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Developers already want to build. The problem is the law.

by amazingamazing 2y ago

tptacek 2y ago
The Georgists agree!
analog31 2y ago
Indeed, my state's constitution severely restricts how cities can tax themselves.
majormajor 2y ago
Developers want to build because building will increase the value of property. If the value of property is constantly increasing through development, how are you solving the affordability problem? The development is attracting and facilitating activity that drives more demand. What dense city with a thriving commercial and business/industrial base is cheaper to live in than a less-developed rural small town?
- sooheon 2y ago
  > What dense city with a thriving commercial and business/industrial base is cheaper to live in than a less-developed rural small town? Wrong question; dense cities with thriving economies are more valuable, so they should be more expensive. The question is who collects the rent? Land title holders, or builders and value creators?
- Qwertious 2y ago
  >What dense city with a thriving commercial and business/industrial base is cheaper to live in than a less-developed rural small town? Um, any city whose residents want services? Does your rural small town need a plumber? That plumber can offer lower costs if there's a wider, more predictable userbase for him than in the small town. This applies to any store selling specialist goods, too - if the small town only has a single store, which stocks something that's only bought once a decade, then the buyer pays the cost of the good plus an entire decade's worth of interest. If the city can have a specialist good that sells that stuff one a month, then it'll be cheaper.
  - sarchertech 2y ago
    If you aren’t buying something frequently, you drive to the big city when you need it, or you order it. Most specialist goods just aren’t available in a small town same day at any price. Plumbers and other non niche service providers are also generally cheaper in small towns because cost of living is higher for the plumber too, all potential customers have less disposable income, and because the market isn’t perfectly efficient. Housing and basic necessities like groceries are so much more expensive in thriving dense cities than in rural small towns, that they swamp out any costs for the vast majority of people.
mperham 2y ago
Correct. Zoning code prevents building density and building codes force building crappy multi-family housing with tons of parking everywhere. Sprawl and car-dependency are bankrupting America.
adverbly 2y ago
Nope. The law is sometimes a large barrier, but there are plenty of places in the world with high housing costs which have minimal regulations. The problem is the cost of land. Developers are severely capital constrained. They take massive loans from Banks. Most of those loans go to paying for the land. Additionally, a large portion of their profits come from the increase in land value that they create from building. Land prices per unit area are higher in a new subdivision than they are in an undeveloped lot(Obviously the majority of the property price increase comes from the building, but the land also increases is my point). It doesn't cost anything to squat on the empty lots while building, so developers purchase multiple undeveloped lots near each other to capture this increase and minimize their purchase cost. Unfortunately, a side effect to this is that the developer basically becomes a monopoly on that area and no other developers or builders can compete with them. This lack of competition is one of the reasons that quality of new build construction has been on decline. In a world with a land value tax, the acquisition cost of land is significantly lower, but holding it is significantly more expensive. This means that a builder is incentivized to purchase smaller tranches, and hold each lot for less time before starting construction. They will be able to invest more into larger teams because they did not need to loan as much to pay for the land. This will speed up development and also improve efficiency by allowing for more competition.

Developers already want to build. The problem is the law.

tptacek 2y ago

The Georgists agree!

analog31 2y ago

Indeed, my state's constitution severely restricts how cities can tax themselves.

majormajor 2y ago

Developers want to build because building will increase the value of property. If the value of property is constantly increasing through development, how are you solving the affordability problem? The development is attracting and facilitating activity that drives more demand. What dense city with a thriving commercial and business/industrial base is cheaper to live in than a less-developed rural small town?

sooheon 2y ago
> What dense city with a thriving commercial and business/industrial base is cheaper to live in than a less-developed rural small town? Wrong question; dense cities with thriving economies are more valuable, so they should be more expensive. The question is who collects the rent? Land title holders, or builders and value creators?
Qwertious 2y ago
>What dense city with a thriving commercial and business/industrial base is cheaper to live in than a less-developed rural small town? Um, any city whose residents want services? Does your rural small town need a plumber? That plumber can offer lower costs if there's a wider, more predictable userbase for him than in the small town. This applies to any store selling specialist goods, too - if the small town only has a single store, which stocks something that's only bought once a decade, then the buyer pays the cost of the good plus an entire decade's worth of interest. If the city can have a specialist good that sells that stuff one a month, then it'll be cheaper.
- sarchertech 2y ago
  If you aren’t buying something frequently, you drive to the big city when you need it, or you order it. Most specialist goods just aren’t available in a small town same day at any price. Plumbers and other non niche service providers are also generally cheaper in small towns because cost of living is higher for the plumber too, all potential customers have less disposable income, and because the market isn’t perfectly efficient. Housing and basic necessities like groceries are so much more expensive in thriving dense cities than in rural small towns, that they swamp out any costs for the vast majority of people.

mperham 2y ago

Correct. Zoning code prevents building density and building codes force building crappy multi-family housing with tons of parking everywhere. Sprawl and car-dependency are bankrupting America.

adverbly 2y ago

Nope. The law is sometimes a large barrier, but there are plenty of places in the world with high housing costs which have minimal regulations. The problem is the cost of land. Developers are severely capital constrained. They take massive loans from Banks. Most of those loans go to paying for the land. Additionally, a large portion of their profits come from the increase in land value that they create from building. Land prices per unit area are higher in a new subdivision than they are in an undeveloped lot(Obviously the majority of the property price increase comes from the building, but the land also increases is my point). It doesn't cost anything to squat on the empty lots while building, so developers purchase multiple undeveloped lots near each other to capture this increase and minimize their purchase cost. Unfortunately, a side effect to this is that the developer basically becomes a monopoly on that area and no other developers or builders can compete with them. This lack of competition is one of the reasons that quality of new build construction has been on decline. In a world with a land value tax, the acquisition cost of land is significantly lower, but holding it is significantly more expensive. This means that a builder is incentivized to purchase smaller tranches, and hold each lot for less time before starting construction. They will be able to invest more into larger teams because they did not need to loan as much to pay for the land. This will speed up development and also improve efficiency by allowing for more competition.