Someone Explain This So Called Housing Crisis?

[panamaican]

You're proving our point with this example and you can't even see that.

Replacing one $2 million dollar unit with multiple $1 million ones is making housing 50% more affordable on that plot of land and boosting supply while also turning a profit for the developer. Sure its not "affordable" or "low income" housing in the way that a progressive person might imagine but JVS and I aren't arguing from that perspective, in fact neither of us originally invoked either of those terms IIRC.

Sure...it's not affordable. Then I'm not proving your point. My point from the very beginning is that there is housing for people willing to pay the high prices that go with it. That people want single family homes, not apartments.

Are you saying that your point is that there's a shortage of million dollar apartments in urban areas?

This is exactly the scenario I mentioned earlier and which you acted incredulous about and yet here you are admitting you've represented people who've done just that.

Also not what I said. Your 2 examples were talking about home owners modifying their existing premises. What I'm talking about is a developer, not a home owner, tearing down expensive real estate to build more expensive real estate instead of building affordable housing.

But my bad. If you had said from the beginning that you've been talking about million dollar properties and not housing for the middle class we could have skipped all of this.

 

[Islam Imamate]

Sure...it's not affordable. Then I'm not proving your point. My point from the very beginning is that there is housing for people willing to pay the high prices that go with it. That people want single family homes, not apartments.

Are you saying that your point is that there's a shortage of million dollar apartments in urban areas?

But my bad. If you had said from the beginning that you've been talking about million dollar properties and not housing for the middle class we could have skipped all of this.

I said from the beginning that what I am arguing for is more market rate housing by allowing higher density in existing low density suburbs which would bring prices down. In your own example converting a $2 million SFH into multiple $1 million is a decrease in price. As I said a few times ITT there are certain areas that have so much pent up demand that allowing more density might bring prices down but not enough so that they are "low income" but that's fine, that's the market at work.

If you apply this across the metro area you will get lower prices. So a suburb further from the core where a SFH might be worth $1 million being converted into multiple $500,000 apartments is a relative improvement in the affordability of housing in that area. Go further and where there's homes worth $500,000 they could be converted into multiple $250,000 apartments and so on and so forth across the R1 suburbs.

I understand that many people want to live in and own SFHs, that's fine because I am not advocating for them to be banned. I am simply advocating for allowing other housing types to be built across the metro area to better meet demand instead of being confined to a minority of the land. In San Jose ~93% of residential land is zoned exclusively for SFHs and it has among the highest home prices in the nation, not an accident.

Also not what I said. Your 2 examples were talking about home owners modifying their existing premises. What I'm talking about is a developer, not a home owner, tearing down expensive real estate to build more expensive real estate instead of building affordable housing.

In the context of the housing market its still more units added to the market to be rented or sold. Idk how you don't get that.

 

[Jack V Savage]

Yes but that is not the goal of real estate developers. You repeatedly conflate the two. You might use government to reduce zoning restrictions but, unless government is building the homes, it will be private sector developers who decide what gets built and at what price point. And, as rational actors, they will build what generates the greatest return for themselves.

Not in collusion, though. People who sell everything would like for that thing to be as expensive as possible, but market competition drives prices down. Again, it's weird to me that this needs to be explained.

You can pull the data yourself. I just posted the most visibly engaging graph. Housing prices didn't pull back until inflation hit the interest rates.

No, but I know that real estate pressures are partially driven by cultural components so it makes little sense to introduce a community in Japan when the United States is what we're talking about and there are more than enough cities and towns to use for your examples.

It's just simple supply and demand. There's no particular reason to think that supply and demand don't drive prices in the U.S.

For someone who knows more about economics than most, your position here has a real blind spot. Probably because you don't really understand what drives the developers in the market. You seem to think that artificial restraints on housing supply only restrict the creation of affordable housing.

I don't think that and haven't said anything that would give that impression. I explicitly said that it's not a binary category.

Additionally, for prices to come down, supply must exceed demand. But there's absolutely nothing out there that suggests that the demand for high price housing has topped out or even remotely come close to exceeding the demand for such housing.

"High-price housing" isn't a separate category either. There is a range of prices in housing. You don't know that?

But there isn't scarcity for "all". Weird. The only scarcity that exists in in "affordable" housing.

Huh? If a lot of people want to buy widgets, and widgets are in limited supply, the price is bid up. Framing that as "there is only scarcity in cheap widgets" is just an error.

The personal stuff is beneath response.

 

[Andy Capp]

I don't think it's rational to expect logistical issues to vanish after an arbitrary wealth value has been reached.

I don't think food deserts are caused by logistical issues.

 

[Andy Capp]

Rational behavior. Tear down a $2 million dollar house and replace it multiple million dollar apartments. Same plot of land, larger return. That's how real estate works. It's completely irrational to assume that developers will be unaware of the greater return if they choose that alternative. It's not economic warfare against the public. That's a silly perspective. The developers are operating within the private sector and their objective is maximum return for themselves by selling to the private sector. They have zero interest in losing money to benefit the public good. They're not in the housing welfare business. Losing money they don't have to lose is irrational behavior.

My statement was that anyone who can afford the $2 million house can afford the $1 million apartment (you got it backwards). And, yes, that's right. Anyone who can afford $2 million for the house can afford $1 million for the apartment.

Yes but that is not the goal of real estate developers. You repeatedly conflate the two. You might use government to reduce zoning restrictions but, unless government is building the homes, it will be private sector developers who decide what gets built and at what price point. And, as rational actors, they will build what generates the greatest return for themselves.

You can pull the data yourself. I just posted the most visibly engaging graph. Housing prices didn't pull back until inflation hit the interest rates.

No, but I know that real estate pressures are partially driven by cultural components so it makes little sense to introduce a community in Japan when the United States is what we're talking about and there are more than enough cities and towns to use for your examples.

For someone who knows more about economics than most, your position here has a real blind spot. Probably because you don't really understand what drives the developers in the market. You seem to think that artificial restraints on housing supply only restrict the creation of affordable housing. Completely blind to the possibility that the restraints also restrict the creation of more high end housing.

Additionally, for prices to come down, supply must exceed demand. But there's absolutely nothing out there that suggests that the demand for high price housing has topped out or even remotely come close to exceeding the demand for such housing.




But there isn't scarcity for "all". Weird. The only scarcity that exists in in "affordable" housing. And you seem to have no idea how developers work. Or an understanding that the type of housing you're asking for is economically unfeasible to construct.

I can't waste more time on this. I represent builders and developers from buyers flipping single family houses, converting them into duplexes or building multimillion dollar projects from the ground up. I own a real estate title company and I see what the developers are actually acquiring and what they intend to do with it. I negotiate the contracts and argue in front of the zoning boards, the license and inspection boards, etc. regularly. I get to sit in on the public policy meetings that push for affordable housing in my community (quietly and in the back of the room). And I get to sit in with the real estate community that genuinely lobbies for more affordable housing with real lobbyists, not just community organizers.

With all due respect, you don't understand this industry and surface level "If you just remove government, the private sector will build it" platitudes make that overwhelmingly clear. Every place understands that simply removing government restrictions on building will not result in more affordable housing. Every conversation is about how to incentivize the private sector to sink money into something that makes zero economic sense. But since you seem to think you know more than the people who are literally spending millions of their own dollars trying to accomplish the same goal, I'll leave you to it.

I have little to contribute here on either side of the discussion except that I think government should be in the business of building homes. Why not?