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Denver rent is back to 2022 prices after 20k new units hit the market

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Re: Denver rent is back to 2022 prices after 20k new units hit the market

#141

Post by toast0 »

JumpCrisscross wrote: post #84
tptacek wrote: post #81

Earlier quoted context omitted.

Induced demand can only function if there's a scarcity to begin with, and it's premised on increased supply increasing affordability (that's the mechanism by which it works), but these axiomatic derivations don't matter because we have case studies (in MN, in TX, and now CO, a story we're literally commenting on). Empirical observations win.

> Induced demand can only function if there's a scarcity to begin with I don't believe this is true, assuming scarcity = shortage. Ad absurdum , if Denver overbuilt such that one could pick up a parcel for a song, you'd see opportunistic demand where there previously was none.

There's places all over where land, and sometimes land with buildings gets very inexpensive because there's not much demand.

Here's a listing for a parcel for $9000, that's been listed for over a year[1]. Denver seems like a nicer place than Detroit, IMHO, but it's possible for there to be more supply than demand.

I suspect at 5% annual growth in units, you would be able to reach the point where there's not enough demand for builders to recover costs. It might take a few years, depending on just how much unmet demand there is.

[1] https://www.redfin.com/MI/Detroit/1752-W-Canfield-St-48208/h...

Re: Denver rent is back to 2022 prices after 20k new units hit the market

#142

Post by JumpCrisscross »

standardUser wrote: post #130
JumpCrisscross wrote: post #118

Earlier quoted context omitted.

> If you buy a house for $400k, and suddenly it is worth $300k, you don't need to be "bailed out" for your purchase decision...we shouldn't be bailing out speeculators When the speculators vote, yes, you need to bail out the speculators. > It's called buyer's remorse It's called building consensus. At the end of the day, if it costs making homeowners whole to gain their buy in to solve the housing crisis, that's mone…

I agree there are political considerations, but we are talking about a scenario where the only damage done is that the buyer must continue to live in the home they purchased at the price they purchased it for, and where the recipient of government benefits is a household capable of purchasing a house, presumably at the height of the market. Is a tax dollar better spent placating grumpy homeowners who already have a p…

> we are talking about a scenario where the only damage done is that the buyer must continue to live in the home they purchased at the price they purchased it for

In non-recourse states, you'd expect to see defaults as people leave the keys in the mail to reduce their housing costs by moving next door at the reduced price or rent. More broadly, people don't like seeing their wealth go down.

> Is a tax dollar better spent placating grumpy homeowners

If it gets you the reform, yes. The point is you don't get housing reform with grumpy homeowners barring a massive shift in voting patterns.

Also, let's keep scope in mind. You only need to bail anyout out if you reduce home prices. If you hold them constant in nominal terms, that shouldn't generate pushback. (If you hold them constant in real terms, people can continue feeling wealthier.)

Re: Denver rent is back to 2022 prices after 20k new units hit the market

#143

Post by AnthonyMouse »

JumpCrisscross wrote: post #89
bearcobra wrote: post #46

It's really encouraging to see these kinds of success stories. I really hope people who are concerned about affordability start to view things from more of a "yes and" point of view. We can work on reducing the barriers to building more housing of any kind while also advocating for more social housing development.

> We can work on reducing the barriers to building more housing of any kind while also advocating for more social housing development One of the NIMBY lobby's greatest wins was putting these options on the ends of a policy spectrum. They're not. They're complementary. If it's cheaper to build, it's cheaper to build social housing. And if you have a vibrant construction sector, you can build more public housing faster…

Probably the best thing you could do in terms of social housing construction would be to have the government put up some capital to buy land and build new housing on that land, then immediately sell it and use the proceeds to do it again and again with exponential growth because it's actually profitable.

But that's also what construction companies would be doing regardless except for the subsidy, at which point you might be better off doing something like exempting construction companies from property taxes for two years if they at least double the number of housing units on their land in that time.

Re: Denver rent is back to 2022 prices after 20k new units hit the market

#144

Post by hnthrow90348765 »

s17n wrote: post #140
seanmcdirmid wrote: post #73

Earlier quoted context omitted.

> It does. Twenty thousand units represent about 5% of Denver's housing stock [1]. Commit to adding this many units to the housing stock every year for the next 10 years and you'll have solved the housing crisis. (You'll probably need to bail out recent homebuyers, who will be permanently underwater, but that's a separate issue.) That is only if you believe that more capacity does not induce more demand, which really…

Are there people who have been avoiding Denver because the rent is too high? I think of Denver as somewhere you go if you're sick of the cost of living on the coast.

You could definitely do better if that's the only criteria.

Re: Denver rent is back to 2022 prices after 20k new units hit the market

#145

Post by caseyohara »

mattmaroon wrote: post #109
seanmcdirmid wrote: post #73

Earlier quoted context omitted.

> It does. Twenty thousand units represent about 5% of Denver's housing stock [1]. Commit to adding this many units to the housing stock every year for the next 10 years and you'll have solved the housing crisis. (You'll probably need to bail out recent homebuyers, who will be permanently underwater, but that's a separate issue.) That is only if you believe that more capacity does not induce more demand, which really…

A 5% increase in supply annually indefinitely would crash the housing market there, induced demand be damned. To put it in perspective, a metro area growing at 2% is killing it, the highest growth rate is Austin at 3%. Denver only grows at less than 1%. Cheaper homes may induce demand, they won't induce a 5% growth rate.

> A 5% increase in supply annually indefinitely would crash the housing market there

Only if population is held constant.

Housing supply is inelastic, but housing demand is somewhat elastic. As seen in Denver, an increase in housing supply would decrease prices. But those lower prices will increase demand from people that want to live in Denver but previously couldn’t afford it.

Re: Denver rent is back to 2022 prices after 20k new units hit the market

#146

Post by unsnap_biceps »

standardUser wrote: post #110
JumpCrisscross wrote: post #54

Earlier quoted context omitted.

> because this doesn’t magically solve the housing crisis It does. Twenty thousand units represent about 5% of Denver's housing stock [1]. Commit to adding this many units to the housing stock every year for the next 10 years and you'll have solved the housing crisis. (You'll probably need to bail out recent homebuyers, who will be permanently underwater, but that's a separate issue.) [1] http://censusreporter.org/pr…

> You'll probably need to bail out recent homebuyers, who will be permanently underwater If you buy a house for $400k, and suddenly it is worth $300k, you don't need to be "bailed out" for your purchase decision. You should have been certain that the house was worth $400k to you at the time of purchase. Otherwise you're a speculator, and we shouldn't be bailing out speculators. It's called buyer's remorse. We accept…

Some loans require PMI if your outstanding balance is larger than the current value. PMI is very expensive and, unlike a TV or car, you might be forced to give up your house because it devalued too far and you can no longer afford mortgage and PMI.

I'm not saying we shouldn't make housing affordable, but it's worth considering the impact for everyone.

Re: Denver rent is back to 2022 prices after 20k new units hit the market

#147

Post by rufus_foreman »

standardUser wrote: post #110
JumpCrisscross wrote: post #54

Earlier quoted context omitted.

> because this doesn’t magically solve the housing crisis It does. Twenty thousand units represent about 5% of Denver's housing stock [1]. Commit to adding this many units to the housing stock every year for the next 10 years and you'll have solved the housing crisis. (You'll probably need to bail out recent homebuyers, who will be permanently underwater, but that's a separate issue.) [1] http://censusreporter.org/pr…

> You'll probably need to bail out recent homebuyers, who will be permanently underwater If you buy a house for $400k, and suddenly it is worth $300k, you don't need to be "bailed out" for your purchase decision. You should have been certain that the house was worth $400k to you at the time of purchase. Otherwise you're a speculator, and we shouldn't be bailing out speculators. It's called buyer's remorse. We accept…

Whether a house is worth $400k or $300k is, sometimes, a choice the government makes.

It isn't always, but sometimes it is. Through regulations, through monetary policy, through other policies.

Now if the government decides that you, you personally, standardUser, are going to lose $100k, I don't think the government should bail you out. It's called "moral hazard". You lost $100k. Deal with it.

If the government decides that I, me personally, am going to lost $100k, I would say that I am old and I vote in every single election, and despite my failing memory, I will remember that lost $100k until the day I die and no politician who voted for that will ever get my vote again. I will remember who did that to me.

Re: Denver rent is back to 2022 prices after 20k new units hit the market

#148

Post by petsfed »

standardUser wrote: post #130
JumpCrisscross wrote: post #118

Earlier quoted context omitted.

> If you buy a house for $400k, and suddenly it is worth $300k, you don't need to be "bailed out" for your purchase decision...we shouldn't be bailing out speeculators When the speculators vote, yes, you need to bail out the speculators. > It's called buyer's remorse It's called building consensus. At the end of the day, if it costs making homeowners whole to gain their buy in to solve the housing crisis, that's mone…

I agree there are political considerations, but we are talking about a scenario where the only damage done is that the buyer must continue to live in the home they purchased at the price they purchased it for, and where the recipient of government benefits is a household capable of purchasing a house, presumably at the height of the market. Is a tax dollar better spent placating grumpy homeowners who already have a p…

The scenario to address is people who are forced to move (via e.g. layoffs, company relocations, industry collapse, etc) who are also suddenly saddled with a mortgage far higher than they can realistically payback while still moving on to whatever opportunity necessitated the move in the first place.

The first order consequence of treating housing as an investment vehicle is high prices, sure, but the second order consequence is that you dramatically increase the stakes when individual people buy any house whatsoever.

I would much rather give checks to every homeowner whose home value falls than to force even a single laid-off autoworker or whatever into bankruptcy (good luck buying a home after that) if they elect to move somewhere else for a new job and can't sell their house for enough to pay off their mortgage. If the consequence of a government policy to build more housing is that more people become homeless, then its failing.

Re: Denver rent is back to 2022 prices after 20k new units hit the market

#149

Post by dingnuts »

ozgrakkurt wrote: post #121
standardUser wrote: post #110

Earlier quoted context omitted.

> You'll probably need to bail out recent homebuyers, who will be permanently underwater If you buy a house for $400k, and suddenly it is worth $300k, you don't need to be "bailed out" for your purchase decision. You should have been certain that the house was worth $400k to you at the time of purchase. Otherwise you're a speculator, and we shouldn't be bailing out speculators. It's called buyer's remorse. We accept…

Yeah, pretty sure a government won’t bail me out if I invested in a stock so much that it would crush me if the stock went down. If buying a house is an investment and not for living, then it should be treated like it is.

people call buying a house to live in an investment but that's because they don't know the technical term is a "hedge"

so you know: most localities do treat the house you live in very differently from a tax perspective than they do any additional properties you might have, because everyone is born short housing, until they own 1 place to live.

so yes, the proposed bailouts up thread would be for people who bought a house because they didn't want to be short housing; a hedge, not an investment.

also if the house has hedges then your hedges are a hedge. I'll see myself out

Re: Denver rent is back to 2022 prices after 20k new units hit the market

#150

Post by tptacek »

Marsymars wrote: post #134
tptacek wrote: post #66

Earlier quoted context omitted.

Until you reach transient shelter beds, which may not be saturated in a region (in some places in Chicagoland the work is going into outreach to get people off the street and into shelter beds as much as it is in expanding the number of beds), every additional unit of housing you build frees up some unit at or below that unit on the stack of housing. The effect percolates all the way down to long-term supportive hous…

> every additional unit of housing you build frees up some unit at or below that unit on the stack of housing. The effect percolates all the way down to long-term supportive housing rooms. This makes intuitive sense to me, but I've really struggled to explain it in a way that makes it click for people.

Just ask: whoever moves into the new place, where did they live before? Does their previous apartment vanish into the ether?

This is an aside to your thing here, but I don't think any of us can do better than the HN commenter on the other housing thread today who said (paraphrasing) that this concern about building market-rate housing is like expressing concern that nobody builds used cars.

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