New Empty Units • Hacker News Board

Re: New Empty Units

#11

Post by hamilyon2 » Sun, Jan 31, 2021, 4:57 PM UTC

The analysis is so obviously wrong, I can't imagine any of this is real.

It assumes that rich entities will buy property at high prices in a soon-to-be buyer's market. That they will not calculate ROI, will not predict market collapse and will easily loose money. The opposite, of course, is true. ROI will be meticulously calculated, bubble will not form. Development companies, unamused by weak demand will stop building long before there will be lots of unaffordable, unsellable housing. Which might be good: market forces at work.

Re: New Empty Units

#12

Post by Finnucane » Sun, Jan 31, 2021, 4:59 PM UTC

THe last time this actually happened, during the Great Bubble of the early 2000s, developers built as fast as they could sell, to anyone who could sign a a paper. It didn't matter if anyone intended to actually live in the buildings. Whole developments were built to stand empty. And when the bubble popped, indeed, prices crashed. Also, stock markets, banks, jobs, income. Foreclosures clogged the market. Corporate real-estate trusts hoovered up the excess housing to convert to rentals. They have not been exemplary landlords in the main. Have the poor benefited in any way from any of this? No, of course not.

Re: New Empty Units

#13

Post by shuckles » Sun, Jan 31, 2021, 5:09 PM UTC

onlyrealcuzzo wrote: post #9

shuckles wrote: post #4

Earlier quoted context omitted.

At least in San Francisco, over 80% of residents in new buildings lived in the city before moving in. I haven’t heard a single induced demand argument which is actually borne out by reality. For the one in this article: the cities with housing crises have extremely low vacancy rates. And the drop in rents during the pandemic has been most substantial in new buildings. If supply was totally inelastic due to money laun…

Land is priced at what the MAX a developer could make from developing the land. Short of completely changing everything about property development from the financing (artificially low rates), taxes (regressive), and development (zones) - there is no solution. If you could build more - someone would. You can't. And it's not like we can just change one thing. The entire market is forcing higher prices at every turn. 66…

This is lazy analysis.

1. Lots of industrial inputs are priced based on value they provide the consumer. That’s not what makes land special, and there are many mechanisms to have non-developers capture the value of land (cf. LVT, inclusionary zoning, impact fees).

2. Focus on developers is misplaced. There is no reason developers are structurally incapable of making their profits by building lots of units at low margins instead of a few units at high margins. The fact that 100% subsidized nonprofit developers deliver projects at nearly the same costs as for profit developers suggests that the drivers of costs are not developers themselves.

3. San Francisco is majority renter yet makes no local policy changes to alleviate the supply crisis. The incentives at play have a lot less to do with greedy developers than you describe.

4. Low interest rates can either manifest as lots of units offered at cost or high multiples on ownership vs rentals. Which one you get is a policy choice. I don’t know what you mean by “artificially low” and how that’s even relevant.

Re: New Empty Units

#14

Post by [deleted] » Sun, Jan 31, 2021, 5:10 PM UTC

Finnucane wrote: post #12

THe last time this actually happened, during the Great Bubble of the early 2000s, developers built as fast as they could sell, to anyone who could sign a a paper. It didn't matter if anyone intended to actually live in the buildings. Whole developments were built to stand empty. And when the bubble popped, indeed, prices crashed. Also, stock markets, banks, jobs, income. Foreclosures clogged the market. Corporate rea…

[deleted]

Re: New Empty Units

#15

Post by shuckles » Sun, Jan 31, 2021, 5:13 PM UTC

Finnucane wrote: post #12

THe last time this actually happened, during the Great Bubble of the early 2000s, developers built as fast as they could sell, to anyone who could sign a a paper. It didn't matter if anyone intended to actually live in the buildings. Whole developments were built to stand empty. And when the bubble popped, indeed, prices crashed. Also, stock markets, banks, jobs, income. Foreclosures clogged the market. Corporate rea…

This presumes home building rates in the lead up to the GFC were unusually high, when in fact they were at a 50 year low: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3569920

Re: New Empty Units

#16

Post by shuckles » Sun, Jan 31, 2021, 5:18 PM UTC

hamilyon2 wrote: post #11

The analysis is so obviously wrong, I can't imagine any of this is real. It assumes that rich entities will buy property at high prices in a soon-to-be buyer's market. That they will not calculate ROI, will not predict market collapse and will easily loose money. The opposite, of course, is true. ROI will be meticulously calculated, bubble will not form. Development companies, unamused by weak demand will stop buildi…

The right way to understand Nathan, the author of the piece, is that - like many other rich kids of his class - they are disguising an aesthetic preference for cute old buildings with a material analysis which can justify that preference in light of their purported egalitarian values.

Re: New Empty Units

#17

Post by shuckles » Sun, Jan 31, 2021, 5:22 PM UTC

jeffbee wrote: post #10

We have a huge contingent of what I call vacancy truthers here in Berkeley and the rest of the Bay Area. Earlier this week a former candidate for city government was opining that new "gentrification tower" - actually tremendously expensive and not at all luxurious studio apartments in a 5 story building -- were all vacant! Look at all these available apartments! But these truthers simply never understand the numbers.…

The vacancy rate of permanent supportive housing units in San Francisco is 6%, which was higher than the vacancy rate of market rate housing. I guess that means there is no need to build more PSH? QED, suckers.

Re: New Empty Units

#18

Post by jeffbee » Sun, Jan 31, 2021, 5:26 PM UTC

shuckles wrote: post #15

Finnucane wrote: post #12

THe last time this actually happened, during the Great Bubble of the early 2000s, developers built as fast as they could sell, to anyone who could sign a a paper. It didn't matter if anyone intended to actually live in the buildings. Whole developments were built to stand empty. And when the bubble popped, indeed, prices crashed. Also, stock markets, banks, jobs, income. Foreclosures clogged the market. Corporate rea…

This presumes home building rates in the lead up to the GFC were unusually high, when in fact they were at a 50 year low: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3569920

What's scary is we now have whole entire generations of Americans who have never personally witnessed a functioning housing market, and this is the kind of junk they believe.

Re: New Empty Units

#19

Post by smitty1e » Sun, Jan 31, 2021, 5:46 PM UTC

mnd999 wrote: post #8

smitty1e wrote: post #6

Those who do not understand Thomas Sowell[1] are doomed to wonder why reality never quite conforms to their conceits. [1] https://www.amazon.com/Basic-Economics-Thomas-Sowell/dp/0465...

I am not familiar with Thomas Sowell and realistically I'm not going to read his book to figure out why you cite him here. Could you at least give a hint?

Wisdom

Re: New Empty Units

#20

Post by fingerlocks » Sun, Jan 31, 2021, 5:46 PM UTC

Finnucane wrote: post #12

THe last time this actually happened, during the Great Bubble of the early 2000s, developers built as fast as they could sell, to anyone who could sign a a paper. It didn't matter if anyone intended to actually live in the buildings. Whole developments were built to stand empty. And when the bubble popped, indeed, prices crashed. Also, stock markets, banks, jobs, income. Foreclosures clogged the market. Corporate rea…

> Have the poor benefited in any way from any of this?

Yeah, I lived in a sweet condo in downtown Seattle for a few hundreds bucks a month in rent during the early 00’s crash. Being a poor college student at the time, and I’d say the price collapse was awesome, esp compared to dorms or other dilapidated UW housing.