Cities with No Children

[Anonymous]

Anonymous wrote:The affordable housing advocates arguments seem to begin and end with saying that increasing supply will reduce prices.

What I don't understand is that the more single-family homes you tear down, in order to replace them with luxury condos, the more valuable single-family homes become.

Which means their price goes through the roof. Which means it no longer becomes economical for developers to buy single-family homes so they can replace them with luxury condos. Which means this whole process of trying to increase density stops. And the relax-the-zoning laws crowd is never able to get the massive number of new units built that they'd need to put in a dent in prices.

Also, if you own a single-family home and you're thinking of selling, and a developer comes sniffing around, you should triple your asking price. Why should developers make all the money?

Replacing single family homes with condos will freeze the market for single family homes. No one will sell unless they absolutely must because everyone will know their home will only grow in value. Developers are having an easy time right now because there are so many dilapidated or vacant rowhouses but it will be a different story when they have to try to buy homes people are living in. We own and plan to keep it until we retire. If we leave DC, we'll just rent it out or leave it empty but will never sell.

[Anonymous]

Anonymous wrote:

Replacing single family homes with condos will freeze the market for single family homes. No one will sell unless they absolutely must because everyone will know their home will only grow in value. Developers are having an easy time right now because there are so many dilapidated or vacant rowhouses but it will be a different story when they have to try to buy homes people are living in. We own and plan to keep it until we retire. If we leave DC, we'll just rent it out or leave it empty but will never sell.

OK. Then don't sell. That's fine. Nobody is going to force you to sell (aside from eminent domain).

[Anonymous]

Anonymous wrote:Brookings responds

https://www.brookings.edu/blog/the-avenue/2019/07/24/the-future-of-the-city-doesnt-have-to-be-childless/

These are all non-profit ideas that have no grounding in economics or reality

Also if improvements happen in neighborhoods guess what the price of everything goes up and then people complain about displacement and gentrification all over again

There is a reason why richer areas are nicer and poorer areas are crappier

Brookings is a shadow of its former self

[Anonymous]

Anonymous wrote:

Anonymous wrote:Brookings responds

https://www.brookings.edu/blog/the-avenue/2019/07/24/the-future-of-the-city-doesnt-have-to-be-childless/

These are all non-profit ideas that have no grounding in economics or reality

Also if improvements happen in neighborhoods guess what the price of everything goes up and then people complain about displacement and gentrification all over again

There is a reason why richer areas are nicer and poorer areas are crappier

Brookings is a shadow of its former self

1. You can try to preserve AH in such areas. 2. You reduce demand for the existing high amenity areas thus lowering prices there (in fact that is the strategy proposed in the Federal Reserve paper somebody quoted before)

2. If I quote Brookings they are wrong because they are a non-profit? But if I quoted a developer, they would be wrong because they are a greedy developer? Hmmmm.

[Anonymous]

Anonymous wrote:The affordable housing advocates arguments seem to begin and end with saying that increasing supply will reduce prices.

What I don't understand is that the more single-family homes you tear down, in order to replace them with luxury condos, the more valuable single-family homes become.

Which means their price goes through the roof. Which means it no longer becomes economical for developers to buy single-family homes so they can replace them with luxury condos. Which means this whole process of trying to increase density stops. And the relax-the-zoning laws crowd is never able to get the massive number of new units built that they'd need to put in a dent in prices.

Also, if you own a single-family home and you're thinking of selling, and a developer comes sniffing around, you should triple your asking price. Why should developers make all the money?

Ok, let me illustrate this for you. The market evaluates a new SFH in location X at 1 million bucks. Because of costs to renovate, etc, you can seel it to a flipper who will renovate and resell for 600k, say. (Dont quibble on the numbers, this is illustrative and will vary of course).

Now the parcel is upzoned. A developer can put in 4 condos at 800k each, total of 3.2 million. To make it pencil out, the MOST he can pay is say, 1.4 million.

Lets say the price of the parcel goes upto 1.4 million then. Does the price keep going up, until there is no more conversion? Probably not, because if conversion stops the value of the property goes back down to 600k. Now maybe as there are fewer SFHs around, the equilibrium price of a renovated SFH goes up from 1 million to 1.2 million. So the price to sell to someone who is going to renovates goes from 600k to 700k. It still does not get high enough to deter conversion.

Not until one of two things happen. A The equilibrium price for SFHs gets really high - like double or triple what it was before. Could happen, but I am skeptical that there is sufficient demand for SFHs at that price point for that to happen

B. The price of condos comes down, from say 800k to 600k. If THAT happens then the pro-supply people have been proven right - the new supply has brought prices down.

[Anonymous]

Anonymous wrote:

Anonymous wrote:The affordable housing advocates arguments seem to begin and end with saying that increasing supply will reduce prices.

What I don't understand is that the more single-family homes you tear down, in order to replace them with luxury condos, the more valuable single-family homes become.

Which means their price goes through the roof. Which means it no longer becomes economical for developers to buy single-family homes so they can replace them with luxury condos. Which means this whole process of trying to increase density stops. And the relax-the-zoning laws crowd is never able to get the massive number of new units built that they'd need to put in a dent in prices.

Also, if you own a single-family home and you're thinking of selling, and a developer comes sniffing around, you should triple your asking price. Why should developers make all the money?

Ok, let me illustrate this for you. The market evaluates a new SFH in location X at 1 million bucks. Because of costs to renovate, etc, you can seel it to a flipper who will renovate and resell for 600k, say. (Dont quibble on the numbers, this is illustrative and will vary of course).

Now the parcel is upzoned. A developer can put in 4 condos at 800k each, total of 3.2 million. To make it pencil out, the MOST he can pay is say, 1.4 million.

Lets say the price of the parcel goes upto 1.4 million then. Does the price keep going up, until there is no more conversion? Probably not, because if conversion stops the value of the property goes back down to 600k. Now maybe as there are fewer SFHs around, the equilibrium price of a renovated SFH goes up from 1 million to 1.2 million. So the price to sell to someone who is going to renovates goes from 600k to 700k. It still does not get high enough to deter conversion.

Not until one of two things happen. A The equilibrium price for SFHs gets really high - like double or triple what it was before. Could happen, but I am skeptical that there is sufficient demand for SFHs at that price point for that to happen

B. The price of condos comes down, from say 800k to 600k. If THAT happens then the pro-supply people have been proven right - the new supply has brought prices down.

To clarify - the price for renovated SFH's. IE it goes from 1 million to 2 or 3 million.

[Anonymous]

Anonymous wrote:

Anonymous wrote:The affordable housing advocates arguments seem to begin and end with saying that increasing supply will reduce prices.

What I don't understand is that the more single-family homes you tear down, in order to replace them with luxury condos, the more valuable single-family homes become.

Which means their price goes through the roof. Which means it no longer becomes economical for developers to buy single-family homes so they can replace them with luxury condos. Which means this whole process of trying to increase density stops. And the relax-the-zoning laws crowd is never able to get the massive number of new units built that they'd need to put in a dent in prices.

Also, if you own a single-family home and you're thinking of selling, and a developer comes sniffing around, you should triple your asking price. Why should developers make all the money?

Ok, let me illustrate this for you. The market evaluates a new SFH in location X at 1 million bucks. Because of costs to renovate, etc, you can seel it to a flipper who will renovate and resell for 600k, say. (Dont quibble on the numbers, this is illustrative and will vary of course).

Now the parcel is upzoned. A developer can put in 4 condos at 800k each, total of 3.2 million. To make it pencil out, the MOST he can pay is say, 1.4 million.

Lets say the price of the parcel goes upto 1.4 million then. Does the price keep going up, until there is no more conversion? Probably not, because if conversion stops the value of the property goes back down to 600k. Now maybe as there are fewer SFHs around, the equilibrium price of a renovated SFH goes up from 1 million to 1.2 million. So the price to sell to someone who is going to renovates goes from 600k to 700k. It still does not get high enough to deter conversion.

Not until one of two things happen. A The equilibrium price for SFHs gets really high - like double or triple what it was before. Could happen, but I am skeptical that there is sufficient demand for SFHs at that price point for that to happen

B. The price of condos comes down, from say 800k to 600k. If THAT happens then the pro-supply people have been proven right - the new supply has brought prices down.

A whole lot of wishful thinking here. For all sorts of economic and political reasons, there will never ever be enough new units adding to the housing supply to have even a slightly noticeable effect on prices. The scale of what's being added isn't even in the same city of the ballpark of what would be required.

[Anonymous]

I don't understand people's religious devotion to the idea that supply and demand can't possibly apply to the housing market.

It's particularly weird because elsewhere I keep reading that supply and demand explains the housing market, in particular the part where nice neighborhoods are expensive and neighborhoods for poor people are crappy.

[Anonymous]

Anonymous wrote:

Anonymous wrote:The affordable housing advocates arguments seem to begin and end with saying that increasing supply will reduce prices.

What I don't understand is that the more single-family homes you tear down, in order to replace them with luxury condos, the more valuable single-family homes become.

Which means their price goes through the roof. Which means it no longer becomes economical for developers to buy single-family homes so they can replace them with luxury condos. Which means this whole process of trying to increase density stops. And the relax-the-zoning laws crowd is never able to get the massive number of new units built that they'd need to put in a dent in prices.

Also, if you own a single-family home and you're thinking of selling, and a developer comes sniffing around, you should triple your asking price. Why should developers make all the money?

Ok, let me illustrate this for you. The market evaluates a new SFH in location X at 1 million bucks. Because of costs to renovate, etc, you can seel it to a flipper who will renovate and resell for 600k, say. (Dont quibble on the numbers, this is illustrative and will vary of course).

Now the parcel is upzoned. A developer can put in 4 condos at 800k each, total of 3.2 million. To make it pencil out, the MOST he can pay is say, 1.4 million.

Lets say the price of the parcel goes upto 1.4 million then. Does the price keep going up, until there is no more conversion? Probably not, because if conversion stops the value of the property goes back down to 600k. Now maybe as there are fewer SFHs around, the equilibrium price of a renovated SFH goes up from 1 million to 1.2 million. So the price to sell to someone who is going to renovates goes from 600k to 700k. It still does not get high enough to deter conversion.

Not until one of two things happen. A The equilibrium price for SFHs gets really high - like double or triple what it was before. Could happen, but I am skeptical that there is sufficient demand for SFHs at that price point for that to happen

B. The price of condos comes down, from say 800k to 600k. If THAT happens then the pro-supply people have been proven right - the new supply has brought prices down.

Good analysis. If a developer comes sniffing can you raise your price by $50k? Possibly?

Can you triple your price? Not unless you are the last lot needed for the skyscraper. Sorry.

[Anonymous]

Anonymous wrote:

Anonymous wrote:The affordable housing advocates arguments seem to begin and end with saying that increasing supply will reduce prices.

What I don't understand is that the more single-family homes you tear down, in order to replace them with luxury condos, the more valuable single-family homes become.

Which means their price goes through the roof. Which means it no longer becomes economical for developers to buy single-family homes so they can replace them with luxury condos. Which means this whole process of trying to increase density stops. And the relax-the-zoning laws crowd is never able to get the massive number of new units built that they'd need to put in a dent in prices.

Also, if you own a single-family home and you're thinking of selling, and a developer comes sniffing around, you should triple your asking price. Why should developers make all the money?

Ok, let me illustrate this for you. The market evaluates a new SFH in location X at 1 million bucks. Because of costs to renovate, etc, you can seel it to a flipper who will renovate and resell for 600k, say. (Dont quibble on the numbers, this is illustrative and will vary of course).

Now the parcel is upzoned. A developer can put in 4 condos at 800k each, total of 3.2 million. To make it pencil out, the MOST he can pay is say, 1.4 million.

Lets say the price of the parcel goes upto 1.4 million then. Does the price keep going up, until there is no more conversion? Probably not, because if conversion stops the value of the property goes back down to 600k. Now maybe as there are fewer SFHs around, the equilibrium price of a renovated SFH goes up from 1 million to 1.2 million. So the price to sell to someone who is going to renovates goes from 600k to 700k. It still does not get high enough to deter conversion.

Not until one of two things happen. A The equilibrium price for SFHs gets really high - like double or triple what it was before. Could happen, but I am skeptical that there is sufficient demand for SFHs at that price point for that to happen

B. The price of condos comes down, from say 800k to 600k. If THAT happens then the pro-supply people have been proven right - the new supply has brought prices down.

This is all silliness. If you could accurately predict prices, I think every bank on Wall Street would like to know how much they could pay you to work for them.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:The affordable housing advocates arguments seem to begin and end with saying that increasing supply will reduce prices.

What I don't understand is that the more single-family homes you tear down, in order to replace them with luxury condos, the more valuable single-family homes become.

Which means their price goes through the roof. Which means it no longer becomes economical for developers to buy single-family homes so they can replace them with luxury condos. Which means this whole process of trying to increase density stops. And the relax-the-zoning laws crowd is never able to get the massive number of new units built that they'd need to put in a dent in prices.

Also, if you own a single-family home and you're thinking of selling, and a developer comes sniffing around, you should triple your asking price. Why should developers make all the money?

Ok, let me illustrate this for you. The market evaluates a new SFH in location X at 1 million bucks. Because of costs to renovate, etc, you can seel it to a flipper who will renovate and resell for 600k, say. (Dont quibble on the numbers, this is illustrative and will vary of course).

Now the parcel is upzoned. A developer can put in 4 condos at 800k each, total of 3.2 million. To make it pencil out, the MOST he can pay is say, 1.4 million.

Lets say the price of the parcel goes upto 1.4 million then. Does the price keep going up, until there is no more conversion? Probably not, because if conversion stops the value of the property goes back down to 600k. Now maybe as there are fewer SFHs around, the equilibrium price of a renovated SFH goes up from 1 million to 1.2 million. So the price to sell to someone who is going to renovates goes from 600k to 700k. It still does not get high enough to deter conversion.

Not until one of two things happen. A The equilibrium price for SFHs gets really high - like double or triple what it was before. Could happen, but I am skeptical that there is sufficient demand for SFHs at that price point for that to happen

B. The price of condos comes down, from say 800k to 600k. If THAT happens then the pro-supply people have been proven right - the new supply has brought prices down.

Good analysis. If a developer comes sniffing can you raise your price by $50k? Possibly?

Can you triple your price? Not unless you are the last lot needed for the skyscraper. Sorry.

The value of our home has doubled in a little more than five years. Sorry.

[Anonymous]

If you add enough units, prices will go down, at least in theory. In practice, all those units would be snapped up by the many people living in the suburbs who have terrible commutes into DC. There are hundreds of thousands of people who get up every day at 4am to avoid traffic or who sit in their car four hours a day. I suspect many of them would be willing to pay quite a bit to have a normal commute. Perhaps the up-zoning crowd could go buy their old places in Sterling or Bowie.

[Anonymous]

Anonymous wrote:If you add enough units, prices will go down, at least in theory. In practice, all those units would be snapped up by the many people living in the suburbs who have terrible commutes into DC. There are hundreds of thousands of people who get up every day at 4am to avoid traffic or who sit in their car four hours a day. I suspect many of them would be willing to pay quite a bit to have a normal commute. Perhaps the up-zoning crowd could go buy their old places in Sterling or Bowie.

If that happened, that would be a good thing, wouldn't it? More people living closer, with shorter commutes, less driving, better air quality, fewer greenhouse gas emissions, etc.?

[Anonymous]

Anonymous wrote:

Anonymous wrote:If you add enough units, prices will go down, at least in theory. In practice, all those units would be snapped up by the many people living in the suburbs who have terrible commutes into DC. There are hundreds of thousands of people who get up every day at 4am to avoid traffic or who sit in their car four hours a day. I suspect many of them would be willing to pay quite a bit to have a normal commute. Perhaps the up-zoning crowd could go buy their old places in Sterling or Bowie.

If that happened, that would be a good thing, wouldn't it? More people living closer, with shorter commutes, less driving, better air quality, fewer greenhouse gas emissions, etc.?

A lot of people want their tract home in the burbs with a quarter acre lawn. No amount of cheap condos is going to change that. This is the American Dream that almost everyone subscribes to.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:If you add enough units, prices will go down, at least in theory. In practice, all those units would be snapped up by the many people living in the suburbs who have terrible commutes into DC. There are hundreds of thousands of people who get up every day at 4am to avoid traffic or who sit in their car four hours a day. I suspect many of them would be willing to pay quite a bit to have a normal commute. Perhaps the up-zoning crowd could go buy their old places in Sterling or Bowie.

If that happened, that would be a good thing, wouldn't it? More people living closer, with shorter commutes, less driving, better air quality, fewer greenhouse gas emissions, etc.?

A lot of people want their tract home in the burbs with a quarter acre lawn. No amount of cheap condos is going to change that. This is the American Dream that almost everyone subscribes to.

It's 2019.