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Paying for Dirt: Where Have Home Values Detached from Construction Costs?

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Re: Paying for Dirt: Where Have Home Values Detached from Construction Costs?

#51

Post by pawelk »

mamon wrote: post #46
kevinburke wrote: post #41

Earlier quoted context omitted.

You’d need 5,000 units a year in San Francisco to keep rents steady. This is the goal SF’s mayor just set for the city, google “Ed Lee Medium” to find it. It is definitely not an intractable problem given SF built 5,000 units in 2016. Upzoning, lowering impact fees, speeding housing approvals for things like ADU’s, making discretionary review tougher (it currently costs $700 to delay a project by three months), elect…

5000 units, and you think that's a lot? Last year in Warsaw (which is smaller than SF) there were almost 20,000 new apartments built. You now see how much impact all those zoning laws have.

According to Wikipedia SF City and County has a population of 870k, Warsaw 1.8 million. The metro area 4.6M vs 3.1M respectively. So I'd say the same ballpark. That said 5000 units seems like nothing at these population sizes. I live near Wrocław (650k city population, 1.1M metro), there were 10.000 new units in 2016 and this year will be similar. And this number doesn't include private investments (people building a house for themselves), only housing built by developers and sold on the market.

Re: Paying for Dirt: Where Have Home Values Detached from Construction Costs?

#52

Post by rsynnott »

TheSpiceIsLife wrote: post #36
kevinburke wrote: post #17

Would like to say: If you would like to reverse these trends, or live in the SFBA and would like to be able to afford a home or condo without needing to commute from Stockton or hit the startup lottery, please pay attention to your local City Council and their zoning/land use decisions. Local decisions frequently don't get that many comments; your voice makes a difference. - Brisbane may approve 4400 units of housing…

Will building more units / appartments/ houses bring the price down? Have other cities seen home prices move toward affordability when more housing has been built? I'm not saying it isn't a good idea, just that the logic seems flawed.

In a rational market, yes, absolutely; if prices are driven by a supply deficit then increasing supply cuts prices (or at least reduces price growth, if a smaller deficit remains).

Housing markets tend not to be all that rational, though; there's often an aspect of speculative mania to them. It's likely that increasing supply would cut prices, but it's not actually certain, as it may just increase speculative 'investor' demand from the "house prices always go up" crowd. The Irish property bubble in the late 90s to late noughties was originally driven by supply shortages, but even as supply started to meet demand prices kept going up for a couple of years due to property "investors" (before crashing spectacularly).

Re: Paying for Dirt: Where Have Home Values Detached from Construction Costs?

#53

Post by oddlyaromatic »

Simon_says wrote: post #35
matt_wulfeck wrote: post #24

Earlier quoted context omitted.

We’ll see how long Washington can maintain its income-tax free environment [1]. 1. https://www.seattletimes.com/seattle-news/politics/seattle-c...

> “Whoever goes against this is openly causing suffering,” she said. This quote really stands out to me. Is this demonization of opposing viewpoints a new thing, or am I just noticing it more in the last two years?

>Is this demonization of opposing viewpoints a new thing, or am I just noticing it more in the last two years?

I think it's more in recent years. Especially in the US where things are highly polarized and every issue seems to have a "Republican" take and a "Democratic" take. So points of view on specific situations are taken to reflect much more about a person's overall position than they actually do. And we have more echo chambers reinforcing our conviction about being right in the first place.

Finally I think there is also something legitimate about connecting viewpoints to consequences and evidence where possible, and discussing higher level concepts with the low level consequences in peoples' lives, in order to understand the tradeoffs that each point of view entails. I do think certain viewpoints are tightly linked to certain outcomes, and it wouldn't be demonizing to say "If you are for policy X you are accepting the likely effects Y and Z".

Re: Paying for Dirt: Where Have Home Values Detached from Construction Costs?

#54

Post by ACow_Adonis »

rspeer wrote: post #37
TheSpiceIsLife wrote: post #36

Earlier quoted context omitted.

Will building more units / appartments/ houses bring the price down? Have other cities seen home prices move toward affordability when more housing has been built? I'm not saying it isn't a good idea, just that the logic seems flawed.

I'm not up on the sources, but a moderately pro-development candidate for Cambridge City Council has often quoted a statistic saying that there are only two ways to bring down house prices: 1. Make the city suck 2. Get the housing vacancy rate to 5.5% And of course he says this to encourage everyone to work toward #2, and the way to do that without displacing anyone is to build new housing. I don't really understand…

I don't see many people mentioning a proportional value-based land tax, which would probably be about the first thing a traditional economist would recommend?

Brings down prices, hurts land-banking, increases density, generates revenue for infrastructure, captures public benefit from value increase, etc...

Re: Paying for Dirt: Where Have Home Values Detached from Construction Costs?

#55

Post by chrisseaton »

rb808 wrote: post #2

Lol they should do this for London, where 150 year old tiny apts cost millions.

> 150 year old tiny apts

Tiny is bad, but what's wrong with old?

I find older houses are usually built to a much higher standard (may just be those that remain but that's irrelevant), and have much more character.

Re: Paying for Dirt: Where Have Home Values Detached from Construction Costs?

#56

Post by emodendroket »

carlivar wrote: post #25
emodendroket wrote: post #9

Earlier quoted context omitted.

I don't know where he went but I've occasionally thought about Raleigh or Chicago as like, way cheaper than Boston, where I am.

Chicago and Illinois in general are in rough financial shape. Taxes are very high with no end to raises in sight.

I looked it up and Illinois just raised its income tax rate to just below that of Massachusetts.

Re: Paying for Dirt: Where Have Home Values Detached from Construction Costs?

#57

Post by pc86 »

TheSpiceIsLife wrote: post #36
kevinburke wrote: post #17

Would like to say: If you would like to reverse these trends, or live in the SFBA and would like to be able to afford a home or condo without needing to commute from Stockton or hit the startup lottery, please pay attention to your local City Council and their zoning/land use decisions. Local decisions frequently don't get that many comments; your voice makes a difference. - Brisbane may approve 4400 units of housing…

Will building more units / appartments/ houses bring the price down? Have other cities seen home prices move toward affordability when more housing has been built? I'm not saying it isn't a good idea, just that the logic seems flawed.

It does if the new units surpass demand, even in the short term. If there are 5k available units but there is demand for 15k over the next 90 days, of course building 1500 won't affect prices much, if at all. You need to build until there is some vacancy, then landlords are forced to lower rent to prevent their units from being vacant, unless they have the means to hold out for someone who really wants that particular location.

Re: Paying for Dirt: Where Have Home Values Detached from Construction Costs?

#58

Post by AznHisoka »

rsynnott wrote: post #52
TheSpiceIsLife wrote: post #36

Earlier quoted context omitted.

Will building more units / appartments/ houses bring the price down? Have other cities seen home prices move toward affordability when more housing has been built? I'm not saying it isn't a good idea, just that the logic seems flawed.

In a rational market, yes, absolutely; if prices are driven by a supply deficit then increasing supply cuts prices (or at least reduces price growth, if a smaller deficit remains). Housing markets tend not to be all that rational, though; there's often an aspect of speculative mania to them. It's likely that increasing supply would cut prices, but it's not actually certain, as it may just increase speculative 'invest…

what differentiates a real estate investor from a speculator?

Re: Paying for Dirt: Where Have Home Values Detached from Construction Costs?

#59

Post by AznHisoka »

clairity wrote: post #33

i once managed the product that calculated the cost basis for your property tax bill in most US counties & states (and some international jurisdictions), and it was common knowledge there that home prices were disconnected from construction costs. construction cost relative to home prices is interesting to a company like buildzoom because they're in the construction business (and finding the coming construction booms…

Why should abstract things like a futures contract be investable, while "real" things like houses shouldnt?

I guess the government should recommend bitcoin investing to everyone since its not real and nobody is affected?

Re: Paying for Dirt: Where Have Home Values Detached from Construction Costs?

#60

Post by Spearchucker »

chrisseaton wrote: post #55
rb808 wrote: post #2

Lol they should do this for London, where 150 year old tiny apts cost millions.

> 150 year old tiny apts Tiny is bad, but what's wrong with old? I find older houses are usually built to a much higher standard (may just be those that remain but that's irrelevant), and have much more character.

Build quality in the UK is generally dire. Mortar and bricks of old buildings crumbles. Lots of asbestos. Leaky pipes cost too much to fix, electrics are old and a hazard... New buildings favour low cost over quality. Staircases crack away from walls 12 months in. Insulation is designed to meet green targets, but not to actually insulate. Compared with the standards-obsessed Germans, I suspect many buildings in the UK should really be demolished. It's but one of the reasons I'm selling up in London and moving to the mainland.
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