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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?

#71

Post by maxsilver »

rspeer wrote: post #37
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.

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…

> I don't really understand the opposite logic, which the NIMBYs like to use, saying that building new housing will drive the price up.

It actually fits the "logic" of the model you mentioned.

If you build more housing, the city "sucks less", more people want to live there, so the price goes up. This is especially true with modern development, since it exclusively builds luxury units, which make that part of the city really suck less, and therefore drives prices really high, really fast.

--

Sure, in the very long run, building new housing lowers prices. But in all short-to-medium timeframes, new housing greatly increases all housing prices in the particular area development occurs, which is why you get so many local residents (even renters) opposed to it.

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

#72

Post by kevinburke »

rsynnott wrote: post #52
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.

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…

Sure there is bubble like behavior at times but there’s also 68 years of data in SF showing that a 1% increase in supply leads to a 1.7% decrease in rents,

http://experimental-geography.blogspot.com/2016/05/employmen...

In the vast majority of places low supply is causing high prices, not speculation.

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

#74

Post by rspeer »

bhickey wrote: post #48
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…

You probably remember a few years back when the well-heeled Green candidate ran on a platform of bussing in homeless. https://www.reddit.com/r/CambridgeMA/comments/3pd9k3/my_note...

Those are my notes! That candidate was amazing. Of course I didn't vote for him, but at least he was honest about his plan to lower the rent.

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

#75

Post by kevinburke »

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…

This is actually not true in California where new housing pays property taxes at 2017 rates. Thanks to Prop 13 there are a lot of homes worth more than a million dollars that are still paying $5,000 or less per year in property taxes.

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

#76

Post by rspeer »

maxsilver wrote: post #71
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…

> I don't really understand the opposite logic, which the NIMBYs like to use, saying that building new housing will drive the price up. It actually fits the "logic" of the model you mentioned. If you build more housing, the city "sucks less", more people want to live there, so the price goes up. This is especially true with modern development, since it exclusively builds luxury units, which make that part of the city…

It would seem to me that, even in that case, building new housing increases the housing price in that local area, while not building new housing increases the housing price everywhere.

Is there an alternative plan to make housing prices decrease? The long term is at least better than never.

I know there's the whole thing where you designate certain units as subsidized affordable housing and have people on a lottery/waiting-list to get it, and having some of that probably helps in the short term, but at least in Cambridge the subsidies are becoming unsustainable. Even people making six figures end up needing subsidized housing.

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

#77

Post by dsfyu404ed »

ACow_Adonis wrote: post #54
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…

I don't see many people mentioning a proportional value-based land tax, which would probably be about the first thing a traditional economist would recommend? Brings down prices, hurts land-banking, increases density, generates revenue for infrastructure, captures public benefit from value increase, etc...

The biggest stakeholders (landowners, especially corporate ones) don't want a value based tax, the only way it'll happen is if the rest of the state decides that the circus going on in the city is causing enough problems that taxes are happening with or without the city on board.

I don't see this happening in CA.

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

#78

Post by kevinburke »

maxsilver wrote: post #71
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…

> I don't really understand the opposite logic, which the NIMBYs like to use, saying that building new housing will drive the price up. It actually fits the "logic" of the model you mentioned. If you build more housing, the city "sucks less", more people want to live there, so the price goes up. This is especially true with modern development, since it exclusively builds luxury units, which make that part of the city…

The phenomenon you’re describing perfectly describes “we are adding new supply but not enough to keep up with demand” and I think you’re getting the causation wrong. The California LAO has published reports showing areas with more new housing had less displacement, for example.

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

#79

Post by rspeer »

ACow_Adonis wrote: post #54
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…

I don't see many people mentioning a proportional value-based land tax, which would probably be about the first thing a traditional economist would recommend? Brings down prices, hurts land-banking, increases density, generates revenue for infrastructure, captures public benefit from value increase, etc...

Hurts grandmas/grandpas who lucked into houses with high property values, who could be rich but don't want to be because they have personal reasons not to move.

These are incidentally severely overrepresented among voters, and their votes are amplified by how easy it is to paint someone following the economic wisdom as an evil grandma-displacer.

It's much more politically convenient to displace young minorities. Nobody will really speak up for them, and they won't vote against you because you displaced them and they live somewhere else now!

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

#80

Post by EADGBE »

rayiner wrote: post #10
lostmsu wrote: post #7

Earlier quoted context omitted.

Where did you move to? I'm looking for a good area like this with the biggest requirement of having fiber or otherwise just a very good 250Mbps+ service.

If you can telecommute a lot, I recommend Maryland b/w D.C. and Annapolis. You can get a 4BR house for what a 1BR apartment costs in D.C., you can be at a farm in 20 minutes in one direction and a downtown bar in 10 minutes in the other, and I've got two different fiber providers available (I'm getting 2-gig installed soon). Unfortunately, the tech scene in the DMV area seems to be mostly in northern Virginia, which…

You just described any suburb in the Midwest.

Literally any.

Minus the fiber, but not entirely ("300mbs ought to be good enough for anyone").

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