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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

#681

Post by chmod775 »

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.

Free markets for housing are likely to settle into an "optimum" where some percentage of people cannot afford housing at all, because while construction/rental of housing for them would net a return, it's not worth the opportunity cost. Plus you should not wait for the market to respond to a lack of housing: people will be homeless in the meantime. Supply/demand is mostly reactive, because building for anticipated future demand years down the line is very risky, so most investors don't like that.

Markets don't optimize for "everyone gets some", yet that's precisely what you need for housing. You'll always need the government to come in at some point to provide for those left behind by the free market.

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

#682

Post by philipallstar »

left-struck wrote: post #669
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.

It’s a difficult problem not because we don’t know the simple solutions (supply and demand). It’s difficult because the people who have the majority vote also typically own the houses and they obviously don’t want the prices to go down. This is not just speaking about the US, many countries are facing this issue

Lots of people have kids and want them to be able to a) not be a victim of crime, and b) be able to afford a house. Anyone who has loads of money to afford high house prices and private security can afford luxury beliefs, as espoused in Oscar acceptance speeches, but everyone else with housing and kids is either voting for less crime and better affordability, or is not yet voting for those things.

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

#683

Post by estearum »

bpt3 wrote: post #662
jaapz wrote: post #640

Earlier quoted context omitted.

Why would you build on a plot of land when the plot of land itself is already appreciating in value with you doing nothing to it Building is risky and costly Having an asset that appreciates on its own regardless of what you do with it is not

Holding costs of land are far from $0 in any major metropolitan area. Sitting on it involves its own form of risk. Vacant land that's desirable is often held back from development due to zoning or infrastructure issues.

> Vacant land that's desirable is often held back from development due to zoning or infrastructure issues.

Nah, it's mostly speculation. Zoning/infrastructure issues get baked into the price. If you cannot build anything on a plot of land, its price falls.

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

#684

Post by philipallstar »

21asdffdsa12 wrote: post #603
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?

Why would you produce more bread, milk, eggs as prices fall? You would of course wait for the next-pig cycle - when the starving masses pay any price to you. The answer- essentials can never be a non-government interferring market. This can be by creating artifical oversupply by buying up oversupply for foreign aid or bio fuels(food production). In the case of housing, this is by having the goverment continually cons…

One of the main housing issues is government interference. People want to do things to get money from other people, including building houses for them to buy.

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

#685

Post by soco »

bpt3 wrote: post #662
jaapz wrote: post #640

Earlier quoted context omitted.

Why would you build on a plot of land when the plot of land itself is already appreciating in value with you doing nothing to it Building is risky and costly Having an asset that appreciates on its own regardless of what you do with it is not

Holding costs of land are far from $0 in any major metropolitan area. Sitting on it involves its own form of risk. Vacant land that's desirable is often held back from development due to zoning or infrastructure issues.

Sitting on it is a predictable cost, while building means a costly chaos which may or may not turn out the wished profitability. So when you are used to "old profits" you maybe rather wait on the predicted do-nothing-cost, and hope for the tide to turn again in your direction.

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

#686

Post by cylemons »

zozbot234 wrote: post #571
bps4484 wrote: post #443

Earlier quoted context omitted.

it's not that density per se drives down existing costs, but density almost always brings more housing stock to the market (unless they are simultanously tearing down housing elsewhere) and housing stock drives down the cost of housing, which is the point of the original article. So if we take it as an assumption that density increases housing stock, there is lots of evidence that density drives down prices of existi…

Density is not going to drive down cost for the same kind of housing. A SFH is not the same as a smaller home on a denser plot, much less an apartment block in a high rise. So the SFH owner who pursues increased density does indeed benefit.

Even from a quality of life perspective, imagine having an SFH in city center that is within walking distance to shops, job, activities etc.

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

#687

Post by philipallstar »

estearum wrote: post #683
bpt3 wrote: post #662

Earlier quoted context omitted.

Holding costs of land are far from $0 in any major metropolitan area. Sitting on it involves its own form of risk. Vacant land that's desirable is often held back from development due to zoning or infrastructure issues.

> Vacant land that's desirable is often held back from development due to zoning or infrastructure issues. Nah, it's mostly speculation. Zoning/infrastructure issues get baked into the price. If you cannot build anything on a plot of land, its price falls.

Only at point of buying. If you buy some land and the mayor suddenly implements rent control then the value goes down.

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

#688

Post by RobotToaster »

kakacik wrote: post #589
unethical_ban wrote: post #581

Earlier quoted context omitted.

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…

> its a luxury all around the world

China has a 96% homeownership rate.

Kazakhstan 98%

Laos, Romania, and Albania 95%

Slovakia 93%

Russia 92%

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

#689

Post by bpt3 »

jjmarr wrote: post #510
KellyCriterion wrote: post #494

Earlier quoted context omitted.

This is theoretical MBA101 speech: In reality, those ideas do not apply to the housing market, esp. as there is no real competition; and because the demand is absolutely inelastic (if we are already applying in MBA-wording universe) Also, that this is true you can see if you compare to housing markets which "are more free than the Australian"

The regulation is single family zoning. Zoning makes it impossible to stack high rise apartment buildings in the areas that people want to live in.

People want to live in those areas because of the lower density. Remove that and they become much less desirable.

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

#690

Post by lesuorac »

pembrook wrote: post #126
lesuorac wrote: post #103

Earlier quoted context omitted.

Eh, people really need to be questioning econ 101 more often. It's built upon untrue assumptions - infinite buyers / sellers - perfect information - no switching / transaction costs --- The article itself has 3 different year ranges provided so I'm not sure how you can use it as evidence. Plus overall the rent is still up by a lot since 93% - 4% is still at least 80%. - Rents increase by 93% from 2010 to 2019 - Housi…

Ah yes, that 150 year old meme reflexively copy-pasta'd by internet commenters since the days of usenet to refute basic concepts like supply and demand. "Lol economists are dumb they think humans are robots!" No they don't. Sorry, we won't be throwing away an entire field of human endeavor based on a straw man caricature that isn't true. We don't call physicists dumb and throw out their ideas because the real world i…

We do throw out everything from physics 101.

The movement of satellites is not modeled using distance = speed * time. It would do well to consider if econ 101 is an accurate way to model the world since for other domains the 101 course is not.

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