.
- seanmcdirmid 2y agoBeijing has cheap rent, at least for foreigners making western wages. That 10k RMB/month 1 bedroom is supposed to cost 7 million RMB to buy, so you are still screwed if you are looking not to rent for some reason. I hear Shanghai is much worse, but never lived there before.
- Tactician_mark 2y agoYour argument about increasing demand for services isn't convincing. Since there are more people in the area, should supply be higher as well, balancing prices? It seems more likely that costs are higher in cities because there are valuable opportunities for skilled people who demand high salaries, simultaneously encouraging dense living to maximize access and increasing cost of living through the Baumol effect. High prices causing density, not the other way around.
- itake 2y ago> Since there are more people in the area, should supply be higher as well, balancing prices? I think we are starting a conversation about gentrification: Rich white-collar/coat workers move into an area creating demand for service work. There is some price competition for their service work labor, raising wages, but typically housing costs are too high for these workers, so they leave (lowering supply, pushing up wages).
- AnthonyMouse 2y agoBut this is just assuming the conclusion. Suppose that you were to increase the housing supply as much as, or more than, the increase in population. The existing lower-wage workers don't have to leave until prices have already increased to price them out, so their leaving can't have been the cause of the higher prices but rather its effect. So it's a feedback loop, but one which is prevented by keeping supply enough to meet demand, because then lower paid workers aren't priced out and cost of living doesn't increase.
- novok 2y agoTokyo does have cheaper housing at a income : cost ratio and is growing in population.
- mdorazio 2y agoDepending whose numbers you believe, Tokyo stopped growing around 2018 and has been slightly shrinking since. https://www.macrotrends.net/global-metrics/cities/21671/tokyo/population https://www.macrotrends.net/global-metrics/cities/21671/toky...
- corimaith 2y agoI don't think looking at density is sufficient enough, what matters if total supply can keep up with demand. Hong Kong and Singapore are very dense, they have to be to sufficiently house the population, but it's still not enough.
- JimDabell 2y ago> But I'm skeptical that increasing building or density would actually lower housing costs. If that were true, high dense cities like Beijing, Tokyo, Singapore, or Hong Kong would have much lower cost housing. Increasing building and increasing density are different things. Singapore and Hong Kong are dense because they have a very limited geographic area to build in. You can’t point to their density and conclude that adding housing doesn’t help lower housing costs. They would be even more expensive if they weren’t so dense.
- countvonbalzac 2y agoTokyo does have much lower housing costs than New York because they build enough housing :) Rent prices are 72.9% lower in Tokyo compared to New York [1]. [1] https://www.numbeo.com/cost-of-living/compare_cities.jsp?country1=United+States&country2=Japan&city1=New+York%2C+NY&city2=Tokyo&tracking=getDispatchComparison https://www.numbeo.com/cost-of-living/compare_cities.jsp?cou...