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You're right - the example does fail if nobody can afford a $500,000 home. I think the challenge is that for the foreseeable future enough people can afford th

You're right - the example does fail if nobody can afford a $500,000 home. I think the challenge is that for the foreseeable future enough people can afford those homes, which leaves us with the other two probably not having a great housing situation until we've saturated the market with the $500,000 homes (or equivalent given an inflation rate or whatnot). Certainly my example is an oversimplification, but I just wanted to highlight that it's more than just zoning code or parking minimums (parking minimums in particular are very nasty) and that there are other economic incentives or factors. Some real estate companies may prefer to just sit on cash given the 4% interest rates we're seeing today. It depends on their IRR target. Unlike, perhaps, software services, it seems to me that it's difficult for new entrants to enter the market and scale quickly to lower prices, and when they do enter the market they wind up with the same calculation that the other home builders do and just build the same thing. The factors that would enable home builders to build more include changing economic incentives. I'm not sure how we change those incentives. I've seen various programs and policy ideas floated around, I believe Harris wants to provide a $25,000 downpayment assistance, for example. But in my mind all of these programs and policies are just treating the symptoms instead of the disease. The disease is society wants more housing and at a lower price. The market is failing to address this. We could try to come up with incentives and plans, or we can go back to basics: supply and demand. The government can increase the supply directly - and just provide contracts to build more housing at a lower price point, particularly in cities where there exists more economic opportunity. Incentives and other policies seem like a middleman ready to be taken advantage of.

bluGill 2y ago
The market does very well where it is allowed to work. However that tends to be out in the new suburbs which are far enough from the city center that it forces unreasonably long drives if you have something to do in the center.
- ericmay 2y ago
  I generally agree, but for "products" like housing there are too many interfering influences to really sit back and say well the market will take care of it. The government gives enormous subsidizes to road and highway construction, for example, think about lending regulations, zoning rules, hook ups for city utilities, etc.. That's not much of "allowing the market to work". I don't think it's fair to say when housing is built in one way it is the free market at work but when it's built in a different way it's all government regulations. We often times think of zoning being restricted in cities, but it's arguably more restrictive outside of cities. Notice how everything that is built is the exact same spread out suburban lots, with no mixed use development, giant highways, giant parking lots, Wal-Marts, Starbucks, and other developments? Is there a single developer in the United States that's building differently en masse? My wife and I live in a historic neighborhood close to downtown Columbus. There are bars and restaurants and shops nearby, a park in the middle, etc. The home prices here are quite substantial because it's a nice, charming village within an urban environment. Though it's not the only one. People move here and pay large sums of money to live here. Clearly it's worth a lot right? So why don't developers build more developments like this when there's such high demand and prices command such a premium? One could build the homes a little closer together, make the streets a little more narrow, add buildings and churches and market stalls within. The economic value is clearly demonstrated. What's the barrier? Where you are concerned about letting market forces go to work I agree, one way to do that is to stop subsidizing a specific development pattern.
  - bluGill 2y ago
    Suburbs often have to stick to state building codes. Even when they don't have to, most just follow the example of what everyone else done and so they put in zoning that forces that same layout. This needs to be fixed first. Developers (and the bankers that fund them) do what they know works. They are not the ones seeing issues for the most part - they get their money. Most will not change. However when I look I see a small number of neighborhoods that are different scattered around - mixed use does happen in a few places (though badly - location location location applies to mixed use and most of them are putting the stores in location that are inconvenient for anyone who doesn't live there and so not enough people will use them to support the stores). Which is to say if it is allowed you will not see overnight changes, but a few developers will try something new and eventually some will find the formula for success and then other developers who are watching will copy that. We are looking at 20 years from making useful changes before we can use useful results - but it is still a change worth doing.
    - ericmay 2y ago
      I agree. Though I think you point out a problem with mixed use development, we shouldn’t throw the baby out with the bath water. Where I live and in other similar neighborhoods, the fact that they are great neighborhoods invite visitors regardless of transportation concerns.

bluGill 2y ago

The market does very well where it is allowed to work. However that tends to be out in the new suburbs which are far enough from the city center that it forces unreasonably long drives if you have something to do in the center.

ericmay 2y ago
I generally agree, but for "products" like housing there are too many interfering influences to really sit back and say well the market will take care of it. The government gives enormous subsidizes to road and highway construction, for example, think about lending regulations, zoning rules, hook ups for city utilities, etc.. That's not much of "allowing the market to work". I don't think it's fair to say when housing is built in one way it is the free market at work but when it's built in a different way it's all government regulations. We often times think of zoning being restricted in cities, but it's arguably more restrictive outside of cities. Notice how everything that is built is the exact same spread out suburban lots, with no mixed use development, giant highways, giant parking lots, Wal-Marts, Starbucks, and other developments? Is there a single developer in the United States that's building differently en masse? My wife and I live in a historic neighborhood close to downtown Columbus. There are bars and restaurants and shops nearby, a park in the middle, etc. The home prices here are quite substantial because it's a nice, charming village within an urban environment. Though it's not the only one. People move here and pay large sums of money to live here. Clearly it's worth a lot right? So why don't developers build more developments like this when there's such high demand and prices command such a premium? One could build the homes a little closer together, make the streets a little more narrow, add buildings and churches and market stalls within. The economic value is clearly demonstrated. What's the barrier? Where you are concerned about letting market forces go to work I agree, one way to do that is to stop subsidizing a specific development pattern.
- bluGill 2y ago
  Suburbs often have to stick to state building codes. Even when they don't have to, most just follow the example of what everyone else done and so they put in zoning that forces that same layout. This needs to be fixed first. Developers (and the bankers that fund them) do what they know works. They are not the ones seeing issues for the most part - they get their money. Most will not change. However when I look I see a small number of neighborhoods that are different scattered around - mixed use does happen in a few places (though badly - location location location applies to mixed use and most of them are putting the stores in location that are inconvenient for anyone who doesn't live there and so not enough people will use them to support the stores). Which is to say if it is allowed you will not see overnight changes, but a few developers will try something new and eventually some will find the formula for success and then other developers who are watching will copy that. We are looking at 20 years from making useful changes before we can use useful results - but it is still a change worth doing.
  - ericmay 2y ago
    I agree. Though I think you point out a problem with mixed use development, we shouldn’t throw the baby out with the bath water. Where I live and in other similar neighborhoods, the fact that they are great neighborhoods invite visitors regardless of transportation concerns.