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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

#761

Post by 9rx »

estearum wrote: post #680
9rx wrote: post #347

Earlier quoted context omitted.

The opportunity cost has already factored that in. Unless you think cost calculations are arbitrarily forgetting to include certain costs for no reason?

Well for sure in the actual financial models yes, but it's demonstrably true that most HN commenters here do not know this is how to think about the question of returns. And FWIW "opportunity cost" doesn't really show up as "a cost" in the traditional sense.

> And FWIW "opportunity cost" doesn't really show up as "a cost" in the traditional sense.

I cannot think of any forward-looking situation where opportunity cost doesn't show up. What case are you thinking of? The discussion, of course, is about a forward-looking situation.

In hindsight often one becomes more interested in seeing if the opportunity cost was paid. A common way to calculate that is to forget about cost and only look at expenses. More specifically, income minus expenses. The result of that calculation gives the opportunity realized. This may be what you are thinking of, but the opportunity cost is still there, it's just that the way of looking at it has changed.

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

#762

Post by subtextminer »

I live in Austin. In the 1980s, there was a building boom that collapsed.

Austin had 23%(!) apartment vacancy in 1990 after a collapse that started in 1985.

It wasn't until about 1993 that prices returned to 1985 nominal values.

At the time it wasn't code changes that caused this but excessive lending by Savings and Loan banks. You can research the S&L crisis that required a federal bail out. This cause massive bankruptcy and the creation of an entity all the Resolution Trust Corporation to sell all this near worthless property for pennies on the dollar. This affected all of Texas and also Louisiana and Arizona.

For Austin this was great as a whole as rents were ridiculously cheap for 10-15 years and it was an economic and cultural catalyst, drawing in hordes of young people from around the country.

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

#763

Post by polothesecond »

juleiie wrote: post #731
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.

Guys you have no idea about these things and what you are talking about. source: I am a city plot owner. No land owner will suddenly become a developer to build an apartment block. A plot owner can sell land to a developer or form a joint venture with developer putting in their land as starting capital (much more risky) most people either keep land as gold or sell it when they need money. I hope it is clearer now. Th…

> Even in utopia of automation and post scarcity society good location land will be truly lucrative and unimaginably expensive if not outright prohibited to own by private individuals.

Indeed, there’s a reason you see silicon valley execs going all in all acquiring land to build fortresses. At the end of the day, regardless of the cold march of technological progress, land remains the root of all real power.

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

#764

Post by malfist »

rayiner wrote: post #451
adrianN wrote: post #333

Earlier quoted context omitted.

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 only makes sense if there is a positive externality from housing. Is there?

Yeah, there's no positive benefit to making sure people have housing. That's why every day when I walk home from work, I have to think really hard about if I'm going to go home today, or just hang out under the overpass and panhandle.

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

#765

Post by vasco »

nsnzjznzbx wrote: post #626
vasco wrote: post #450

Earlier quoted context omitted.

Hello https://cep.lse.ac.uk/_new/publications/abstract.asp?index=1... UK public housing is widely known for being shit. Unsafe, puts all the poor people together in a block. There's bunch of crime, and your kids will be likely to stay stuck there or go to jail due to bad influences. Social housing should be sprinkled around it has been found. So nice example of what I was saying.

I would rather have more housing than less though. Government can build it at scale without worrying about profit. And privately built appartment blocks are awful. One cracked in Sydney had to be evacuated. Concrete cancer and water ingress issues. It is concrete enshittification.

The question is not if, but who and how.

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

#766

Post by pfdietz »

estearum wrote: post #675
pfdietz wrote: post #346

Earlier quoted context omitted.

The problem is it can't drive prices below what the free market would dictate? Talk about praising with faint damns.

No, the problem is that the free market in advanced economies appears to dictate a price point for housing that is unattainable for broad swaths of society. Classic case of Baumol's disease, which is not solved by "well duh we just gotta build more." People will not "just build" enough to solve the problem because they won't "just build" beyond equilibrium (for long).

No, the problem is the government has artificially restricted housing supply and this has driven up prices. It's not a market failure, it's a government failure.

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

#767

Post by oblio »

juleiie wrote: post #731
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.

Guys you have no idea about these things and what you are talking about. source: I am a city plot owner. No land owner will suddenly become a developer to build an apartment block. A plot owner can sell land to a developer or form a joint venture with developer putting in their land as starting capital (much more risky) most people either keep land as gold or sell it when they need money. I hope it is clearer now. Th…

> My plot increased 3 times in price in 10 years. Try to beat that with SP500. It’s virtually immune to inflation no matter how the broader economy fares it will always shield from inflation because you cannot make more land hah.

The GFC says hi :-)

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

#768

Post by triceratops »

embedding-shape wrote: post #758
triceratops wrote: post #754

Earlier quoted context omitted.

That's not helpful at all. There are many, many situations where you don't want to own. https://news.ycombinator.com/item?id=47434393 You're telling all these people "f** you"

I currently don't own, and I can't either, because I don't want to be stuck in one place for too long. If the prices where lower, where I could reliably buy, live for some years then sell again, without a huge amount of hassle, and not costing at least one million to buy some shitty apartment, then that'd be preferably. And besides just having "real estate investors" slurping up all housing, people could own one hous…

> people could own one house then rent out parts of it

It's already a thing, called house hacking. Tough luck if you're a couple that wants a complete unit instead of a room in someone else's house.

> a collection of people could own their apartment building together

That's called a co-op or a condo (the difference is a bit fuzzy to me). This still involves ownership and upkeep of an asset, which many people prefer not to do.

> huge companies owning large parts of the market

Make it publicly-owned, for all I care. Or let it be individual landlords. Or forbid a single company from owning more than 5% of the stock in a city. As long as it's market rate and abundant and competitive, it literally does not matter. More houses = cheaper housing.

> yet the largest landlords in the US was found to engage in price-fixing and artificially raising rents

Your own link shows that we know this happened because there was a Justice Department investigation about the practice. How can you say enforcement isn't happening.

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

#769

Post by bandofthehawk »

komali2 wrote: post #291
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…

It seems to me that the market will select for urban sprawl though which is a negative for society but has the highest margin. E.g. Houston suburbs, miles and miles of cheap to fab single family homes that turn it into a suburban hell scape where you have to drive everywhere. I don't think the free market is giving the promises you say it is - supply isn't elastic for real estate if nobody's building because there's…

I believe the market in the US selects for urban sprawl because it's usually subsidized by the dense urban core. Suburban areas often don't generate enough tax revenue to support their own infrastructure and services.

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

#770

Post by bpt3 »

juleiie wrote: post #731
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.

Guys you have no idea about these things and what you are talking about. source: I am a city plot owner. No land owner will suddenly become a developer to build an apartment block. A plot owner can sell land to a developer or form a joint venture with developer putting in their land as starting capital (much more risky) most people either keep land as gold or sell it when they need money. I hope it is clearer now. Th…

> No land owner will suddenly become a developer to build an apartment block.

No one is suggesting this.

> A plot owner can sell land to a developer or form a joint venture with developer putting in their land as starting capital (much more risky) most people either keep land as gold or sell it when they need money.

Most people don't own vacant lots, but some who do hold onto it as an investment. It's a pretty poor one on average over time, just like gold (which is a good analogy).

> The very idea that everyone who owns land should build an apartment block is laughable, it is very complicated endeavour best not to get into it if you know nothing about it. Hell building a single family house is complex, let alone five story building.

Again, no one is suggesting this. The assumption is that a developer would buy a lot to build on, because that's what happens in practice.

> So you either keep it if you don’t need money or you sell it if you want to buy something else or need to have liquidity. And you don’t even sell it to buy other investment vehicle because land is already better than gold.

Land and gold are not better than the stock market over time.

> My plot increased 3 times in price in 10 years. Try to beat that with SP500. It’s virtually immune to inflation no matter how the broader economy fares it will always shield from inflation because you cannot make more land hah.

The S&P 500 beats real estate over time. Congratulations on getting lucky with your plot of land. Land is a good inflation hedge, assuming you are in a growing area. Ask rust belt land owners how things worked out for them.

> Even in utopia of automation and post scarcity society good location land will be truly lucrative and unimaginably expensive if not outright prohibited to own by private individuals. The question is what will be a “good location” in 30 years.

Thanks for highlighting one of the many issues with communism, but we will never reach a post-scarcity society for many reasons, including this one.

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