3 ms·

The downside is that you cannot build units (especially apartments) without large scale capital. To effectively build, you need people (developers) to finance t

by mgh95 2y ago

The downside is that you cannot build units (especially apartments) without large scale capital. To effectively build, you need people (developers) to finance the construction of many units, especially multifamily whether townhomes, apartments, or condos. The issue is heavily constrained supply. Even if it is profitable to build a smaller, lower-cost unit land use restrictions effectively limit the production of housing units from land.

dredmorbius 2y ago
Capital flooding into the residential real estate market hasn't exactly 'sploded the quantity of available housing. There are other mechanisms of financing housing than equity capital. (Loans, grants, tax deductions to mortgage holders, direct land grants as was the case with the Homestead Act, direct government construction (local, regional, state, federal), etc.)
- mgh95 2y ago
  > Capital flooding into the residential real estate market hasn't exactly 'sploded the quantity of available housing. No, because zoning (both in terms of timeline and build restrictions) is leading to artificial restriction of housing units. This, coupled with requirements for subpar financial returns due to large amounts of affordable housing requirements (again, due to lack of capacity) leads to increased housing costs. > There are other mechanisms of financing housing than equity capital. (Loans, grants, tax deductions to mortgage holders, direct land grants as was the case with the Homestead Act, direct government construction (local, regional, state, federal), etc.) And how, exactly are those paid for? By taxes. And this runs into the same issues as any public project in addition to the standard construction issues. This is why it took SF 1.2MM on average to build affordable housing (see: https://www.sfchronicle.com/sf/article/it-now-costs-more-than-1-2-million-to-build-a-17463355.php https://www.sfchronicle.com/sf/article/it-now-costs-more-tha...). Direct government construction is, in practice, unsuccessful.
  - dredmorbius 2y ago
    The largest factor in new housing construction is land cost, and withholding land from new construction largely as a financial asset. Land-value taxation directly addresses both factors. Note that this is a tax on the land, not (as most property taxes are) on improvements. This increases the costs of holding unimproved land, and directly incentivises the improvements of land. As with numerous other types of widespread phenomena, localised zoning restrictions do little to explain why new housing is so unavailable on a global basis, both across the US in hugely disparate cities, counties, and states, as well as in many places worldwide. The places which seem to have the most affordable housing are those in which capital is least incentivised to buy and hold it. Notably Vienna, Austria, and of all places, Tokyo, Japan. There are any number of other factors which also play roles, but those tend to vary strongly amongst regions. Zoning is a problem but not the problem, as are certain building codes and other restrictions. I'd include those in elements to be addressed, but focus on the main problem.
    - mgh95 2y ago
      > The largest factor in new housing construction is land cost, and withholding land from new construction largely as a financial asset. This is incorrect. The largest factory in new single family housing construction is land cost. The largest factory in MFH is hard costs which account for 50-70% of costs compared to land at just 20% (see: https://www.brookings.edu/articles/making-apartments-more-affordable-starts-with-understanding-the-costs-of-building-them/).Both https://www.brookings.edu/articles/making-apartments-more-af... Tokyo and Vienna have substantially reduced zoning restrictions for private and public, respectively. I really don't know how you come to square the circle that "new construction [is] largely a financial asset" and "building more housing does not diminish the value of existing assets". The reality is MFH zoning is incredibly difficult in most urban zones; just look at the recent Manhattan-Harlem MFH project that was canned for a truck park due to the affordable housing crowd demanding too many concessions. Or SF. Or any number of cities that cannot effectively build housing because they really don't want housing enough to make changes to their zoning codes.

by mgh95 2y ago

dredmorbius 2y ago

Capital flooding into the residential real estate market hasn't exactly 'sploded the quantity of available housing. There are other mechanisms of financing housing than equity capital. (Loans, grants, tax deductions to mortgage holders, direct land grants as was the case with the Homestead Act, direct government construction (local, regional, state, federal), etc.)

mgh95 2y ago
> Capital flooding into the residential real estate market hasn't exactly 'sploded the quantity of available housing. No, because zoning (both in terms of timeline and build restrictions) is leading to artificial restriction of housing units. This, coupled with requirements for subpar financial returns due to large amounts of affordable housing requirements (again, due to lack of capacity) leads to increased housing costs. > There are other mechanisms of financing housing than equity capital. (Loans, grants, tax deductions to mortgage holders, direct land grants as was the case with the Homestead Act, direct government construction (local, regional, state, federal), etc.) And how, exactly are those paid for? By taxes. And this runs into the same issues as any public project in addition to the standard construction issues. This is why it took SF 1.2MM on average to build affordable housing (see: https://www.sfchronicle.com/sf/article/it-now-costs-more-than-1-2-million-to-build-a-17463355.php https://www.sfchronicle.com/sf/article/it-now-costs-more-tha...). Direct government construction is, in practice, unsuccessful.
- dredmorbius 2y ago
  The largest factor in new housing construction is land cost, and withholding land from new construction largely as a financial asset. Land-value taxation directly addresses both factors. Note that this is a tax on the land, not (as most property taxes are) on improvements. This increases the costs of holding unimproved land, and directly incentivises the improvements of land. As with numerous other types of widespread phenomena, localised zoning restrictions do little to explain why new housing is so unavailable on a global basis, both across the US in hugely disparate cities, counties, and states, as well as in many places worldwide. The places which seem to have the most affordable housing are those in which capital is least incentivised to buy and hold it. Notably Vienna, Austria, and of all places, Tokyo, Japan. There are any number of other factors which also play roles, but those tend to vary strongly amongst regions. Zoning is a problem but not the problem, as are certain building codes and other restrictions. I'd include those in elements to be addressed, but focus on the main problem.
  - mgh95 2y ago
    > The largest factor in new housing construction is land cost, and withholding land from new construction largely as a financial asset. This is incorrect. The largest factory in new single family housing construction is land cost. The largest factory in MFH is hard costs which account for 50-70% of costs compared to land at just 20% (see: https://www.brookings.edu/articles/making-apartments-more-affordable-starts-with-understanding-the-costs-of-building-them/).Both https://www.brookings.edu/articles/making-apartments-more-af... Tokyo and Vienna have substantially reduced zoning restrictions for private and public, respectively. I really don't know how you come to square the circle that "new construction [is] largely a financial asset" and "building more housing does not diminish the value of existing assets". The reality is MFH zoning is incredibly difficult in most urban zones; just look at the recent Manhattan-Harlem MFH project that was canned for a truck park due to the affordable housing crowd demanding too many concessions. Or SF. Or any number of cities that cannot effectively build housing because they really don't want housing enough to make changes to their zoning codes.