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Paying for Dirt: Where Have Home Values Detached from Construction Costs?

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Re: Paying for Dirt: Where Have Home Values Detached from Construction Costs?

#61

Post by toasterlovin »

pc86 wrote: post #57
TheSpiceIsLife wrote: post #36

Earlier quoted context omitted.

Will building more units / appartments/ houses bring the price down? Have other cities seen home prices move toward affordability when more housing has been built? I'm not saying it isn't a good idea, just that the logic seems flawed.

It does if the new units surpass demand, even in the short term. If there are 5k available units but there is demand for 15k over the next 90 days, of course building 1500 won't affect prices much, if at all. You need to build until there is some vacancy, then landlords are forced to lower rent to prevent their units from being vacant, unless they have the means to hold out for someone who really wants that particula…

Supplying more of something always reduces the price of that thing. The thing to keep in mind, though, is that it doesn’t reduce the price that people actually pay; it reduces the price that people would have paid.

Re: Paying for Dirt: Where Have Home Values Detached from Construction Costs?

#62

Post by TACIXAT »

chrisseaton wrote: post #55
rb808 wrote: post #2

Lol they should do this for London, where 150 year old tiny apts cost millions.

> 150 year old tiny apts Tiny is bad, but what's wrong with old? I find older houses are usually built to a much higher standard (may just be those that remain but that's irrelevant), and have much more character.

You miss out on a lot of modern advancements. A few things that come to mind from my lovely house:

* Single pane windows that leak heat / cool, also that rattle.

* Lack of insulation.

* Non-grounded wiring / unsafe wiring.

* Plaster instead of drywall, cracks very easily.

* Old heating systems (oil furnace with steam radiators).

* Crooked doorways and doors that don't close quite right.

Re: Paying for Dirt: Where Have Home Values Detached from Construction Costs?

#63

Post by rb808 »

chrisseaton wrote: post #55
rb808 wrote: post #2

Lol they should do this for London, where 150 year old tiny apts cost millions.

> 150 year old tiny apts Tiny is bad, but what's wrong with old? I find older houses are usually built to a much higher standard (may just be those that remain but that's irrelevant), and have much more character.

Nothing wrong with old. Just that its related to the OP - construction costs are irrelevant when you can amortize the cost over a century or two.

Re: Paying for Dirt: Where Have Home Values Detached from Construction Costs?

#64

Post by lg »

TheSpiceIsLife wrote: post #36
kevinburke wrote: post #17

Would like to say: If you would like to reverse these trends, or live in the SFBA and would like to be able to afford a home or condo without needing to commute from Stockton or hit the startup lottery, please pay attention to your local City Council and their zoning/land use decisions. Local decisions frequently don't get that many comments; your voice makes a difference. - Brisbane may approve 4400 units of housing…

Will building more units / appartments/ houses bring the price down? Have other cities seen home prices move toward affordability when more housing has been built? I'm not saying it isn't a good idea, just that the logic seems flawed.

home price increases in my neighborhood of manhattan have substantially slowed their rise in the past couple years as a bunch of new construction has come on the market. this will probably continue through next year as stuff in progress finishes up, and then probably rise again because homebuilders don't start projects when prices are flat.

Re: Paying for Dirt: Where Have Home Values Detached from Construction Costs?

#66

Post by cat199 »

kevinburke wrote: post #39
TheSpiceIsLife wrote: post #36

Earlier quoted context omitted.

Will building more units / appartments/ houses bring the price down? Have other cities seen home prices move toward affordability when more housing has been built? I'm not saying it isn't a good idea, just that the logic seems flawed.

Broadly, yes, for the same reasons that destroying housing (as happened in Santa Rosa) increases competition for existing apartments and increases rents. Here's a report from the state LAO about the effects of building more housing on displacement: http://www.lao.ca.gov/Publications/Report/3345 In 2016 SF built 5,000 units, a record, and rents and owner move-in evictions both fell for the first time in a while. (They…

> Austin, Houston, and Dallas don't have very restrictive zoning or rules around new home construction, and they lap California in home building and have seen rents hardly rise at all

not exactly true.. in htx new construction is all luxury, and many people are moving in from out of state; those that can afford it and want to can go to the luxury units and those have had price 'reductions' (from overpriced initial prices) but the 'regular' apts have seen rents rise quite a bit because the newcomers have squeezed the existing people into more competition for the cheaper units..

i posit that subsequently the emptier, overprovisioned high end buildings will start to fail, and become a glut of relatively high price condos, which will then cause the regular housing prices to go up..

Re: Paying for Dirt: Where Have Home Values Detached from Construction Costs?

#67

Post by frgtpsswrdlame »

AznHisoka wrote: post #58
rsynnott wrote: post #52

Earlier quoted context omitted.

In a rational market, yes, absolutely; if prices are driven by a supply deficit then increasing supply cuts prices (or at least reduces price growth, if a smaller deficit remains). Housing markets tend not to be all that rational, though; there's often an aspect of speculative mania to them. It's likely that increasing supply would cut prices, but it's not actually certain, as it may just increase speculative 'invest…

what differentiates a real estate investor from a speculator?

Diversification? Although drawing the line there would put plenty of big time "investors" on the speculator side. Maybe it's just a distiction without a difference.

Re: Paying for Dirt: Where Have Home Values Detached from Construction Costs?

#68

Post by marcosdumay »

TheSpiceIsLife wrote: post #40
dtech wrote: post #38

Earlier quoted context omitted.

> Will building more units / appartments/ houses bring the price down? Ballooning housing prices are a prime example of demand exceeding supply leading to increased prices. Increasing supply will decrease prices or at least limit further price increase.

But it's not like demand is inelastic. Do we know how much additional supply would have to be built to saturate demand? Is that even freasible? It seems like an intractable problem to me because it's not like anything we do, in these big popular cities, is going to have much of an effect in the next 12 months to 5 years. Personally, I solved the problem for myself by moving away from the big city I was in to a sub 10…

> But it's not like demand is inelastic.

How many houses do you need to live on?

Housing is one of less elastic goods you will find around. Basic food is probably less elastic, it viewed as a single good, but you won't find many other counter examples.

Re: Paying for Dirt: Where Have Home Values Detached from Construction Costs?

#69

Post by ch4s3 »

kurthr wrote: post #44
rspeer wrote: post #37

Earlier quoted context omitted.

I'm not up on the sources, but a moderately pro-development candidate for Cambridge City Council has often quoted a statistic saying that there are only two ways to bring down house prices: 1. Make the city suck 2. Get the housing vacancy rate to 5.5% And of course he says this to encourage everyone to work toward #2, and the way to do that without displacing anyone is to build new housing. I don't really understand…

Actually, you get double bonus wherever you add housing, because you'll never add enough transportation or parking as necessary so that neighborhood will also start to suck! Also, housing people is a net drain on the tax base so the city services get worse or taxes increase. Win, win! Yeah, that's why NIMBY... on the other hand add transit, jobs, or retail somewhere and house prices go up locally with it because peop…

> Also, housing people is a net drain on the tax base so the city services get worse or taxes increase

I'm not sure what you're talking about here. It's far cheaper to provide services at higher density, far cheaper. You need fewer meters of sewer, conduit, etc. Transit lines can be shorter with fewer connections. Additionally, if you bring more people into a municipality, you generate more taxes through increased property values, increased sales tax revenue, and income taxes if you municipality does that.

Re: Paying for Dirt: Where Have Home Values Detached from Construction Costs?

#70

Post by kevinburke »

cat199 wrote: post #66
kevinburke wrote: post #39

Earlier quoted context omitted.

Broadly, yes, for the same reasons that destroying housing (as happened in Santa Rosa) increases competition for existing apartments and increases rents. Here's a report from the state LAO about the effects of building more housing on displacement: http://www.lao.ca.gov/Publications/Report/3345 In 2016 SF built 5,000 units, a record, and rents and owner move-in evictions both fell for the first time in a while. (They…

> Austin, Houston, and Dallas don't have very restrictive zoning or rules around new home construction, and they lap California in home building and have seen rents hardly rise at all not exactly true.. in htx new construction is all luxury, and many people are moving in from out of state; those that can afford it and want to can go to the luxury units and those have had price 'reductions' (from overpriced initial pr…

Are new cars on average more “luxury” than used cars? If for some reason we didn’t produce any new cars, would the price of used cars rise or fall?
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