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Change my mind: Density increases local but decreases global prices

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Re: Change my mind: Density increases local but decreases global prices

#81

Post by somenameforme »

yboris wrote: post #3

Whenever thinking about density and prices, a worthwhile example to consider is Tokyo. Very dense, but housing prices are very affordable. Part of the reason, as I understand, is that Tokyo allows people to keep building (compare to San Francisco).

People generally don't seem to be aware of Japan's economic state. Here are some relevant data:

Graph of Japanese Stock Market: https://www.macrotrends.net/2593/nikkei-225-index-historical...

Graph of Japan's Population: https://tradingeconomics.com/japan/population

Graph of Tokyo's Population: https://www.macrotrends.net/cities/21671/tokyo/population

Average Salary in Tokyo: https://www.timedoctor.com/blog/average-salary-in-japan/ (outdated exchange rate, yen has been collapsing)

In a nutshell: The Japanese economy was larger 33 years ago than it is today, the Japanese population is declining by the millions with even Tokyo now also seeing increasingly declining population, and the average salary in Tokyo is about $45,000. This can absolutely lead to low housing costs, but is probably not a model you want to emulate.

Re: Change my mind: Density increases local but decreases global prices

#82

Post by [deleted] »

endisneigh wrote: post #4
yboris wrote: post #3

Whenever thinking about density and prices, a worthwhile example to consider is Tokyo. Very dense, but housing prices are very affordable. Part of the reason, as I understand, is that Tokyo allows people to keep building (compare to San Francisco).

> Very dense, but housing prices are very affordable it's not, though. Tokyo is substantially more expensive than other cities in Japan. Tokyo is also more expensive than American cities when adjusted to per sq/ft rent and PPP. "Tokyo is so cheap" is a meme at this point. Tokyo is cheap the same way having roommates is cheap (roommates are much, much rarer in Tokyo compared to NYC).

[deleted]

Re: Change my mind: Density increases local but decreases global prices

#83

Post by robocat »

atdrummond wrote: post #15
endisneigh wrote: post #4

Earlier quoted context omitted.

> Very dense, but housing prices are very affordable it's not, though. Tokyo is substantially more expensive than other cities in Japan. Tokyo is also more expensive than American cities when adjusted to per sq/ft rent and PPP. "Tokyo is so cheap" is a meme at this point. Tokyo is cheap the same way having roommates is cheap (roommates are much, much rarer in Tokyo compared to NYC).

Really? I’ve lived in the Bay Area and Tokyo. Right now I can find a 535 sq ft bedroom in Tokyo for $1170 ( https://realestate.co.jp/en/rent/view/929199 ). There are plenty of units like this - and even more (slightly bigger, nicer amenities, etc) to three times more. And this isn’t even a “cheap” part of the city. Even at that higher end of the Tokyo price range, there’s nothing like that for solo renters in SF or O…

The article mentions Tokyo in a footnote:

  1 I’m limiting this to America because it’s approximately a self-contained housing market; I don’t think there are enough immigrants to really affect things. Thinking at a country level does make a difference - for example, I worry someone will bring up Tokyo as a counterexample. But I think Tokyo managed to build its way to low housing prices in the context of the rest of Japan also having good housing policy. Even if that isn’t true, Tokyo on its own is a quarter of the Japanese market, so it might be able to exhaust the entire pool of Japanese house-seekers by itself!

Re: Change my mind: Density increases local but decreases global prices

#84

Post by jjav »

scythe wrote: post #53

>Imaginary graph of how price as a function of density would have to look But price is not a function of density! You think building more apartments in Cumberland, MD will increase prices, or decrease prices? I should point out: Cumberland is already a very densely built city. Its inner urban geography is not unlike Oakland. It just happens to be in a long, painful period of decline. So many of those buildings are em…

> You think building more apartments in Cumberland, MD will increase prices, or decrease prices?

> So many of those buildings are empty.

> The answer is pretty obvious, here. Prices would likely drop.

If many of the existing buildings are sitting empty already, it sounds like there is far more supply of housing in this city than demand. So prices are already as low as they can go, since rent can't trend to zero.

So seem like building more housing there couldn't really drop the prices further.

Re: Change my mind: Density increases local but decreases global prices

#85

Post by joshlemer »

somenameforme wrote: post #81
yboris wrote: post #3

Whenever thinking about density and prices, a worthwhile example to consider is Tokyo. Very dense, but housing prices are very affordable. Part of the reason, as I understand, is that Tokyo allows people to keep building (compare to San Francisco).

People generally don't seem to be aware of Japan's economic state. Here are some relevant data: Graph of Japanese Stock Market: https://www.macrotrends.net/2593/nikkei-225-index-historical... Graph of Japan's Population: https://tradingeconomics.com/japan/population Graph of Tokyo's Population: https://www.macrotrends.net/cities/21671/tokyo/population Average Salary in Tokyo: https://www.timedoctor.com/blog/average-s…

I personally don't think it's such a bad thing if our population stays stable rather than increasing, even small decline I don't think is such a bad thing.

Re: Change my mind: Density increases local but decreases global prices

#86

Post by rippercushions »

chii wrote: post #78
antognini wrote: post #75

I feel like this (along with many discussions about urban housing) slightly misses the real issue. A lot of these discussions center around how to make housing affordable in cities and whether denser construction leads to lower housing costs or higher housing costs. But cities don't exist to minimize housing costs. They exist to maximize opportunities: job opportunities, dating opportunities, friendship opportunities…

I think you got it the wrong way around - cities _form_ around opportunities, rather than produce them. Initially, geographic advantage (such as being near harbour, river, or some other geographic feature) gives a settlement that's not yet a city a big advantage in attracting more people there. This in turn, forces the city to grow as more people cram in. To artificially build denser by policy doesn't produce opportu…

There are lots of planned cities that are natural experiments in this: Brasilia, Canberra, Ottawa, Abuja etc. They all show that yes, it is possible to "build it and they will come", but it's hugely expensive, takes a long, long time (decades) to get to critical mass, and produced mixed results at best, eg Brasilia's original strictly separated zoning has been widely panned as a disaster. And I'm pretty sure all of those would still suffer gravely if the capital was ever moved out.

Re: Change my mind: Density increases local but decreases global prices

#87

Post by joshlemer »

nullc wrote: post #29

Why is it that many of the same people who argue against more roads and more parking lots on the basis of induced demand preventing more roads from meaningfully solving congestion seem to think that in the densest and most competitive cities that adding units will necessarily make hosing affordable?

Oh the Urbanity on Youtube had a great video on this https://www.youtube.com/watch?v=c7FB_xI-U6w

Re: Change my mind: Density increases local but decreases global prices

#88

Post by Gigachad »

colmmacc wrote: post #54

Never mind houses, what about gas/petrol? It always seems to be more expensive in dense cities, even though there is greater competition and economies of scale (e.g. delivery of the fuel to the stations) while it tends to be cheaper in rural middle-of-nowheres, even if there is no immediate local competition. The cost of land and labor is higher, sure, but even the stations that are owned rather than rented don't see…

The price of petrol would be increasingly irrelevant the denser the area since you'd have better PT.

Re: Change my mind: Density increases local but decreases global prices

#89

Post by renewiltord »

jltsiren wrote: post #76
nullc wrote: post #59

Earlier quoted context omitted.

I don't really follow. The idea for roads is that congestion moderates the utility of roads, so over a wide range of capacities roads will remain congested or even become more congested as you add roads, since if you build more you make the roads more useful (reaching more places faster, through better connections or increased capacity) and so people will use them more, potentially resulting in more congestion but al…

Either those numbers are obvious nonsense, or this is yet another way California is dysfunctional. In Finland, a typical 8-story midrise is ~50% more expensive to build (per square meter) than a typical single-family home. Construction costs only start rising significantly after 10-12 stories.

It is an American characteristic. Many more things are possible in this world than are possible in America but to Americans they seem like immutable characteristics rather than the result of choices.

Mostly, it is regulation. Example of something is the two staircase rule for buildings.

Re: Change my mind: Density increases local but decreases global prices

#90

Post by renewiltord »

Tade0 wrote: post #73
pornel wrote: post #47

Earlier quoted context omitted.

Everything causes induced demand. Expansion of bike lanes and public transit also causes induced demand for these, but at least in the end you end up with more efficient transport. The increased efficiency/throughput gives you a better chance of outpacing demand growth. With housing you also have a better chance of outpacing demand growth if you build densely enough. Even that's never enough to meet all the demand, a…

> With housing you also have a better chance of outpacing demand growth if you build densely enough. I feel like one important driver of demand is missing here: investment properties. It's no secret that at one moment AirBnB essentially took over tourist hotspots in the most attractive cities, jacking prices up to ridiculous levels. There's a building in my neighborhood that consists of so-called "microapartments" -…

The logical thing for any locality is then to build one million units and sell them for a million dollars each. Since the supply elasticity of price is zero in this model, the locality can amass a trillion dollars easily.

At this point, armed with the resources of nations, it can do many things - perhaps buy out an entire island nation, perhaps end wars. If the money is insufficient, sell a billion homes, and now you have a quadrillion dollars.

With that kind of money, this locality could simply acquire entire other nations and transform them into papercli- I mean investment properties.

This Von Neumann probe city state will soon encompass the known galaxy.

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