4 ms·

I was using the economist's definition of affordable housing, which is that only 1/3 of your income is consumed by housing. If a term isn't quantifiable, then i

I was using the economist's definition of affordable housing, which is that only 1/3 of your income is consumed by housing. If a term isn't quantifiable, then it's useless for making plans. You are right that if there is a market where the scarcity is caused by insufficient supply, building more slow costs increases. But there is a point where the costs of the product cannot be cut anymore. The more you produce it will not be cheaper. Let's take another extreme example. Start with the city of 10,000 people. A developer razes the city center and rebuilds with very dense housing capable of housing 10,500 people. Is the cost of housing cheaper because of those extra 500 units? The answer is no; they would increase the cost of all the other units. Why? Someone has to pay for the materials, labor, and profit. If someone is not renting those units, the cost of creating those units is now spread among all the other units. The core question is how to lower the cost of the unit. Building more once you satisfy demand is not the answer. Building more expensive units frees up cheaper units if and only if enough people can afford them and move into them. But the cheaper units are not going to drop in cost. They will rent for at least the same price. It's important to acknowledge a couple of truisms. Demand for urban space will grow, and landlords will do everything to minimize expenses and maximize profits. There will never be enough housing to meet the demand. The question is how far behind demand is the housing production rate

_yb2s 2y ago
You are right that prices can't fall forever with supply and demand, there is a floor of the actual cost of the supply- but the cost of construction is nil compared to the prices houses sell for in high demand areas like the SF Bay area. Once you have a situation where, e.g. the cost of construction labor to build a house is a major fraction of the price of a house, logically- someone doing construction labor could themselves afford a house in that area. We're so far from something like that, that arguing about how to make housing even cheaper than that in theory is a red herring. I don't agree at all that "there will never be enough housing to meet the demand." There was enough in the past when populations were lower, and wealthy nimby landowners blocked construction from keeping up with population growth- you don't need that much more to just catch up with growth. It's also very regional- there are many places where supply radically exceeds demand, mostly because there aren't jobs. Much of the rural USA has nice houses that sit on the market for years at low prices because populations in those areas are declining. Housing could be way cheaper if innovation were legal in housing... there are a lot of creative ideas to radically reduce materials and labor required, but they are also completely illegal with building codes in most places. So you get a situation where something like Fuller's Dymaxion House would be criminal because building codes say the HVAC system is undersized or something (because it's more efficient and doesn't need more), but in practice you have people living in highly flammable plywood and PVC shanty towns on every corner. If you consider the illegal shanty towns and homeless camps, supply already meets demand, you really just need to make it legal to build low cost housing that meets a minimum standard of safety to replace the shanty towns with something safer but still cheap.

_yb2s 2y ago

You are right that prices can't fall forever with supply and demand, there is a floor of the actual cost of the supply- but the cost of construction is nil compared to the prices houses sell for in high demand areas like the SF Bay area. Once you have a situation where, e.g. the cost of construction labor to build a house is a major fraction of the price of a house, logically- someone doing construction labor could themselves afford a house in that area. We're so far from something like that, that arguing about how to make housing even cheaper than that in theory is a red herring. I don't agree at all that "there will never be enough housing to meet the demand." There was enough in the past when populations were lower, and wealthy nimby landowners blocked construction from keeping up with population growth- you don't need that much more to just catch up with growth. It's also very regional- there are many places where supply radically exceeds demand, mostly because there aren't jobs. Much of the rural USA has nice houses that sit on the market for years at low prices because populations in those areas are declining. Housing could be way cheaper if innovation were legal in housing... there are a lot of creative ideas to radically reduce materials and labor required, but they are also completely illegal with building codes in most places. So you get a situation where something like Fuller's Dymaxion House would be criminal because building codes say the HVAC system is undersized or something (because it's more efficient and doesn't need more), but in practice you have people living in highly flammable plywood and PVC shanty towns on every corner. If you consider the illegal shanty towns and homeless camps, supply already meets demand, you really just need to make it legal to build low cost housing that meets a minimum standard of safety to replace the shanty towns with something safer but still cheap.