Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Why developers seem to only build luxury housing (2018)

ggwash.org

Post reply on HN
Print view View original

161–170 of 185 posts

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

#161

Post by actionablefiber »

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…

I think part of what muddies the waters here is that there's so much speculation in the market. In some areas, particularly megacities, there are also a lot of ultrawealthy foreign investors buying up real estate in the U.S. and Canada to park/hide their fortunes. So you have lots of market participants who are not interested in buying a property for the purpose of living in it. And if you're building exclusively for the top bidder, then it will take some time before you get to actually housing the people who need it, and it may not be in areas that are convenient for them to live in.

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

#162

Post by actionablefiber »

foogazi wrote: post #116
actionablefiber wrote: post #45

Earlier quoted context omitted.

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…

> The rapid rise in housing prices and rents over the past couple decades means a lot of people are moving Isn’t that the rule ? Wasn’t there a huge shift to the US west in search of opportunities? People move all the time to find a better life for themselves You can sit around and wait for your cities laws to revert the market and offer walkable cities, mass public transit, solve homelessness… or move

Your points only make sense from the perspective of someone with the resources and flexibility to move at any time to any place.

Many people move because they're priced out of their former dwellings. Many people who want to move to a different area can't because of financial/family reasons.

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

#163

Post by Red_Leaves_Flyy »

lazide wrote: post #154
Red_Leaves_Flyy wrote: post #148

Earlier quoted context omitted.

Profit should not be a thing in housing, healthcare, or food until everyone is housed, cared for, and fed.

Why should someone go through all the effort to do that if they aren’t getting paid for it?

The workers get a livable wage. The organization breaks even.

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

#164

Post by lazide »

Red_Leaves_Flyy wrote: post #163
lazide wrote: post #154

Earlier quoted context omitted.

Why should someone go through all the effort to do that if they aren’t getting paid for it?

The workers get a livable wage. The organization breaks even.

Who is going to organize said organization and deal with all the BS (petty and not) to make a livable wage, if they can do simpler and get the same, or do the same and get paid more?

A few will, but most won’t. The amount of risk to develop and the type of skills required are non trivial.

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

#165

Post by zbrozek »

actionablefiber wrote: post #161
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…

I think part of what muddies the waters here is that there's so much speculation in the market. In some areas, particularly megacities, there are also a lot of ultrawealthy foreign investors buying up real estate in the U.S. and Canada to park/hide their fortunes. So you have lots of market participants who are not interested in buying a property for the purpose of living in it. And if you're building exclusively for…

Folks around here point to that scapegoat a lot, but our local vacancy rate is <3%, suggesting that foreign speculation is not a real issue.

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

#166

Post by gernb »

ghaff wrote: post #125
gernb wrote: post #101

Earlier quoted context omitted.

That's fine if people want to live in the suburbs but... They need to start paying the full amount of what it costs to maintain those suburbs. As it is, the dense urban downtown is subsidizing all of it. That's not fair. https://youtu.be/7Nw6qyyrTeI

It's by no means a straightforward question. It's not like a city exists in some impermeable bubble from the surrounding area. A great deal is shipped into a city through the suburbs and other surrounding area. Many workers commute in from suburbs which are often cheaper than the city even though they may have better school systems (even though the per student costs are often lower). Food comes in from generally more…

It makes sense the downtown is where people in the suburbs go to work and that therefore downtown appears to be making more. But that's still ignoring the fact that there's a cost to maintain every road, water pipe, sewer, sidewalk, etc. Those suburbs still cost way more than downtown and the suburbs are not paying enough to maintain their costs. Cities are going bankrupt.

If you want to consider the entire thing one unit (suburbs + downtown = unit), you still have to figure out how to pay for all the services. The more spread out everything is the more those services cost.

So it still comes down to the same thing. If you want, blame it on the government zoning downtown for no residents and only zoning for single family housing and therefore leading to the only affordable thing being the suburbs. But, to maintain those suburbs they're going to have to raise taxes 4x to 8x on everyone in that unit.

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

#167

Post by DrScump »

lol768 wrote: post #146
coryrc wrote: post #72

Earlier quoted context omitted.

The UK is well known for unaffordable, poor-quality housing. I'm not sure why you're holding it up as a good example.

> I'm not sure why you're holding it up as a good example. Because it has the regulatory requirements I detailed in my post for housing developers. > The UK is well known for unaffordable, poor-quality housing And houses in the states aren't poor quality? Do builders over there even know what bricks are? Freeholds in some areas have a reputation for being unaffordable, sure. I'm not so sure that the shared ownership…

>Do builders over there even know what bricks are?

Builders over here in earthquake country are constrained by earthquake and fire mitigation materials. Plus masonry isn't energy-efficient.

BTW, I highly recommend the PBS series "Home Diagnosis" for modern home building strategies and testing of insulation and airflow.

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

#168

Post by DrScump »

actionablefiber wrote: post #87
ethbr0 wrote: post #44

Earlier quoted context omitted.

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 bi…

Why not just abolish parking minimums so that car-free neighborhoods are legal to build from the get-go?

>car-free neighborhoods

Are people in those neighborhoods willing to forgo the hundreds of vehicle trips a month that they will create via their Uber/Lyft/cab trips and Instacart, Amazon, Chewy, Doordash, and Uber Eats orders? Simply outsourcing those car trips to someone else, and leaving them nowhere to stop in the process, is a hypocritical pipe dream.

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

#169

Post by CalRobert »

chrisseaton wrote: post #133
lupire wrote: post #128

Earlier quoted context omitted.

At some point that can't keep being true. And houses generally have gotten far larger over time.

> At some point that can't keep being true. I can't really see us ever going back to solid-stone construction and the kind of intricate architecture we used to have in our culture. > And houses generally have gotten far larger over time. Rooms used to be 3m tall - they've shrunk over time to 2.4m tall. New-builds have zero storage.

Just did a self build and apparently ceilings have been rising again - 9, or 10 feet (which brings you back to 3m). Lower-volume rooms do mean less volume to heat or cool though.

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

#170

Post by DrScump »

actionablefiber wrote: post #129
ethbr0 wrote: post #123

Earlier quoted context omitted.

Because then everyone would always build no-parking developments to maximize profit, even in neighborhoods unsuitable for it. E.g. no public transit, no nearby grocery store.

Market dynamics would solve for this pretty quickly. If a neighborhood of no-parking developments had no grocery store, then building one would be a blindingly obvious opportunity. If the neighborhood is actually incorrigibly unsuitable for zero parking, then developers would have to build parking to attract buyers. But if you mandate parking minimums based on a formula then you have absolutely no mechanism for A) di…

>developers would have to build parking

Where, once you've removed all the parking footprint that existed before? Do you have any idea how expensive it is to retrofit underground parking under an existing structure?

Post reply on HN