5 ms·

Easily. Many of those people have a correct observation in that new construction is just luxury housing, which is obviously unaffordable for people struggling

by vkou 6mo ago

Easily. Many of those people have a correct observation in that new construction is just luxury housing, which is obviously unaffordable for people struggling with rent. What they fail to miss is that for every luxury unit that's built and is occupied, some well-off person moved into it... And out of a shitty, cheap unit that's now on the market.

BrenBarn 6mo ago
The question is whether the well-off person moved in from the same market, or from elsewhere. (Also, whether they vacate their previous unit or, e.g., keep it as a vacation home.)
- mpyne 6mo ago
  None of those are really pertinent because it doesn't change the fact that the well-off person is going to occupy an additional housing unit in this scenario no matter what. The question is whether it's going to be new construction that they occupy or existing construction. If you're not well-off you'd want that decision to end up with "new construction" so you can move into "existing construction" at a lower rent/mortgage than if new construction didn't exist.
  - BrenBarn 6mo ago
    I don't think that is necessarily true. I believe there are, for instance, many reasonably wealthy people who live somewhere outside California and would not move into a dumpy old apartment in LA or SF but might move into a fancy new one. In other words, they will not occupy an additional housing unit (in a given market) unless it is "nice" enough. I am in favor of building new housing, but I'm even more in favor of reducing wealth inequality. I think we can do both, but we need to be deliberate about it.
    - bombcar 6mo ago
      Taken to extremes you'll have all wealthy people living in California, and the rest of the country available to us plebs. The greatest tool we have to reduce wealth inequality is make it so people can buy homes - and the biggest levers we seem to have there are making supply available in general, and making jobs available where there's already supply.
      - tsimionescu 6mo ago
        > Taken to extremes you'll have all wealthy people living in California, and the rest of the country available to us plebs. Which is exactly what people are afraid of happening, and what they mean by the crisis of housing affordability. You can go and buy or rent a cheap house today in probably 90% of the localities of the USA. Of course, if you already live in those places, you probably don't have the money, because good work is very hard to find. The problem of housing is that regular people want to live in NYC, and Chicago, and LA, and all of these places, and relatively near to where their jobs are, and they're seeing the rich own more and more of the space that could have allowed them to do so.
        wallst07 6mo ago
        "The problem of housing is that regular people want to live in NYC, and Chicago, and LA, and all of these places, and relatively near to where their jobs are" It's not clear in your phrasing, but it sounds like this is a casual correlation. It's not... Many people only want to live in these cities because it's the ONLY way to get work, given a choice they would quickly move out.
        jhbadger 6mo ago
        Or, maybe the jobs are there because people companies want to hire want to live there. We have a way of testing this now given that remote work is a thing. We can see if people would rather work remotely from a cheap house in rural Kansas and have nothing to do in the evenings or live in an expensive apartment in an exciting city where their job is.
        6mo ago
    - wallst07 6mo ago
      >I am in favor of building new housing, but I'm even more in favor of reducing wealth inequality. I think we can do both, but we need to be deliberate about it. ... And that's why nothing gets done.
    - mpyne 6mo ago
      > I believe there are, for instance, many reasonably wealthy people who live somewhere outside California and would not move into a dumpy old apartment in LA or SF but might move into a fancy new one. In other words, they will not occupy an additional housing unit (in a given market) unless it is "nice" enough. That's the point, the "dumpy old apartment" was never going to be the thing stopping the rich person from moving in. Due to overlap in preferences amongst a multitude of people, the rich person would free up the housing they like by buying it from whoever, who would then free up slightly-less-good housing in the area by kicking out someone else (with money, to be clear) and so on down the chain until you get to the "dumpy old apartment", whose rent now rises because there are more people interested in moving into it due to lack of other options. New housing, even if it's new 'luxury' housing, breaks this chain of housing migrations in the area before it gets to buying people out of their dumpy old apartments.
tptacek 6mo ago
Almost all new construction is luxury housing; it's what pencils out. The mechanism by which it reduces prices is by reducing demand pressure on older housing stock, which would otherwise be bought up and rehabbed by the same people moving into the "luxury" housing. The constraint that makes this work is increased density: so long as you're adding net units to the market, new construction at any price level will reduce prices in the market.
- deleted 6mo ago
  [deleted]
tsimionescu 6mo ago
> What they fail to miss is that for every luxury unit that's built and is occupied, some well-off person moved into it... And out of a shitty, cheap unit that's now on the market. Ah yes, good old trickle down economics, applied to housing. It's obviously always true that the people moving into a new luxury home are coming from existing lower-luxury homes in the same part of the same city, and will immediately sell or rent those homes off at prices no larger than what they themselves had paid for them and no more. And we're basing all of this on a tiny decrease in the prices of new rent offers in one of the most expensive in the USA, which built a tiny amount of extra homes recently, not even clear of what type. Clear causation well established.
EduardoBautista 6mo ago
As someone who grew up in San Diego and now lives in Dubai, I point towards how much of the construction companies in Dubai are partly government owned and were at once fully owned before the government sold shares in their IPOs. I really don’t understand why the California government doesn’t just build luxury condos at a large scale for profit. The state will get revenue and lower housing costs overall.
- omnimus 6mo ago
  Because that's communism
- refurb 6mo ago
  Why? The level of graft would be breathtaking. No doubt some major builders would get preference for cost plus budgets on inflated numbers. Politicians would steer money to their supporters. They’d like be building at 1.5 to 2 times what private does.
  - mothballed 6mo ago
    Because government bureaucrats need to be let in on the take to make it worth their time. Graft is how that gets done. Otherwise they usually just stonewall housing. Paying $1 to government shills and corrupt capitalists for every $1 spent on actual housing is still a hell of a deal compared to not being able to build anything, which is the status quo in many locked up parcels. A moral standoff and resting on your principles of not funding graft sounds nice, but doesn't accomplish anything.
    - wallst07 6mo ago
      >Paying $1 to government shills and corrupt capitalists for every $1 And then some forensic accounting happens and a paper is published citing that government built homes cost twice as much as privately built, and the program stops.
      - mothballed 6mo ago
afpx 6mo ago
luxury housing? I see miles and miles of $650k townhouses that look like government housing. It would be much easier to cut demand.
- deleted 6mo ago
  [deleted]
underlipton 6mo ago
This is the common refrain, however, consider: There were two shitty, cheap units. The people in the first were forced to move out when a developer bought it, tore it down, and built the luxury unit. They have been homeless/going into debt renting a third slightly-less-shitty third unit. Without the first shitty, cheap unit, the second's competition was that third slightly-less-shitty unit; they raised their prices commensurately. The well-off person moved into their nice new unit. The poor person's choice is staying in the unit they can't afford, or spending thousands on moving costs to go to a shittier unit that they also can't afford. Oh, and the city "motivated" the luxury unit's development with tax incentives. A larger percentage of the poor person's check is now going toward paying that back. This is the reality once you get past simple narratives and reconcile with the fact that building tons of luxury units hasn't actually moved the needle.
- TheCoelacanth 6mo ago
  Where do you see developers buying up units to tear them down and replace them with the same number of units? When I see properties getting redeveloped it's usually a tiny house getting replaced with an apartment building. Often it's a strip mall or surface parking lot that wasn't housing anyone getting replaced. I don't think I've ever seen a redevelopment that doesn't significantly increase the amount of living space.
  - underlipton 6mo ago
    >Where do you see developers buying up units to tear them down and replace them with the same number of units? DC. And when there are more units afterwards, they're luxury. Building more units doesn't magically lower rates; it has to drive landlords of older units to lower their rates. Did that actually happen? You'd have to prove it. Something else could have, like increased non-traditional competition or the end of ZIRP and refinancing horizons coming to bear.
    - TheCoelacanth 6mo ago
      That's nonsense. DC has gone from 297k housing units in 2010 to 369k housing units in 2024[1][2]. Developments generally involve more units than what they are replacing. [1] https://www.census.gov/data/tables/time-series/demo/popest/intercensal-2010-2020-housing-units.html https://www.census.gov/data/tables/time-series/demo/popest/i... [2] https://www.census.gov/data/datasets/time-series/demo/popest/2020s-total-housing-units.html https://www.census.gov/data/datasets/time-series/demo/popest...

by vkou 6mo ago

BrenBarn 6mo ago

The question is whether the well-off person moved in from the same market, or from elsewhere. (Also, whether they vacate their previous unit or, e.g., keep it as a vacation home.)

mpyne 6mo ago
None of those are really pertinent because it doesn't change the fact that the well-off person is going to occupy an additional housing unit in this scenario no matter what. The question is whether it's going to be new construction that they occupy or existing construction. If you're not well-off you'd want that decision to end up with "new construction" so you can move into "existing construction" at a lower rent/mortgage than if new construction didn't exist.
- BrenBarn 6mo ago
  I don't think that is necessarily true. I believe there are, for instance, many reasonably wealthy people who live somewhere outside California and would not move into a dumpy old apartment in LA or SF but might move into a fancy new one. In other words, they will not occupy an additional housing unit (in a given market) unless it is "nice" enough. I am in favor of building new housing, but I'm even more in favor of reducing wealth inequality. I think we can do both, but we need to be deliberate about it.
  - bombcar 6mo ago
    Taken to extremes you'll have all wealthy people living in California, and the rest of the country available to us plebs. The greatest tool we have to reduce wealth inequality is make it so people can buy homes - and the biggest levers we seem to have there are making supply available in general, and making jobs available where there's already supply.
    - tsimionescu 6mo ago
      > Taken to extremes you'll have all wealthy people living in California, and the rest of the country available to us plebs. Which is exactly what people are afraid of happening, and what they mean by the crisis of housing affordability. You can go and buy or rent a cheap house today in probably 90% of the localities of the USA. Of course, if you already live in those places, you probably don't have the money, because good work is very hard to find. The problem of housing is that regular people want to live in NYC, and Chicago, and LA, and all of these places, and relatively near to where their jobs are, and they're seeing the rich own more and more of the space that could have allowed them to do so.
      - wallst07 6mo ago
        "The problem of housing is that regular people want to live in NYC, and Chicago, and LA, and all of these places, and relatively near to where their jobs are" It's not clear in your phrasing, but it sounds like this is a casual correlation. It's not... Many people only want to live in these cities because it's the ONLY way to get work, given a choice they would quickly move out.
        jhbadger 6mo ago
        Or, maybe the jobs are there because people companies want to hire want to live there. We have a way of testing this now given that remote work is a thing. We can see if people would rather work remotely from a cheap house in rural Kansas and have nothing to do in the evenings or live in an expensive apartment in an exciting city where their job is.
        6mo ago
  - wallst07 6mo ago
    >I am in favor of building new housing, but I'm even more in favor of reducing wealth inequality. I think we can do both, but we need to be deliberate about it. ... And that's why nothing gets done.
  - mpyne 6mo ago
    > I believe there are, for instance, many reasonably wealthy people who live somewhere outside California and would not move into a dumpy old apartment in LA or SF but might move into a fancy new one. In other words, they will not occupy an additional housing unit (in a given market) unless it is "nice" enough. That's the point, the "dumpy old apartment" was never going to be the thing stopping the rich person from moving in. Due to overlap in preferences amongst a multitude of people, the rich person would free up the housing they like by buying it from whoever, who would then free up slightly-less-good housing in the area by kicking out someone else (with money, to be clear) and so on down the chain until you get to the "dumpy old apartment", whose rent now rises because there are more people interested in moving into it due to lack of other options. New housing, even if it's new 'luxury' housing, breaks this chain of housing migrations in the area before it gets to buying people out of their dumpy old apartments.

tptacek 6mo ago

Almost all new construction is luxury housing; it's what pencils out. The mechanism by which it reduces prices is by reducing demand pressure on older housing stock, which would otherwise be bought up and rehabbed by the same people moving into the "luxury" housing. The constraint that makes this work is increased density: so long as you're adding net units to the market, new construction at any price level will reduce prices in the market.

deleted 6mo ago
[deleted]

tsimionescu 6mo ago

> What they fail to miss is that for every luxury unit that's built and is occupied, some well-off person moved into it... And out of a shitty, cheap unit that's now on the market. Ah yes, good old trickle down economics, applied to housing. It's obviously always true that the people moving into a new luxury home are coming from existing lower-luxury homes in the same part of the same city, and will immediately sell or rent those homes off at prices no larger than what they themselves had paid for them and no more. And we're basing all of this on a tiny decrease in the prices of new rent offers in one of the most expensive in the USA, which built a tiny amount of extra homes recently, not even clear of what type. Clear causation well established.

EduardoBautista 6mo ago

As someone who grew up in San Diego and now lives in Dubai, I point towards how much of the construction companies in Dubai are partly government owned and were at once fully owned before the government sold shares in their IPOs. I really don’t understand why the California government doesn’t just build luxury condos at a large scale for profit. The state will get revenue and lower housing costs overall.

omnimus 6mo ago
Because that's communism
refurb 6mo ago
Why? The level of graft would be breathtaking. No doubt some major builders would get preference for cost plus budgets on inflated numbers. Politicians would steer money to their supporters. They’d like be building at 1.5 to 2 times what private does.
- mothballed 6mo ago
  Because government bureaucrats need to be let in on the take to make it worth their time. Graft is how that gets done. Otherwise they usually just stonewall housing. Paying $1 to government shills and corrupt capitalists for every $1 spent on actual housing is still a hell of a deal compared to not being able to build anything, which is the status quo in many locked up parcels. A moral standoff and resting on your principles of not funding graft sounds nice, but doesn't accomplish anything.
  - wallst07 6mo ago
    >Paying $1 to government shills and corrupt capitalists for every $1 And then some forensic accounting happens and a paper is published citing that government built homes cost twice as much as privately built, and the program stops.
    - mothballed 6mo ago

afpx 6mo ago

luxury housing? I see miles and miles of $650k townhouses that look like government housing. It would be much easier to cut demand.

deleted 6mo ago
[deleted]

underlipton 6mo ago

This is the common refrain, however, consider: There were two shitty, cheap units. The people in the first were forced to move out when a developer bought it, tore it down, and built the luxury unit. They have been homeless/going into debt renting a third slightly-less-shitty third unit. Without the first shitty, cheap unit, the second's competition was that third slightly-less-shitty unit; they raised their prices commensurately. The well-off person moved into their nice new unit. The poor person's choice is staying in the unit they can't afford, or spending thousands on moving costs to go to a shittier unit that they also can't afford. Oh, and the city "motivated" the luxury unit's development with tax incentives. A larger percentage of the poor person's check is now going toward paying that back. This is the reality once you get past simple narratives and reconcile with the fact that building tons of luxury units hasn't actually moved the needle.

TheCoelacanth 6mo ago
Where do you see developers buying up units to tear them down and replace them with the same number of units? When I see properties getting redeveloped it's usually a tiny house getting replaced with an apartment building. Often it's a strip mall or surface parking lot that wasn't housing anyone getting replaced. I don't think I've ever seen a redevelopment that doesn't significantly increase the amount of living space.
- underlipton 6mo ago
  >Where do you see developers buying up units to tear them down and replace them with the same number of units? DC. And when there are more units afterwards, they're luxury. Building more units doesn't magically lower rates; it has to drive landlords of older units to lower their rates. Did that actually happen? You'd have to prove it. Something else could have, like increased non-traditional competition or the end of ZIRP and refinancing horizons coming to bear.
  - TheCoelacanth 6mo ago
    That's nonsense. DC has gone from 297k housing units in 2010 to 369k housing units in 2024[1][2]. Developments generally involve more units than what they are replacing. [1] https://www.census.gov/data/tables/time-series/demo/popest/intercensal-2010-2020-housing-units.html https://www.census.gov/data/tables/time-series/demo/popest/i... [2] https://www.census.gov/data/datasets/time-series/demo/popest/2020s-total-housing-units.html https://www.census.gov/data/datasets/time-series/demo/popest...