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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

#331

Post by slg »

pclowes wrote: post #289
slg wrote: post #217

Earlier quoted context omitted.

This comment is phrased as if the article is confirming these points when it either doesn't mention them or even directly refutes them. First there is no mention of either crime or rent control in the article. But more importantly, it states that "A key piece of Austin’s strategy has been to encourage the construction of affordable housing." So why are you concluding that affordable housing isn't needed?

In this case affordable housing nets out as a way to overcome policy barriers to market rate housing. So it actually makes the market freer. Many other implementations of affordable housing further raise the barrier and thus even if any is built it doesn’t help widespread housing affordability issues. Rent control is just another flavor of housing affordability policy that often (always?) backfires. Crime, social pea…

>In this case affordable housing nets out as a way to overcome policy barriers to market rate housing. So it actually makes the market freer.

>Many other implementations of affordable housing further raise the barrier and thus even if any is built it doesn’t help widespread housing affordability issues.

Can you be specific with what you mean here? Because this reads like a no true Scotsman argument that it doesn't count as "affordable housing" if it works. The article discusses the programs encouraging income-restricted units which seems like a classic affordable housing program. What specifically do you think is different in this case?

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

#332

Post by triceratops »

mmooss wrote: post #325
triceratops wrote: post #302

Earlier quoted context omitted.

Unless all of the housing is owned by non-residents prior to gentrification, some residents always benefit from their neighborhood going upscale. Either through increased home values, allowing them to sell and improve their lives. Or because it's now a more pleasant area to live in. Even renters in gentrifying areas may profit if housing construction outpaces population growth. Yes, they may have to move, but also th…

> increased home values, allowing them to sell and improve their lives That also raises property taxes, making the neighborhood unaffordable and driving them out. > it's now a more pleasant area to live in. For new wealthy residents. People who have spent lifetimes there don't want everything to change and have their communities destroyed. > Yes, they may have to move, but also the places they move to on their curren…

The alternative: new housing doesn't get built. Existing housing - including the "bad" neighborhood that isn't redeveloped for fear of "gentrification" - gets bid up to the moon. People who can't afford rent end up moving anyway and commuting from very far away, if they're lucky. Or they end up on the streets, if they aren't so lucky.

That isn't theoretical. I just described the SF Bay Area.

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

#333

Post by adrianN »

estearum wrote: post #221
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.

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.

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

#334

Post by narrator »

mcmcmc wrote: post #301
narrator wrote: post #170

Earlier quoted context omitted.

[flagged]

Ah yes, an ad hominem is an excellent way to deflect from reality. Thanks for your thoughtful reply.

Performative ignorance is when you dispute something supported by tons of empirical evidence with a few anecdotes and whatever you just made up and expect me to spend time refuting it. It's the same technique flat earthers and young earth creationists use.

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

#335

Post by slg »

cuuupid wrote: post #323
slg wrote: post #306

Earlier quoted context omitted.

I'm not going to debate what the definitions should be, I'll just say I don't think it is productive to join an existing conversation using terms with different definitions than everyone else uses. Defining all housing as inherently "affordable" makes the term meaningless and even if you disagree with the motivations behind the desire for "affordable housing", at least the term has meaning in the way it's typically u…

You are quite literally debating what the definition should be, because this is _not_ the existing definition of affordable housing, it is legally what OP is saying. "Affordable housing" is just when the household spends What >you In recent years, most 'affordable housing' policy has been advanced by progressives, who use that term for marketing purposes, whereas the actual policy primarily relates to 'low income hou…

Those definitions aren't in conflict. The "progressive" definition is just the applied version of the "HUD" definition scaled to local income levels.

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

#336

Post by triceratops »

tharmas wrote: post #321
triceratops wrote: post #248

Earlier quoted context omitted.

No not really. You just have to restrict the same investor from buying all the housing in an area, and prevent investors from colluding on rents.

Investors add to demand for housing. This will help drive up prices. And no, builders will not necessarily increase supply if they can realise increased margin of profit due to increased demand. We see that with RAM manufacturers. RAM suppliers constrain supply to boost margins. Same with house builders. The difference is people can go without RAM but everyone needs a place to live.

> Investors add to demand for housing

And here I thought people who want to live in houses add to demand for housing.

Investors buy houses that people want to live in. If people don't want to live someplace, you won't see any investors there either.

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

#337

Post by sgc »

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 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'.

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

#338

Post by nsnzjznzbx »

terminalshort wrote: post #224
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?

Because home builders don't make money by buying and selling houses, they make money by building them and selling them.

But building cost > sale value is possible.

Or land ends up better value left as suburban house than developing up.

Or they build where sale cost - build cost is maximized. I.e. different city.

Governments need to build more housing. Make it bland so snobs can price discrimnate themselves to buy builders' homes. Why thrifts by the government home for value for money (and quality).

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

#339

Post by cuuupid »

estearum wrote: post #266
cuuupid wrote: post #261

Earlier quoted context omitted.

It's not necessarily prices falling here but the profitability of [demand] at [price]. Like if prices fall 10% but demand rises 20%, you would want to build more housing. This is the beauty of the free market because it guarantees three things: [1] Real estate is generally a good investment and will hold value or appreciate in the long term, because supply will adjust to demand shocks to rescue values [2] If people w…

> Like if prices fall 10% but demand rises 20% Not as a developer you wouldn't... You already have razor thin margins. Prices going down 10% means you cannot get financing for your project. Holding real estate is generally a good investment. Developing real estate actually is not. > Real estate developers and construction are solid, safe businesses with great unit economics No they are not lol

If you live in a magical fairy world where supply and demand are fixed, sure. In the real world, prices going down 10% leads to a surge in demand, and so you can fill more of your units. This leads to either equal or increased revenue, for the same construction (flat cost), which actually yields higher margins. This is why developers are usually concerned with occupancy rates, and prices are more a concern for homeowners.

There are only really 3 scenarios where prices are low and demand is low:

[1] There is a dramatic surplus of supply, in which case if a developer is trying to build they've not done research and probably should not get financing

[2] There is some other factor (usually high crime) in which case again, developer should do their research, and the market is operating fine

[3] You are developing super early and operating within incentives offered by the city, usually tax abatements, which drive down the carrying cost and make it a better investment.

Also important to note that in scenario [3] a smart developer will slowly release inventory to restrict supply to meet demand, and as demand grows, release more inventory at the newly raised price, continuing to do so as long as the tax abatements advantage the strategy. This is common in successfully developed areas e.g. Jersey City, and is fine as long as broad scale collusion doesn't occur

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

#340

Post by karakoram »

The solution to ALL cost of housing problems globally is this.

Everywhere you look, Australia, Canada, UK, EU this is just a massive issue for young professionals with long-term disastrous downstream political consequences, and yet, the solution is so simple but hardly ever implemented in these countries.

Just BUILD MORE HOUSING. Mass build everywhere. Vast amounts of land is available. Just build homes and apartments everywhere!

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