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Suppose Hong Kong and Manhattan rezoned and made it illegal for half the density there to exist. That is, for any given population, the demand for land would n

by ty6853 1y ago

Suppose Hong Kong and Manhattan rezoned and made it illegal for half the density there to exist. That is, for any given population, the demand for land would now be double. Would you expect land prices to go up or down as some portion of the ejected people try to maintain a footprint there?

Ericson2314 1y ago
OK so under your though experiment we are chopping of too-tall buildings? I would expect unit prices to go up, but land prices to go down. There are ugly bidding wars as people try to stay, but also much less revenue per building as the number of units shrinks. The increase in per-unit rents will not be as great as the decrease in per-building units, and thus per-land revenues will go down, and the land will be less valuable. What actually happens depends a bit on the inequality makeup of society. In UWS / UES apartments are combined into a larger apartments more than people realize. That is somewhat similar to the zoning change, except it is market driven. At the same time, the fact that rich UES/UWSers live in apartments at all is clear evidence that the rich can afford less land than they can in the suburbs, and they are OK with this. There is a famous quote "a developed country is not one where the poor own cars, but the rich take public transportation". By the same token "a developed country is not one where the poor own houses, but the rich live in apartments". Density is very egalitarian in that higher densities allow masses of less-rich people to compete with richer people for land. Arguably the inequality-driven apartment-merging-during-housing shortage is downstream of having a housing shortage, and if Manhattan didn't in fact have stupid zoning constraints too (yes, I know!) we would not be seeing these apartment merges / bigger units would be accompanied by taller buildings so not net fewer units.

by ty6853 1y ago

Ericson2314 1y ago

OK so under your though experiment we are chopping of too-tall buildings? I would expect unit prices to go up, but land prices to go down. There are ugly bidding wars as people try to stay, but also much less revenue per building as the number of units shrinks. The increase in per-unit rents will not be as great as the decrease in per-building units, and thus per-land revenues will go down, and the land will be less valuable. What actually happens depends a bit on the inequality makeup of society. In UWS / UES apartments are combined into a larger apartments more than people realize. That is somewhat similar to the zoning change, except it is market driven. At the same time, the fact that rich UES/UWSers live in apartments at all is clear evidence that the rich can afford less land than they can in the suburbs, and they are OK with this. There is a famous quote "a developed country is not one where the poor own cars, but the rich take public transportation". By the same token "a developed country is not one where the poor own houses, but the rich live in apartments". Density is very egalitarian in that higher densities allow masses of less-rich people to compete with richer people for land. Arguably the inequality-driven apartment-merging-during-housing shortage is downstream of having a housing shortage, and if Manhattan didn't in fact have stupid zoning constraints too (yes, I know!) we would not be seeing these apartment merges / bigger units would be accompanied by taller buildings so not net fewer units.