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Has LA cracked the code for building affordable housing?

benjaminschneider.substack.com

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Re: Has LA cracked the code for building affordable housing?

#181

Post by [deleted] »

rcxdude wrote: post #175
imgabe wrote: post #166

Earlier quoted context omitted.

The value is in the land, not the house. If you own a plot of land with a single family house on it, and suddenly someone is able to build an apartment building on that piece of land, it will actually become much more valuable because an apartment building generates much more revenue than a SFH. They could easily sell the land to a developer and retire somewhere else.

It's not obvious that would stay fixed: depending on the dynamics of the market, it could go up, it cold go down (The demand is for housing, not land. If you manage to increase supply for housing sufficiently by increasing density, then the value is the land could go down even if you could build many more homes on it than before). I agree it's not certain that it would go down, however.

[deleted]

Re: Has LA cracked the code for building affordable housing?

#182

Post by beaeglebeached »

rcxdude wrote: post #175
imgabe wrote: post #166

Earlier quoted context omitted.

The value is in the land, not the house. If you own a plot of land with a single family house on it, and suddenly someone is able to build an apartment building on that piece of land, it will actually become much more valuable because an apartment building generates much more revenue than a SFH. They could easily sell the land to a developer and retire somewhere else.

It's not obvious that would stay fixed: depending on the dynamics of the market, it could go up, it cold go down (The demand is for housing, not land. If you manage to increase supply for housing sufficiently by increasing density, then the value is the land could go down even if you could build many more homes on it than before). I agree it's not certain that it would go down, however.

It becomes obvious as housing density approaches infinity. Why would anyone buy your land for housing if they need one tiny spec to house a billion? This is simple supply and demand, high density housing lowers land value, as price isn't determined primarily by potential utility .

Re: Has LA cracked the code for building affordable housing?

#183

Post by beaeglebeached »

imgabe wrote: post #166
beaeglebeached wrote: post #145

Earlier quoted context omitted.

Imagine you spend half your working class life saving for an absolute shit hole for half a million, knowing it's an NFT that no one can build more of. Then permitting laws are liberalized and suddenly your NFT is worth no more than the labor and material cost to physically build the house, minus depreciation. It's difficult because losing that NFT means they are fucked in retirement. Oh well for them, stupid them for…

The value is in the land, not the house. If you own a plot of land with a single family house on it, and suddenly someone is able to build an apartment building on that piece of land, it will actually become much more valuable because an apartment building generates much more revenue than a SFH. They could easily sell the land to a developer and retire somewhere else.

Why on earth would apartment builder buy my land specifically for housing when they can dump a mega apartment complex anywhere? This is simple supply and demand.

As density limits rise, housing land demand lowers. In the extreme of infinite density, demand goes to zero, as everyone can fit in a pinpoint and we don't need other land for housing. We get the opposite as your prediction as everyone lowers prices hoping to undercut to get the single pinpoint bid.

Re: Has LA cracked the code for building affordable housing?

#184

Post by cyberax »

Aloisius wrote: post #128
cyberax wrote: post #90

Earlier quoted context omitted.

"Supply skepticism" is a good overview: https://furmancenter.org/research/publication/supply-skeptic... And it's written from the viewpoint of pro-density. Read the linked papers there, the best results of density increases are either extremely indirect ("migration chains") or insignificant (no sale price decreases, and single-digit percentage one-time decreases in rent). I'm writing an analysis of all densifications…

Greenaway-McGrevy (2023) showed an increased supply of housing in Auckland reduced rents in 3-bedroom homes by 26-33% below a control. Mense (2023) showed a 1% yearly increase in housing supply in Germany results in an average local municipality rent to fall by 0.2%. Asquith et al. (2023) found in NYC, the average new building lowers nearby rents within 250 meters of the new building by 5% to 7% relative to the trend…

> Greenaway-McGrevy (2023) showed an increased supply of housing in Auckland reduced rents in 3-bedroom homes by 26-33% below a control.

I have not read this one yet. Sounds suspicious, though.

The rest are basically what I told: one-time single-digit percentage decreases in rents. This one is also funny:

> Asquith et al. (2023) found in NYC, the average new building lowers nearby rents within 250 meters of the new building by 5% to 7% relative to the trend rent growth otherwise would have followed.

Rents still _increased_, but slightly slower.

Re: Has LA cracked the code for building affordable housing?

#185

Post by cyberax »

laurencerowe wrote: post #131
cyberax wrote: post #93

Earlier quoted context omitted.

> And you’re entitled to not want to live in a dense urban environment, but you might need to open your mind to the idea that not everyone feels the way you do. You're entitled to move away from a toxic river that catches fire. But you might need to open your mind to the idea that not everyone feels the way you do. Perhaps some people like to work at the factory that produces the toxic slime. Urban density is polluti…

> Urban density is pollution. Its effects are not limited to cities. This is simply not the case. People living in dense walkable urban areas produce far less pollution than those living in the suburbs who need to drive much more and require far more infrastructure per household. https://www.brookings.edu/articles/its-not-just-cities-subur...

Nah. It's just a propaganda piece.

Switching from gas cars to EVs and downsizing from barn-sized SUVs to medium-sized cars will solve the emissions issues.

Moreover, extrapolating the self-driving vehicles trend a bit, mild automated car-pooling will completely negate emissions advantage of EVERY other intracity public transit method.

Re: Has LA cracked the code for building affordable housing?

#186

Post by cyberax »

tekla wrote: post #147
cyberax wrote: post #110

Earlier quoted context omitted.

> That's 646 square feet. That's 25'5"x25'5". For an urban area, that's plenty of space. It's not. And this is the total space, including the bathroom and the kitchen. > That doesn't mean literally every apartment is that small You are right, some are even smaller: https://www.nytimes.com/2022/10/03/business/tiny-apartments-... And all while just a hundred miles away, beautiful historical houses can be bought for lit…

What is this opulence? 646 SqFt is plenty.

Next generation: who the fuck needs their own _room_? A bunk bed is enough!

Re: Has LA cracked the code for building affordable housing?

#187

Post by cyberax »

presentation wrote: post #157
cyberax wrote: post #110

Earlier quoted context omitted.

> That's 646 square feet. That's 25'5"x25'5". For an urban area, that's plenty of space. It's not. And this is the total space, including the bathroom and the kitchen. > That doesn't mean literally every apartment is that small You are right, some are even smaller: https://www.nytimes.com/2022/10/03/business/tiny-apartments-... And all while just a hundred miles away, beautiful historical houses can be bought for lit…

30 million people in the Tokyo area would like to disagree with you, myself included. Why do you think those beautiful historical houses are laying there empty?

Because people are forced to move closer to urban centers by economic forces. Nobody seriously tried to incentivize job creation outside of Downtowns.

Re: Has LA cracked the code for building affordable housing?

#188

Post by cyberax »

Sabinus wrote: post #121
cyberax wrote: post #93

Earlier quoted context omitted.

> And you’re entitled to not want to live in a dense urban environment, but you might need to open your mind to the idea that not everyone feels the way you do. You're entitled to move away from a toxic river that catches fire. But you might need to open your mind to the idea that not everyone feels the way you do. Perhaps some people like to work at the factory that produces the toxic slime. Urban density is polluti…

Do you think there are economic efficiencies in gathering a large workforce in one location? Do you think suburbia is an efficient and effective use of land?

> Do you think there are economic efficiencies in gathering a large workforce in one location?

Oh, absolutely. It's more efficient for companies to hire workforce in dense cities and offload the externalities (increasing cost of living) onto the public.

Just like with pollution: if you dump toxic sludge into rivers, your factory can make widgets cheaper, than a factory that has to take care of its waste.

> Do you think suburbia is an efficient and effective use of land?

I don't think _efficiency_ should be the reason for cities. A polluting factory is also more efficient than a clean factory. Yet we somehow don't appreciate that efficiency anymore.

Moreover, the amount of urban areas is around 2% of the total land area in the US. De-aggregating the cities will only result in its increase by maybe 20%.

Re: Has LA cracked the code for building affordable housing?

#189

Post by presentation »

cyberax wrote: post #187
presentation wrote: post #157

Earlier quoted context omitted.

30 million people in the Tokyo area would like to disagree with you, myself included. Why do you think those beautiful historical houses are laying there empty?

Because people are forced to move closer to urban centers by economic forces. Nobody seriously tried to incentivize job creation outside of Downtowns.

I can tell you for a fact that I did not move to Tokyo because I was forced to by economic forces, I chose to move there out of my own accord despite being fully location independent. Just because you hate cities doesn’t mean everyone else does.

Re: Has LA cracked the code for building affordable housing?

#190

Post by cyberax »

Aloisius wrote: post #128
cyberax wrote: post #90

Earlier quoted context omitted.

"Supply skepticism" is a good overview: https://furmancenter.org/research/publication/supply-skeptic... And it's written from the viewpoint of pro-density. Read the linked papers there, the best results of density increases are either extremely indirect ("migration chains") or insignificant (no sale price decreases, and single-digit percentage one-time decreases in rent). I'm writing an analysis of all densifications…

Greenaway-McGrevy (2023) showed an increased supply of housing in Auckland reduced rents in 3-bedroom homes by 26-33% below a control. Mense (2023) showed a 1% yearly increase in housing supply in Germany results in an average local municipality rent to fall by 0.2%. Asquith et al. (2023) found in NYC, the average new building lowers nearby rents within 250 meters of the new building by 5% to 7% relative to the trend…

> Greenaway-McGrevy (2023) showed an increased supply of housing in Auckland reduced rents in 3-bedroom homes by 26-33% below a control.

Read it. Oh wow. That's a fucking propaganda piece with shoddy statistics.

They basically found a statistical anomaly in the data, with the one- and two- bedroom apartments rents showing no significant difference from the historical trend. And to exaggerate the trend, they used an overfitted exponential model.

And in both cases, there were NO price decreases. Rents continued to grow, outpacing the inflation.

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