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Why developers seem to only build luxury housing (2018)

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Re: Why developers seem to only build luxury housing (2018)

#41

Post by lotsofpulp »

eptcyka wrote: post #38
zbrozek wrote: post #23

Let'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.

It is unreasonable to mandate, as it invites unnecessary corruption and bureaucracy into what is and is not affordable (specifically the location aspect of it).

The only thing that should happen, if the goal is to lower prices, is increase supply and/or lower demand. The supply can be increased by simply changing zoning to allow for much denser residences.

Re: Why developers seem to only build luxury housing (2018)

#42

Post by leetcrew »

h2odragon wrote: post #24

why 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?

cashflow? during the time it takes to plan and build the new house, you have to pay for that in addition to the place you're still living in.

Re: Why developers seem to only build luxury housing (2018)

#43

Post by mooreds »

lol768 wrote: post #37

Points #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…

> Is this a thing in the United States? If not, why not?

So local entities govern building in the USA. I know that where I live, Boulder, has a requirement for affordable housing to be built in any new development, but also allows for the developer to pay cash in lieu of building the affordable housing. The cash is then used by other entities (non-profits, the city) to build affordable housing.

More here: https://bouldercolorado.gov/unit-cash-lieu-calculator

I don't know what other cities/local governments require, though.

Re: Why developers seem to only build luxury housing (2018)

#44

Post by ethbr0 »

actionablefiber wrote: post #29
nopenopenopeno wrote: post #15

Earlier quoted context omitted.

This make excellent sense, and the only solution would necessitate public transportation. Unsurprisingly, whether it’s public housing or public transportation, there really is no way around investing in public infrastructure if you want to have a healthy society.

Public transportation is one piece of the puzzle. Cities that are truly great for car-free living are also walkable and cyclable, and have dedicated infrastructure to this end. Public transit gets you part-way there, since unlike cars, public transit, even buses, do not really make the streets dangerous and hostile the way that individual transport vehicles do. Still, it's important to remember that public transit is…

I'm not in zoning, so no idea if this is already done, but it would be great to have a (probably national-level) standardized formula for calculating a transit credit for a development that could be applied to decrease required parking spaces.

I.e. having a light or heavy rail stop within 2 miles gives an X credit, having a grocery or mixed use commercial (food and services) within 2 miles gives a Y credit, having bike storage and lanes gives a Z credit

Essentially, attempt to quantify the holistic experience of residents, when talking about parking requirements.

If we make the kind of housing / communities we'd like to see cheaper, developers will start building it naturally.

Edit: From the linked Reddit post: "In January 2013, LA enacted its first major parking reduction, essentially giving developers the option of replacing up to 15% of their required residential parking with bike parking if they are within 1500ft of a major light rail or metro station. However, these bike spaces must be “long term” spaces, which require locked cages, a dedicated bike servicing area." (But also notes some requirements around the bike spaces that increase the cost of making that trade-off)

Re: Why developers seem to only build luxury housing (2018)

#45

Post by actionablefiber »

h2odragon wrote: post #24

why 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?

Most people who own homes either A) have most of their net worth tied up in it or B) have a levered position in its value via mortgage. And many people who don't own homes, especially younger people, have pretty much given up hope on being able to own their own home within their lifetimes. The rapid rise in housing prices and rents over the past couple decades means a lot of people are moving - their rents go up and their wages aren't keeping pace.

So, it's somewhat of a luxury to be able to form an emotional attachment to your home, without worrying about its effect on your finances.

Re: Why developers seem to only build luxury housing (2018)

#46

Post by tfehring »

h2odragon wrote: post #24

why 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?

Building your own housing usually means living either in the middle of nowhere or at the sprawling edge of suburbia. None of the places I would want to live have much, if any, empty developable land. So that would mean a tear down and rebuild of an existing house, which is a lot more expensive than just buying an existing house. Also, relatively modern building codes and zoning rules like setback requirements put new construction at a disadvantage compared to existing housing.

Re: Why developers seem to only build luxury housing (2018)

#47

Post by zbrozek »

api wrote: post #25
seibelj wrote: post #17

I’m a developer. I do tons of work to get the right to build - buy the property, the permits, the environmental review, neighbor meetings where they oppose it, more legal and municipal review, this drags on for years. Now after all of these fix costs would I rather build luxury units that net me tons of money or affordable units that net me little money? And also the neighborhood itself is opposed to a lot of low-inc…

This is the answer, and it's kind of amazing the strange contortions people go through to not admit it. Regulation is a tax. Review requirements are a tax. NIMBY opposition is a tax. Complex irregular permitting requirements are a tax. All those taxes must be paid up front by the developer, so obviously developers are only ever going to build high-margin high-income housing. They'd probably lose money on anything els…

I'd support of a constitutional amendment that makes housing (any form, from a farmhouse to a high-rise) a by-right land use across the entire United States.

Re: Why developers seem to only build luxury housing (2018)

#48

Post by wnolens »

Zoning laws seem like the easiest single lever here. Government can change one thing and get out of the way (yes I'm naive here..)

The cities of the world that don't feel like they're enveloped in a housing crisis have opposite zoning restrictions to those that do - namely they restrict single-family homes and high rises, and permit that middle-sized building and also for existing single family homes to be converted into multiplexes.

https://www.sightline.org/2017/09/21/yes-you-can-build-your-...

Re: Why developers seem to only build luxury housing (2018)

#49

Post by adhesive_wombat »

dazc wrote: post #27
chrisseaton wrote: post #10

Earlier 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?

I genuinely do not understand where the money comes from for the number of very new BMWs, Mercs, Audis and Range Rovers on the roads comes from. It seems way out of step with my impression of "normal" salaries (in the UK).

I guess either it's a dangerous amount of finance or I'm just very underpaid. Not that's I'd buy a new car anyway, I'll let someone eat that five-digits depreciation thank you.

Re: Why developers seem to only build luxury housing (2018)

#50

Post by nemo44x »

eptcyka wrote: post #38
zbrozek wrote: post #23

Let'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.

You’re forcing private businesses to take on contracts that they may not want. Totally unreasonable.

The only way to do this is to zone things certain ways. For instance, pass a law that says any building in a certain area needs to be a certain height and contain n% affordable units.

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