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New Empty Units

jefftk.com

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Re: New Empty Units

#31

Post by jeffbee »

imtringued wrote: post #29
shuckles wrote: post #13

Earlier quoted context omitted.

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 marg…

Greedy developers don't want to drive the value of their existing properties up, they want to build more properties because that is an easy way to double or triple their money. Greedy owners of single family housing want to drive the value of their house up because they can't easily invest into a second home. A lot of them also love the idea of halting progress at all costs, even if it harms them or their children in…

Housing developers aren't out there with 50-70% margins. Their net margins are usually well under 10%.

The only people doubling and tripling their money are Boomers who bought houses with 1-2 years of saving ordinary wages, spent 40 years shouting down new construction in their towns, and now are sitting on millions of dollars of unearned returns.

Re: New Empty Units

#32

Post by tumbleweeds »

imtringued wrote: post #26

After spending so much time on this topic I always came to the same conclusion. Even when I made the most extreme assumptions it didn't change the answer. Just build more housing or stop building too much commercial real estate. That's it. The truth is that Californians love expensive housing. They love having lots of jobs that attract people outside their city. They also love yelling at the people they desperately t…

I wouldn't say Californians love expensive housing. They love the speculative market which draws a good investment on their prior investment. Problem is it inevitably squeezes out all those people who cannot to pay market rate. Not for a house or an apartment. Where do they go? Suburbs nearest are already full, the periphery between aren't too far from being the next redeveloped arras. Some resort to commuting 2-3 hours each way since they can at least buy a cheaper home hours away and not infinitely pay rising rent. They do build "cheaper" houses in the exurbs so that helps some but the vacancies are filled by all others chasing the California lifestyle even if only temporary.

One point to add is that it's pretty expensive to build in California. Even to fix an old house could incur 20-25% more due to retrofitting for earthquakes. Getting land and whatever property isn't cheap on top of doing anything further to it. I'm in the field and started wanting to do affordable housing but the pace at which it all moves is pushing me towards other paths. Say 3-5 years for 1,200 new units to get through various agencies and built on time, most of which are not meant to be affordable units. Can people put their struggles on pause in hopes of being lucky this round? Much as may be said to signal virtue, there is an obvious informal aversion living next to poor people.

What made me laugh was when the City of Los Angeles was building those homeless shelters and still charging city fees. Way of the system, ok, but why would the city need to charge itself permitting fees? I feel there's a huge indifference to put only a facade of trying but at least it produces a few units at an astronomical cost to taxpayers. The are already paying for an annual budget half-owned by the police. Relevant point because a lot of cops and city workers don' live in the city either. They take their income and their future pensions elsewhere and the residents paying for these services get so little of those tremendous salaries reinvested back in their own communities.

Greed will always be here. I don't see it changing either unfortunately.

Re: New Empty Units

#33

Post by smitty1e »

namenotrequired wrote: post #21
smitty1e wrote: post #19

Earlier quoted context omitted.

Wisdom

So, how and why does reality never quite conform to the concepts in the article?

The article outlines the conceited maps of man; the overarching conceit being: the territory can be conformed to some arbitrary map.

Not unlike the counterintuitive way I am telling you the truth, a positive thing, and getting modded down for it in this thread in the most punk-tacular fashion.

Re: New Empty Units

#34

Post by jefftk »

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 analysis is so obviously wrong

Are you talking about my analysis, or Nathan Robinson's (who I'm responding to)?

Re: New Empty Units

#35

Post by makomk »

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…

Yeah, as I recall we've seen this happen on the rare occasion cities built enough housing to cause the market to weaken. All the property companies stop building the moment it starts to happen because they know they're at risk of ending up with a load of housing they can only offload at a loss, and that can easily bankrupt them.

Re: New Empty Units

#36

Post by [deleted] »

jeffbee wrote: post #31
imtringued wrote: post #29

Earlier quoted context omitted.

Greedy developers don't want to drive the value of their existing properties up, they want to build more properties because that is an easy way to double or triple their money. Greedy owners of single family housing want to drive the value of their house up because they can't easily invest into a second home. A lot of them also love the idea of halting progress at all costs, even if it harms them or their children in…

Housing developers aren't out there with 50-70% margins. Their net margins are usually well under 10%. The only people doubling and tripling their money are Boomers who bought houses with 1-2 years of saving ordinary wages, spent 40 years shouting down new construction in their towns, and now are sitting on millions of dollars of unearned returns.

[deleted]

Re: New Empty Units

#37

Post by BobbyJo »

shuckles wrote: post #17
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.

6 < 10

Re: New Empty Units

#38

Post by shuckles »

BobbyJo wrote: post #37
shuckles wrote: post #17

Earlier quoted context omitted.

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.

6 < 10

I said was. The vacancy rate in San Francisco and the Bay Area hovered around 5% during the recent cycle. 10% is the average vacancy rate of reasonable housing markets, mostly in Asia.

Re: New Empty Units

#39

Post by hamilyon2 »

jefftk wrote: post #34
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 analysis is so obviously wrong Are you talking about my analysis, or Nathan Robinson's (who I'm responding to)?

Your analysis is wrong in assuming that when developers acquire permissions, demolish buildings, rent machinery and pour concrete, buyers still behave as if there is shortage of housing.

Nathan Robinson's analysis might be wrong too, but it is still more nuanced.

Re: New Empty Units

#40

Post by randyrand »

Today's new expensive home are tomorrow's old cheap homes.

Even without waiting for tomorrow when rich people move from an old ratty apartment to the new shiny one that old home becomes available for someone less fortunate.

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