3 ms·

In a normal market, they would. But housing is highly regulated with artificial shortages, so that pricing is very distorted.

• estearum 7mo ago
  Regulation is not what suppresses production, but the actual profit margins. It's extremely hard to make money building housing because the cost of land and labor are so high. These costs are high because we now live in an advanced economy where land can do much more valuable things than "be housing", and laborers can do much more productive things than "build housing."
  • cogman10 7mo ago
    Yup. Development companies contract when the housing market contracts. They aren't building houses for the fun of it, they are building them because they believe the 100 houses they build in a hot market will ultimately pay back the land purchase rights. They will never build so many houses as to decrease the cost of a home. I actually got my home from a developer right after the housing bubble. They confided in me that they were giving away these homes pretty much at cost and that they had to fire a huge portion of their staff because the market was just crap at the time. Really, the only way to actually achieve lower housing prices is through the state ownership and build out. The state could also spend a premium on building homes that it sells at a loss or rents at lower rates. But that will be pretty unpopular with the general public.
    • estearum 7mo ago
      Yep — or aggressive subsidization of the inputs of housing production, or some other cost management of an input (such as a high LVT that discourages speculation and withholding of valuable land from use)
  • joe_the_user 7mo ago
    I disagree. Zoning, building permits, inflated utility hook-up charges, etc is what restricts me from buying a one-acre parcel and putting in 30 snug cabins.
    • estearum 7mo ago
      Sure, but if zoning etc didn't prevent you from doing that, the price of the land would just be far higher. High enough again to make it hardly profitable (if you're lucky) to do what you're allowed to do on that land. There are entire businesses that just buy lots, change their zoning, then sell them. It's all priced in.
      • joe_the_user 7mo ago
        You are confusing marginal price (or profit-equalization) theory with numerical limits on the level of housing unit production. If people were allowed to build as they wished, they'd build a lot of housing, much of the housing crisis would subside and then the profitability of building house would equalize with the profitability of other uses. But stable point would give a lot more people housing. It's like... Taxation or similar things can reduce X use of resource Y. Remove taxation and eventually X use isn't any more profitable than other uses but a tautology of markets/economics, not an argument the taxation isn't limit the production involved in X use.
        • estearum 7mo ago
          > If people were allowed to build as they wished, they'd build a lot of housing You seem to be under the impression that building housing isn't already a nearly-unprofitable venture. There's no room to for "them to build a lot of housing" – builders are already pulling back on more construction because we have too much. Not "too much" as in everyone is amply housed, but "too much" to be able to do it profitably despite the fact that we still have a shortage. Cost of inputs is the problem, full stop.