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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

#581

Post by unethical_ban »

pinkmuffinere wrote: post #376
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?

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.

Some would say that housing is a right (while acknowledging the need for housing construction and its workers and supplies to be paid for) and that it should be funded somehow, even if the free marker profit becomes negative during certain periods. Like any market manipulation, the question then would be how to intervene to keep housing construction going when construction isn't profitable, while not fomenting corruption in the industry.

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

#582

Post by ginko »

bobthepanda wrote: post #403
wolfi1 wrote: post #398

Earlier quoted context omitted.

Vienna built housing itself, with this housing it was possible to have cheap rents and keep rents from private investors down. https://en.wikipedia.org/wiki/Housing_in_Vienna

It’s worth noting that a major confounding factor is that, unlike most cities with a housing crisis, Vienna is well below its population peak and so does not need to build nearly as much housing

During that peak Vienna’s housing situation was infamously bad though. You’d have single rooms shared by multiple families and beds being used by multiple people on a timetable.

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

#583

Post by kxrm »

komali2 wrote: post #262
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?

Maybe other real estate savvy people can help me understand this plus two other things I'm confused about in the housing crisis: 1. Houses are unaffordable for many Americans. To get houses to prices where they'd be affordable again would require a housing prices drop that would likely be, market-wide, significantly low enough to put a ton of people underwater on their mortgages. What is society/the government meant…

I'd also rethink these questions under the assumption that incomes rise over time as the dollar reduces in purchasing power. The original premise was that due to inflation the cost you paid for a home would reduce your economic burden for housing. The slow and steady rise of inflation along with income would guarantee your loan to income ratio would improve.

The last few years have distorted this promise and I think some people have taken a more extreme view of the time window in the name of increased short-term profits.

All said the price you pay today being less of a burden over time was never meant to be a short-term profit motive in the discussion of homes as a economic safe haven.

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

#584

Post by btilly »

baq wrote: post #572
sophrosyne42 wrote: post #549

Earlier quoted context omitted.

There is more than enough land for everyone, and rich people aren't really competing for the kind of housing that poor people are competing for, e.g. smaller plots with smaller homes. The demand of the rich does not eliminate demand of the poor, so the market produces different kinds of housing for different clientele. Think about it this way: assume you supply all the housing to all the rich people. Then there still…

But zoning is required to maintain order. Nobody wants anybody to live in favelas. As with everything the regulator needs to strike a balance to make the market work.

Given the choice between being homeless and living in favelas, millions in Brazil have chosen to live in favelas.

The reality of zoning laws in Western countries is to provide a target for regulatory capture by the NIMBY crowd. With the result that we're systemically underbuilding housing, then wonder why we wound up with homelessness.

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

#585

Post by michaelmrose »

sophrosyne42 wrote: post #549
michaelmrose wrote: post #532

Earlier quoted context omitted.

If a minority has most of the wealth then the equilibrium supply may include a lot of supply of second homes, very large homes on large plots for the rich, properties sold at a premium based on how much they can extract from renters, and even investment properties occupied by nobody whilst still having insufficient small basic homes and dense housing. Capital that could be invested in better serving the bottom half h…

There is more than enough land for everyone, and rich people aren't really competing for the kind of housing that poor people are competing for, e.g. smaller plots with smaller homes. The demand of the rich does not eliminate demand of the poor, so the market produces different kinds of housing for different clientele. Think about it this way: assume you supply all the housing to all the rich people. Then there still…

Rich and poor alike are competing for scarce land near where people actually live and work.

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

#586

Post by zozbot234 »

roenxi wrote: post #575
michaelmrose wrote: post #532

Earlier quoted context omitted.

If a minority has most of the wealth then the equilibrium supply may include a lot of supply of second homes, very large homes on large plots for the rich, properties sold at a premium based on how much they can extract from renters, and even investment properties occupied by nobody whilst still having insufficient small basic homes and dense housing. Capital that could be invested in better serving the bottom half h…

There's a couple of "ifs" there and the scenario seems implausible. If I look at the prime real estate in a city it tends to be a lot of skyscrapers rather than very large homes (with occasional exceptions like say a Buckingham Palace). But it looks like the economic equilibrium is lots of cheaper apartments rather than large homes for rich people. > ... and even investment properties occupied by nobody ... Not much…

People don't want to rent those homes out because once you're doing so it's difficult to evict a long-term tenant. You just lose out a lot on flexibility - even if you try and manage that risk by leasing out housing e.g. on a yearly basis, landlord-tenant law often overrides that since there are strong ethical reasons for not evicting someone who has since come to treat that rental space as their home.

Short term rentals are better on that score: no one sensible forms a long-term expectation that they're going to live in an Airbnb that they've rented for a few days. (If you think short-term rentals are "bad" for the long-term market or have negative side-effects on the neighborhood, then tax them to manage that tradeoff. But banning them altogether is unconscionable and just leads to houses sitting empty and unused.)

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

#587

Post by jjav »

tirant wrote: post #467
idiotsecant wrote: post #406

Earlier quoted context omitted.

What do you do when that equilibrium point is hopelessly above what the average person can afford?

That means there’s an invisible hand keeping prices up, or basically that the market is not free enough. That’s caused most of the time due to excessive regulation. Another reason is high demand in locations where offer is limited due to physical limitations. There’s always demand to live in Broadway, and offer can never catch up due to its physical limitations.

> That means there’s an invisible hand keeping prices up

Construction labor is quite expensive and so are the raw materials (and going up). Means there is a hard lower bound on cost and unfortunately it's not that cheap even if they built at zero profit (which nobody will).

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

#588

Post by kevin061 »

pclowes wrote: post #176

Its wild how the solution to housing costs is really just: Build more housing. Keep law and order. No it doesn’t need to be “affordable”. Yes rent control is a terrible idea. Just build more housing. Note: that the US already has plenty of housing and housing costs basically go up in areas of low crime relative to economic opportunity. If you build housing, but allow crime to rise, you have wasted everybody’s time.

No, it really is not that easy. Check out China, and read up on the Spanish housing crisis. "Just build more" works only sometimes, as demonstrated in those counter-examples. Housing is massive societal and sociological problem with no simple fix. Furthermore, in many circles, another proposal is to cut red tape. You know, housing in the US already is among the least affordable and lowest quality in the developed world. But some people really insist that going back to asbestos and lead pipes would make housing cheaper.

And don't get me wrong, asbestos and lead are wonderful construction materials. Cheap, durable, and high quality. It's just a shame it causes all sorts of health complications when we use them, right? I mean, it would definitely make housing cheaper, but also cause all kinds of health problems.

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

#589

Post by kakacik »

unethical_ban wrote: post #581
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.

Some would say that housing is a right (while acknowledging the need for housing construction and its workers and supplies to be paid for) and that it should be funded somehow, even if the free marker profit becomes negative during certain periods. Like any market manipulation, the question then would be how to intervene to keep housing construction going when construction isn't profitable, while not fomenting corrup…

... but your own housing isn't any form of basic human right, its a luxury all around the world and always has been. Now I completely understand folks who come out of uni and see the salaries (sans faangs and generally devs and few other lucky positions), the prices and the emotions of missing out come easily.

But it isn't a right, just because you would like it. Same as I don't have a right to a car at price I would like, just because I live, by my choice, in rural environment close to nature. I desperately need one though for work commute, shopping, taking kids to school etc so thats as non-optional as accommodation to existence of my family. I can either suck up car's actual prices, move whole family so I don't need it or do similar choices in life to tackle that.

But car ain't a right. Same as your own accommodation, of course not a modest small apartment but a house, ideally close to work, amenities, schools, and costing peanuts. Literally what everyone else wants. Or am I incorrect in your expectations? Because if yes, its easy to accept cheap remote small old properties, those aren't expensive for above-average earners at all, anywhere.

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

#590

Post by pydry »

davidw wrote: post #411
wolfi1 wrote: post #398

Earlier quoted context omitted.

Vienna built housing itself, with this housing it was possible to have cheap rents and keep rents from private investors down. https://en.wikipedia.org/wiki/Housing_in_Vienna

Unless you want to build more sprawl-oriented social housing, you'd still need, in most American cities, to reform zoning codes and building codes (single stair and elevator reform) to get Vienna style social housing. It's a "yes, and" problem though, mostly. Let the market build what it can, and if you want to pursue social housing, do that too - just don't let the perfect be the enemy of the good and delay the refo…

No, you need a government agency which will build social housing.

Not once has the private sector ever been "encouraged" to build social housing with deregulation. The only reason it keeps getting touted as The Solution in the media is because deregulation would boost their profits.

The bottleneck is land, anyway. If you dont tax that enough or take it with eminent domain then you'll end up like San Francisco with absurdly low density housing and criminally high rents.

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