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EXPLAIN HOW PRICES ARE IMPACTED BY BUILDING MORE HOUSING TO ME OR I'LL FUCKING EVICT YOU! DON'T DUMB IT DOWN INTO SOME VAGUE SHIT! EXPLAIN HOUSING PRICES TO ME RIGHT NOW OR I'LL LITERALLY FUCKING EVICT YOU! DO THEY GO UP OR DOWN WITH MORE HOUSING??? Bro chill out I got you:
On the one hand, building housing seems to prevent prices from going up. On the other hand, building housing increases density, and density is highly correlated with cost (big cities expensive! manhattan v expensive!) https://t.co/0CWAa61PAg
Let’s take a step back. What determines the price of housing? The same thing that determines the price anything else: supply and demand. https://t.co/ZO5TvLHvkz
The fact that housing in high density is significantly more expensive per sq ft than housing in low density tells us something important: there is much higher demand for high-density housing, relative to supply, than there is for low-density housing, relative to supply.
This kind of makes sense, since by default we live in superabundance of very low density for the entirety of history. Building up density takes time, labor, and capital. Low/medium density just takes land, which we collectively have plenty of. For context, SF is ~7,000 ppl/km^2. https://t.co/yusYzG9HCW
The high prices for higher densities imply that there is massive pent up demand for the benefits of high density living. People are willing to pay a premium for it. Imagine how many people would move to SF or NYC if they were a lot cheaper!
Why does building a lot of housing appear to suppress housing prices, for places like Las Vegas and Raleigh? Because the housing market takes a long long time to equilibrate. Moving cities is expensive and slow. Once people are settled somewhere, they usually don’t move.
If housing were an ordinary commodity, and you stopped building housing at this point, the result would be a return to equilibrium at the same price point. You’d have say 50% more residents in town, but also 50% more housing, and the price would be the same. https://t.co/x1RbgiJxt8
But housing is not a normal commodity. If you stop building housing at this new higher density, what happens is NOT a return to prior prices. Instead the new more dense city is more attractive at a national level, and prices begin to climb until they’re higher than before.
There are only two proven ways out of this situation, if you want to reduce the price of housing in your city. The first is the way of Vegas: Just Keep Building. The second is the way of Detroit: if you get rid of enough jobs, people will have to leave.
San Francisco is trying a novel approach, where we try to destroy the quality of life in the city while keeping everyone grinding at their jobs. So far so good on destroying quality of life, but empirically prices just aren’t going down.
I think SF is just too fundamentally beautiful for this approach to work, tbh. And the economic powerhouse that is infotech doesn't seem to be slowing down. https://t.co/cpfRoJ0LDe
There is nothing intrinsically expensive about high density regions, or low density regions. We just chronically underbuild high density by making it illegal to construct more. Until we construct a huge amount more housing in our biggest metro areas, prices will remain high.
The same thing happens in very desirable low density regions when supply is constrained. You get sky high prices in Aspen, CO too, which is incredibly expensive vs its density. It's just we write those off as enclaves for the rich, instead of cities everyone needs to live in.