That’s so obvious it’s nearly a truism.
Rate of new houses is below the rate of new households, and it’s been that way for years.
Nah, what actually happens is the lower rung housing is either flipped to capture the increase in area pricing or the lot gets scraped, again to capture the increase in area pricing.
This is absolutely false, not true, disproven, and made up.
Social housing builders are good for many reasons, 1) they provide competition to the public market, and when efficient don't need to return profit to shareholders so provide a very good competitor in places like Finland and Singapore, 2) social housing builders smooth out the business cycle, because new housing is needed just as much when at the downturn of the business cycle as at the top, so it greatly helps provide stable employment and a stable workforce for housing construction, greatly improving housing.
But the idea that new idea drives up housing prices in any way is, at best, a fiction. It's mostly a lie from landlords and homeowners to try to justify their continued extraction of profits from their idleness.
Someone should tell the local housing market that then, because this pattern has consistently manifest over the last 20 years here. Without exception everyone I've seen make this claim isn't invested in residential real estate and hasn't closely watched how prices shift in response to new construction. In any event if you're trying to advance the claim that gentrification is a myth you're going to need to bring some serious proof to back that.
Sure, as with every other good.
But there’s a long way to go between current property prices and raw construction costs.
How much? Searching a bit suggests that net profit margin in housing industry is about 8.7%
Consindering an investor can get ~3.75% in zero risk T-bills without lifting a shovel, that's about an extra 5% net profit to get involved in building housing.
Which isn't nothing, it's a decent profit. But I also wouldn't call extra 5% a huge difference.
> That’s so obvious it’s nearly a truism.
And that is why Manhattan, due to having the most housing units per square mile, is one of the cheapest places to live in the US.
Since it's not, it is not a truism that merely increasing the housing supply will decrease prices. It takes more than that.
As long as you have excess people willing and able to buy $1M studios, every new studio will get snapped up. Prices can only begin to drop if you build so many that you exhaust the supply of people willing to pay $1M and the highest bid left is $900K.
Think of it as analogous to bond issuances. Just because the government issues more and more bonds the price won't drop as long as there are buyers to clear the price. Bond price only drops when they run dry of buyers at the higher price and must start accepting lower offers.
More housing will not make manhattan cheaper than Charleston, West Virginia, but it will make manhattan cheaper than how manhattan is today. That's the point.
Your argument is like saying obese people should not go on diet because statistically the people who go on diet are more overweight than average.
Where I live has ~21k units for ~45k residents (47%), and a median home price of $440k or so. NYC has about 3.6 M housing units for ~8.5 M people (42%), and a median home price of $870k. For NYC to make up that 5% they would need around 425k housing units.
Obviously these numbers can’t tell the whole story, but it does seem like the supply is fundamentally more constrained in NYC than here, and here is already pretty tight, with very low vacancy rates, high rental prices, and expensive homes.
Anyway NYC plans to build 200k units over the coming decade, increasing the supply in order to reduce the cost. Of course that’s not the only item in the plan to reduce costs, but it’s a major component.
