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Why developers seem to only build luxury housing (2018)
31–40 of 185 posts
Re: Why developers seem to only build luxury housing (2018)
#32Something I noticed happening around Boston metro starting with the pandemic is there is a lot more new builds than additions and remodels. The remodel we tried to do ended up significantly delayed due to labor and other shortages, and shopping around was very difficult. It made me wonder whether the developers prefer the hassle-free experience of unoccupied or new builds where you don't have constant headaches of fi…
Also capital efficiency. If you have limited labor anyway, why bother with lower margin additions and remodels?
Re: Why developers seem to only build luxury housing (2018)
#33All the points raised here were valid then and still are valid.
It's really worth highlighting that in most of the US it is illegal to build anything other than single-family homes ("SFHs"). The sort of medium density neighbourhoods a lot of people like are an historical anachronism in zoning terms.
It's true there are local issues too. For example, New York's scaffolding laws just make all construction expensive [1]. Basically any gravity-induced incident is 100% the employer's fault and this hugely drives up insurance costs.
Tax laws play a part too. Ultra-luxury apartments in NYC not only don't pay their fair share of property tax (in terms of market value), which is an issue New York State has to fix and has refused to for decades because upstate SFH owners don't want to pay more tax (SFHs in NY pay way less property tax than an equivalent value apartment). Ultra-luxury getting property tax abatements for new construction is a crime.
But here's a key general issue that has been proven true around tdhe world: anywhere with the free flow of capital such that you can park money in real estate in the world's urban centers with little to no oversight have experienced huge increases in property value. This incentivizes ultra-luxury pdroperty development. We need to stop this.
We need:
1. More multi-family building in SFH zoned areas. Areas that prohibit this should be penalized for it with higher property taxes (if it's not outlawed entirely);
2. More medium-density development along transport corridors where we can and do create walkable neighbourhoods; and
3. More high-density affordable housing in urban centers.
[1]: https://www.nytimes.com/2013/12/18/nyregion/campaign-underwa...
Re: Why developers seem to only build luxury housing (2018)
#34Earlier quoted context omitted.
Toyota makes a new camry as well as a new lexus.
Sure but the new economy sedan is more expensive than the used economy sedan. According to this interpretation therefore, if you build a new house, and it is broadly similar to houses in the neighborhood in which you build it… it’s going to be expensive relative to its neighbors. It will perhaps be perceived as “luxury” despite just being new.
> If the land is valuable, and all you can build on it is a single-family home, why not build a very expensive single-family home?
The article suggests changing zoning so triplex/fourplexes can be built. Even if they have marble countertops, they'd still be more affordable than a house.
Currently, I can't build the housing version of a Camry.
Re: Why developers seem to only build luxury housing (2018)
#35Earlier quoted context omitted.
In the UK new-builds are seen as the worst option. Most people want a house from the 20s or 30s if they can. Every decade beyond that the quality of housing got worse and worse and worse. These days buying a new house is a desperate option for people who can’t afford anything else.
Elephant in the room being the 'help to buy subsidy'. Half the deposit needed for a new build rather than an old build. That said, I'm not sure I have much sympathy for these buyers. There is a new esatate near me where everyone is driving a newish car in the 30-50K price range?
When we had our house built. The builder only required 5% down (2016). We later got an FHA mortgage with 3.5% down and we got the other 1.5% back.
Of course we refinanced when the housing market got crazy and reduced the interest rate to 1.5% and got rid of PMI (FHA MPI)
Re: Why developers seem to only build luxury housing (2018)
#36Earlier quoted context omitted.
But older houses are better (nicer architecture, better materials, more space, more mature trees) than newer houses.
With asbestos, lead, I couldn’t just pick a piece of land and go to a showroom and get exactly what we wanted. Choose to get cat 6 prewired throughout the house. Some really old ones don’t have central air (even my parents house they had built in 1978 did). I’ve bought five properties over the years. The two I bought to live in I had built and never had the maintenance costs people complain about (2002-2012 and 2016…
At least in the UK I don't think most people care about the tech of their house (air conditioning, certainly not network cabling) like this.
Re: Why developers seem to only build luxury housing (2018)
#37Points #3 and #4 seem to be arguing that regulation is the problem here.
In the UK, developers aren't allowed to build a new development (of >5 [some areas] or >10 dwellings [everywhere]) without providing sufficient affordable housing. This is usually a mixture of shared ownership properties and affordable rent properties (which must be no more than 80% of market rent, incl charges) which must be built alongside the other dwellings.
Is this a thing in the United States? If not, why not?
> there is no epidemic of fire deaths in older buildings that are not equipped with state-of-the-art sprinkler systems
For someone from the UK, where we experienced the Grenfell tower tragedy just a few years ago - and where experts have testified that sprinklers would've absolutely helped to prevent fire deaths (https://www.bbc.co.uk/news/uk-england-london-41230521), this argument comes across as so short-sighted and stupid it's not even funny. Skimping on fire safety measures is not the answer.
Re: Why developers seem to only build luxury housing (2018)
#38Let's say I'm a developer and there's unmet demand at all price points. Obviously I build the highest-margin product until I've satisfied that demand. Then I move on to the second-highest-margin product until I've satisfied that demand. Anywhere that demand across the spectrum dramatically outstrips production capacity (e.g., anywhere in the Bay Area, where NIMBYism has made it nigh-impossible to build anything) what…
It'd be perfectly reasonable to mandate that for one high value luxury house, a developer has to build a certain number of affordable homes. I guess it'd be the nimbys that would try and prohibit such legislation.
Re: Why developers seem to only build luxury housing (2018)
#39Let's say I'm a developer and there's unmet demand at all price points. Obviously I build the highest-margin product until I've satisfied that demand. Then I move on to the second-highest-margin product until I've satisfied that demand. Anywhere that demand across the spectrum dramatically outstrips production capacity (e.g., anywhere in the Bay Area, where NIMBYism has made it nigh-impossible to build anything) what…
It'd be perfectly reasonable to mandate that for one high value luxury house, a developer has to build a certain number of affordable homes. I guess it'd be the nimbys that would try and prohibit such legislation.
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Re: Why developers seem to only build luxury housing (2018)
#40why don't more people act as their own architect / build more of their housing themselves? I'm coming from an attitude of "a house is a home , a machine to make the lives of my family easier and more comfortable", not "houses are an investment with incidental utility as shelter." Is it that many don't care about their house as a home?
People seem to want to move in with everything aready done, shiny kitchen, fitted carpets, etc, etc. This would be great if houses were built like Toyotas - but they're not.