4 ms·

Well it's not quite arbitrary because it will induce supply in other goods and services. Rent in high COL areas is driven primarily by land rent (i.e. cost of l

Well it's not quite arbitrary because it will induce supply in other goods and services. Rent in high COL areas is driven primarily by land rent (i.e. cost of land, regardless of whether that land is actually rented to the building on top of it or not), which has zero supply elasticity. And then the other portion of rent (the building itself) is also pretty darn supply-inelastic as well, though not entirely.

greenie_beans 2y ago
i live in a high COL area and rent is not high because of land costs. there are several empty lots that people want to build on but the discretionary review process for entitlements make it too easy to wreck the permit process (everybody knows this in the entire world; this is the YIMBY line which has truth to it). another factor is the cost per bedroom to build is very high, due to the cost of building in the market (labor, cost of goods, etc). so it's actually everything to do with the building/entitlements and nothing to do with land cost. at least where i live right now. proof: the college cancelled a massive housing project because it was gonna be too expensive per bedroom. this wasn't because of land costs but building costs. aside, while i'm at it, let's take another swipe at free market and housing: the YIMBY line has truth about regulations preventing building, but if you look at build starts for like the 10 years after the 2008 crisis, you'll see a lack of buildings that happened during that time. they had record housing starts leading up to the crisis, and you know what also existed then? the same regulatory regime that we are now tearing down to help us build what we need. but after the crisis, the builders stopped building because they were fearful about the market. this suggests to me that "regulations prevent building, just let the free market take care of it," is too simplistic and ignores very real data. the market took care of it by not building.
- llamaimperative 2y ago
  What location is this?
  - greenie_beans 2y ago
    burlington, vt. a place that has deep regulatory issues, but that is only part of it. https://www.vermontpublic.org/local-news/2024-05-23/uvm-halts-student-housing-project-construction-costs-workforce-shortage https://www.vermontpublic.org/local-news/2024-05-23/uvm-halt...
    - llamaimperative 2y ago
      So 1) yes construction costs are a huge, huge factor (especially right now), but 2) land is about $1.5MM/ac in Burlington VT. A few miles outside of it, land is about $150,000/ac. Consider a 2 acre project: $3MM in land costs inside Burlington $300,000 in land costs right outside Burlington What projects would could you do on the $300,000 lot that you can't possible do on the $3MM? Basically all of them! Regarding the UVM project: they should sell that parking lot to bring the $1.5MM/ac costs closer to $300k/ac so people can build stuff instead of a place to store asphalt :)
      - greenie_beans 2y ago
        are you googling your cherry picked facts? nice debate win! (might help to have local context) regardless, why do you think land in burlington is expensive?
        llamaimperative 2y ago
        No, those are real numbers spot-checked from Zillow. I was on my phone and, ya know, it's an Internet argument, so they're definitely ballparked, but they are from real actual land sales inside Burlington and then a few miles outside of Burlington. I suppose the delta is surprising to you? It's expensive because it's productive. The marginal productivity of living/working in Burlington means the market can sustain higher costs, ergo the costs go up. This is more problematic than every other good because 1) they cannot add more land inside Burlington and 2) the land doesn’t actually have higher carrying costs by virtue of being more expensive (unlike roughly every other asset).

greenie_beans 2y ago

i live in a high COL area and rent is not high because of land costs. there are several empty lots that people want to build on but the discretionary review process for entitlements make it too easy to wreck the permit process (everybody knows this in the entire world; this is the YIMBY line which has truth to it). another factor is the cost per bedroom to build is very high, due to the cost of building in the market (labor, cost of goods, etc). so it's actually everything to do with the building/entitlements and nothing to do with land cost. at least where i live right now. proof: the college cancelled a massive housing project because it was gonna be too expensive per bedroom. this wasn't because of land costs but building costs. aside, while i'm at it, let's take another swipe at free market and housing: the YIMBY line has truth about regulations preventing building, but if you look at build starts for like the 10 years after the 2008 crisis, you'll see a lack of buildings that happened during that time. they had record housing starts leading up to the crisis, and you know what also existed then? the same regulatory regime that we are now tearing down to help us build what we need. but after the crisis, the builders stopped building because they were fearful about the market. this suggests to me that "regulations prevent building, just let the free market take care of it," is too simplistic and ignores very real data. the market took care of it by not building.

llamaimperative 2y ago
What location is this?
- greenie_beans 2y ago
  burlington, vt. a place that has deep regulatory issues, but that is only part of it. https://www.vermontpublic.org/local-news/2024-05-23/uvm-halts-student-housing-project-construction-costs-workforce-shortage https://www.vermontpublic.org/local-news/2024-05-23/uvm-halt...
  - llamaimperative 2y ago
    So 1) yes construction costs are a huge, huge factor (especially right now), but 2) land is about $1.5MM/ac in Burlington VT. A few miles outside of it, land is about $150,000/ac. Consider a 2 acre project: $3MM in land costs inside Burlington $300,000 in land costs right outside Burlington What projects would could you do on the $300,000 lot that you can't possible do on the $3MM? Basically all of them! Regarding the UVM project: they should sell that parking lot to bring the $1.5MM/ac costs closer to $300k/ac so people can build stuff instead of a place to store asphalt :)
    - greenie_beans 2y ago
      are you googling your cherry picked facts? nice debate win! (might help to have local context) regardless, why do you think land in burlington is expensive?
      - llamaimperative 2y ago
        No, those are real numbers spot-checked from Zillow. I was on my phone and, ya know, it's an Internet argument, so they're definitely ballparked, but they are from real actual land sales inside Burlington and then a few miles outside of Burlington. I suppose the delta is surprising to you? It's expensive because it's productive. The marginal productivity of living/working in Burlington means the market can sustain higher costs, ergo the costs go up. This is more problematic than every other good because 1) they cannot add more land inside Burlington and 2) the land doesn’t actually have higher carrying costs by virtue of being more expensive (unlike roughly every other asset).