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Austin’s surge of new housing construction drove down rents

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Re: Austin’s surge of new housing construction drove down rents

#451

Post by rayiner »

adrianN wrote: post #333
estearum wrote: post #221

Earlier quoted context omitted.

New construction has already decelerated in Austin due to falling prices, which compresses already-near-zero margin on real estate development. So yes, it really is "just build more housing." The problem is: why would you build more housing as prices fall?

There is the possibility that the government builds housing, since the government doesn't have to care about direct profits and can include the overall economic effects of affordable housing in its calculations. We don't expect much direct profits from roads either, but we keep building more and more of them.

That only makes sense if there is a positive externality from housing. Is there?

Re: Austin’s surge of new housing construction drove down rents

#452

Post by vasco »

neom wrote: post #392
vasco wrote: post #371

Earlier quoted context omitted.

Do you have example of another area the government has higher profit margins than private industry? I can't. And if I was going to think a government would build housing, it would be in places that are cheap and I could mass house a bunch of people, not in hip expensive cities which is what people want when they talk about this. But surely soviet style huge blocks of tiny t0 apartments all stuck together is a dream..…

https://en.wikipedia.org/wiki/Government_Pension_Fund_of_Nor...

This is a government literally putting their money in private companies instead of using it themselves (for idk schools or infrastructure for their people instead of giving it to nvidia and tesla). It's the most literal illustration of "private" beats "public" investment. Not sure what point you tried to make.

Re: Austin’s surge of new housing construction drove down rents

#453

Post by pinkmuffinere »

throwaway27448 wrote: post #437
pinkmuffinere wrote: post #376

Earlier quoted context omitted.

I'm confused by this objection, if you draw a stereotypical supply and demand curve, you can see how prices settle to an equilibrium point. Of course reality has more complications, but I think your objection is 95% answered by a supply and demand curve. You keep building houses when it is profitable. You stop when it is not. This naturally keeps everything in balance.

Sure, so long as the balance involves not housing people which is pretty sick and twisted

I never claimed the balance will occur at a point that I like. This is just math, it’s not a political stance. If you want more homes, go build homes.

Re: Austin’s surge of new housing construction drove down rents

#454

Post by ghufran_syed »

eigen wrote: post #355
bpt3 wrote: post #279

Earlier quoted context omitted.

Can you define razor thin? Grocery stores have very small margins, as little as 1%. Homebuilders make at least an order of magnitude more on a very expensive item.

> Grocery stores have very small margins, as little as 1%. Looking at the Kroger 2024 Annual report shows that they have 22.3% gross margin . they pay dividends, had a stock buy back, etc so its entirely possible that they had a very low margin but gross margin seems to be similar to a home builder. Sales $ 147,123 Merchandise costs $113,720 Rent, Depreciation, Amortization $655 Gross profit $32,748 for a gross margi…

The net margin of around 1.5% seems more relevant: the gross margin is just the revenue minus the cost of good sold plus cost of transportation. The net margin is the money you have left after paying things like Rent, employee wages, electricity, taxes, interest on debt.

Re: Austin’s surge of new housing construction drove down rents

#455

Post by hunterpayne »

idiotsecant wrote: post #415
sgc wrote: post #337

Earlier quoted context omitted.

That is a good idea that requires careful attention to make sure it has near-perfect execution. Because we do that, and they are called 'the projects'.

There are multiple city and state housing facilities in my area that are perfectly fine. They are not huge or luxurious but they're safe, clean, and well maintained. When the options ar homelessness or subsidized housing, subsidized housing is absolutely the best option, which is backed up by decades of data.

"When the options ar homelessness or subsidized housing, subsidized housing is absolutely the best option, which is backed up by decades of data."

Not quite. That's only true if you are housing people who ended up homeless due to bankruptcy or similar reasons (lost jobs, medical issues, etc). If you have people who are homeless due to sever addiction, you just end up with more OD deaths. You have similar issues with people with sever mental illness.

The homeless are not a monolith and different parts of the population need different solution unless you really really don't give a f*ck about them.

Re: Austin’s surge of new housing construction drove down rents

#456

Post by nielsbot »

Relevant: I just listened to an interview with Max Buchholz, US Berkeley assistant professor and the lead author of a new working paper titled "Inequality, Not Regulation, Drives America's Housing Affordability Crisis."

He says that building housing does bring prices down, but not very much. In his paper they argue that income inequality is a big driver of making housing unaffordable. (Not billionaires, but more those making more than the median income vs the rest) Because (among other reasons) those with higher income have leeway to spend more on housing versus those at the lower end of the income scale who can’t spend more on housing even if they get a raise.

https://www.youtube.com/live/ai76174930Q?si=R-FYO86COepRADhE...

Re: Austin’s surge of new housing construction drove down rents

#457

Post by culopatin »

bluegatty wrote: post #431
hahahacorn wrote: post #386

Earlier quoted context omitted.

It would be far more efficient to simply tax away all rent collected from land instead of grossly warping markets and creating terrible incentives for all involved. The reason is that you can’t produce more land. Fixed supply will also warp economic markets and create terrible incentives (land speculation). If you want the best solution, you implement a land value tax. If you want the 2nd best solution, tax property…

Rent control is not 'warping markets' - it's the notion that 'homes are markets' that is 'warped' - that's the basis of the problem. The workaround is to build more dwellings, and rc generally is not an inhibitor there. Funny enough 'wealth taxes' may actually be the worst of tax of all - aka a double negative - like a double negative. What we want to do is make it so that 'rich people get rich' not from rent-seeking…

Who builds them? Private party. What’s their incentive? Making money.

Re: Austin’s surge of new housing construction drove down rents

#458

Post by RuslanL »

throwaway27448 wrote: post #436
estearum wrote: post #221

Earlier quoted context omitted.

New construction has already decelerated in Austin due to falling prices, which compresses already-near-zero margin on real estate development. So yes, it really is "just build more housing." The problem is: why would you build more housing as prices fall?

Why let private developers build at all? The market provides perverse incentive to not house everyone.

To create artificial scarcity on a free market, it should be either a direct monopoly, or a giant cartel that includes every single developer and has mechanisms of punishing the outliers.

Re: Austin’s surge of new housing construction drove down rents

#459

Post by AngryData »

steve-atx-7600 wrote: post #204
AngryData wrote: post #199

Earlier quoted context omitted.

People move to where there is jobs and money. You can't build the housing first, in our society you need capitalists to invest into building businesses to make people want to move there. And because we have spent decades killing small business in favor of corporations, you need corporations to decide to build where there are no people and they have to pay a small short term premium to attract workers. Except corporat…

You could build all the housing first in China until recently…

China was dumping money into those cities for people to build businesses and paying people to move there though, it wasn't just the housing. So yes I agree it can work if you go beyond that, but not through applying capitalist principles first and foremost. If you tried to pay people to live in a specific city and pay them again to build a small local business in the US, people would go bonkers about communism and 99% of politicians and capitalist investors would spend every waking moment trying to stop it.

Re: Austin’s surge of new housing construction drove down rents

#460

Post by Straw »

nielsbot wrote: post #456

Relevant: I just listened to an interview with Max Buchholz, US Berkeley assistant professor and the lead author of a new working paper titled "Inequality, Not Regulation, Drives America's Housing Affordability Crisis." He says that building housing does bring prices down, but not very much. In his paper they argue that income inequality is a big driver of making housing unaffordable. (Not billionaires, but more thos…

This is nonsense. In every material good, the buying power of nearly everyone has increased in real terms over time, regardless of inequality. It's only in housing, with constrained supply, that inequality can drive up prices; and even in that case, it doesn't actually change the housing supply- if prices are high, that just means a lot of people who want to live there! Inequality doesn't reduce the number of houses.

Building a little reduces prices a little. Building a lot reduces prices a lot. If the prices are very high, then it's very profitable to build, so unless stopped by regulation, you will get a lot of building. Even if building merely keeps the price from going up as density increases, the value provided by living in an area goes up from agglomeration effects as it grows.

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