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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

#11

Post by endisneigh »

konschubert wrote: post #6
endisneigh wrote: post #2

Personally I’ve never believed that adding more houses decreases prices. Though that is true in theory, in practice what happens is: 1. Major housing developments are accompanied by more jobs than the units being built could serve. 2. Developments are accompanied by local initiatives to improve the neighborhood that take effect soon after. 3. The quality disparity in a given area results in people far higher than the…

Even if it didn’t slow the price increases - just the fact that building more housing means that more people get to live where they want to live- isn’t that a good thing and enough reason to build? And as you said, the neighbourhood gets improved - isn’t that a good thing? Or are you saying that the solution to the housing crisis is to make cities as inhospitable as possible such that people are forced to live in the…

I am not against building more. I am simply saying that if you look at the data, there is no evidence what so ever that building more decreases the price of housing. What it does is slow the price increases, but the very demand that is driving price increases was generated by the density, that is exacerbated by building more.

We need a better metric. If you have some number to describe the quality of a city, perhaps let's call it fun, then the fun/$ is probably much higher than in a cheap suburb, for sure.

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

#12

Post by endisneigh »

stale2002 wrote: post #9
endisneigh wrote: post #2

Personally I’ve never believed that adding more houses decreases prices. Though that is true in theory, in practice what happens is: 1. Major housing developments are accompanied by more jobs than the units being built could serve. 2. Developments are accompanied by local initiatives to improve the neighborhood that take effect soon after. 3. The quality disparity in a given area results in people far higher than the…

> 1. Major housing developments are accompanied by more jobs than the units being built could serve. Lets take your theory to be true. Even if this is the case, it would still effectively cause housing prices to decrease, relative to the amount of money that people are making. So, if density causes people's income to double, by having all these awesome and cool jobs, but housing prices only go up by 50%, this is stil…

> Even if this is the case, it would still effectively cause housing prices to decrease, relative to the amount of money that people are making.

This isn't true at all, though, empirically. Trivially you can look at the minimum wage in the top 10 most expensive cities vs the bottom 10 and see this.

> So, if density causes people's income to double, by having all these awesome and cool jobs, but housing prices only go up by 50%, this is still a massive win for the residents.

Why exactly would that happen? Ironically denser places result in lower wages, relative to the rent. Your theory is empirically false. This is why people like remote work, so they can better arbitrage.

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

#13

Post by endisneigh »

raybb wrote: post #5
endisneigh wrote: post #2

Personally I’ve never believed that adding more houses decreases prices. Though that is true in theory, in practice what happens is: 1. Major housing developments are accompanied by more jobs than the units being built could serve. 2. Developments are accompanied by local initiatives to improve the neighborhood that take effect soon after. 3. The quality disparity in a given area results in people far higher than the…

How would you take into account Vienna in the denseness and cheapness dimensions?

I'm not familiar with Austria. I'd be shocked if Vienna is cheaper than random parts of Austria, though.

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

#14

Post by s1artibartfast »

endisneigh wrote: post #2

Personally I’ve never believed that adding more houses decreases prices. Though that is true in theory, in practice what happens is: 1. Major housing developments are accompanied by more jobs than the units being built could serve. 2. Developments are accompanied by local initiatives to improve the neighborhood that take effect soon after. 3. The quality disparity in a given area results in people far higher than the…

I agree that housing being big is a primary driver, if not the primary driver of price, along with quality, in most markets.

That said, I think the fundamental claim that adding houses doesn't reduce prices is pretty absurd. You simply have to ask what would happen if we stopped building houses.

Of course density is not the driver of price. Houses in urban center are not more expensive because they are denser. They are more expensive due to proximity to jobs.

Build a high density structure in the middle of the desert and it will be cheap and dense.

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

#15

Post by atdrummond »

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).

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 Oakland. You’ll have to go a one hour drive out of either city. Even then, there’s a good chance you’d end up in a room with shared amenities rather than a full apartment.

And let’s not forget that Tokyo actually has real transit. My first rental there was a luxury 4 bedroom home about 45 minutes from my office by train - I paid $1200 a month. It’d be even less today.

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

#16

Post by endisneigh »

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…

you need to adjust for local income. the apartment you posted would be massively unaffordable for a local tokyo resident with the median wage.

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

#17

Post by cammikebrown »

colinsane wrote: post #10
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).

“Tokyo is cheap” is a new phrase to my ears. i’m more familiar with the meme of people posting 150sqft closets and saying “i wouldn’t live anywhere else, even if the rent was half the $2000/mo i pay now”. truth looks to be somewhere in the middle, but interesting how the polar opposites can exist so close to each other.

The average apartment in Tokyo is small, but under $1,000 USD/month.

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

#18

Post by hnboredhn »

Isn't the obvious arrow here that high prices drives density? The fact that NYC is the densest and most expensive seems to be an obvious story of high prices incentivizing people to build up.

The question is whether or not an old building being replaced by a tower or a single family house will lead to more expensive housing throughout the city. I still am confused as to how density would hurt locally here.

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

#19

Post by atdrummond »

endisneigh wrote: post #16
atdrummond wrote: post #15

Earlier quoted context omitted.

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…

you need to adjust for local income. the apartment you posted would be massively unaffordable for a local tokyo resident with the median wage.

The median resident isn’t buying a place in Shinjuku - see my edited part of the comment. Tokyo’s transit enables cheaper living than is available in the bay.

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

#20

Post by endisneigh »

atdrummond wrote: post #19
endisneigh wrote: post #16

Earlier quoted context omitted.

you need to adjust for local income. the apartment you posted would be massively unaffordable for a local tokyo resident with the median wage.

The median resident isn’t buying a place in Shinjuku - see my edited part of the comment. Tokyo’s transit enables cheaper living than is available in the bay.

The bay isn't remotely reasonable comparison. NYC is much cheaper than Tokyo, adjusted for living quarter size and median wage. I'm not talking about affordances you get by living in certain areas - simply the size of the place and the price, relative to localized income. Tokyo simply is not cheaper, period.

It only seems cheaper because rich Americans keep using their income and comparing it to the adjusted USD:YEN price. The Yen is trash compared to the dollar, so it seems affordable to an American. But it's not America.

I feel like many commenters have not been to Tokyo. Some of the apartments are literally the size of a single bedroom in an average New York City apartment.

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