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[quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous]Today I learned that over the past decade, housing unit production in DC outpaced population growth. According to the YIMBY urbanist crowd, this should have led to lower prices and yet prices went up, up, up.

Honestly, we will be in a better world when these simpletons are ignored.[/quote]

Prices actually did go up in DC considerably more slowly than the national average, and considerably slower than other high cost cities.  See:

https://realestatedecoded.com/case-shiller/

You can see in the second chart that adjusted for inflation, DC prices increased only modestly through 2019.  You can also see from the first tables that we've had some of the slowest price appreciation over the past year.  You can also see in the "Real Monthly Principal and Interest Price Index" that, once you adjust for both inflation *and* declining mortgage interest rates, DC has basically not gotten any more expensive at all for homeowners who take out mortgages, and it's cheaper to own in real terms than it was in the early 1990s or mid-2000s.

The demand curve slopes downward.[/quote]
And yet, they still went up by a lot. Never down.[/quote]
To be clear, we are talking about renting, not owning because that was the bulk of housing production and DC has traditionally been in the top 10 most expensive cities to rent in America for the last decade and in some surveys in the top 5. Building more did not make it cheaper.[/quote]

The best data that I could find on this comes from the Zillow Observed Rent Index, which has monthly data going back to 2014.  I compared the data over the six-year period from January 2014 to January 2020 to exclude the effects of the pandemic.  Over this period, DC rents grew by an average of 2.01% per year, less than half the national average rental growth rate of 4.18%.  In fact, of the 50 largest metro areas in the data, only 4 (Baltimore, Virginia Beach, Oklahoma City, and New Orleans) had slower rental price growth than DC, and none of those are exactly hotbeds of economic growth and opportunity like DC.  Except for Baltimore, every single one of the top 30 markets had rental price growth that was at least 1/2 a percentage point faster than DC.

https://www.zillow.com/research/data/

Was it enough to make rents go down?  No.  But rents in the DC metro barely increased faster than inflation, unlike virtually every other major metro.  Increasing the supply by building housing works.[/quote]
Okay. So then the GGW, YIMBY crowd has been lying for the last decade about housing costs?

People cannot have it both ways here. You’re saying that it’s worked. They themselves are saying that it’s not worked. You’re telling me they’re wrong?[/quote]

I really don't see the logical inconsistency.  Increasing supply puts downward pressure on prices.  Population growth, demographics and changing preferences put upward pressure on prices, especially for increasingly desirable ways of living for which the supply of housing is inelastic (e.g. rowhouses in gentrifying close-in neighborhoods).

This region built more housing than most places, so its prices and rents went up more slowly than most other cities.  Increasing the housing supply does work.  But, prices still went up on an inflation adjusted basis because we didn't build enough to overcome the demand side forces that are pushing prices up.  And, prices for the most inelastically supplied types of housing still went up quite fast, because we don't really build those types of housing anymore and so couldn't blunt the increase in demand.  The types of housing we do build are seen as imperfect substitutes.

The build more strategy works to depress average prices across the metro.  If your goal is to keep rents stable after inflation, we didn't quite build enough to get there, though we got much closer than most.  We certainly didn't build enough to make rents appreciably cheaper, which is the stated goal of many.   But, if your goal is to keep real costs stable for certain well-liked ways of living, then that is much harder.  It requires significant regulatory reform to allow or mandate more of the types of housing that is desired.  Compounding that is that some things simply can't be replicated because close-in land is inherently scarce.  It is essentially impossible to build enough close-in single-family homes to make them cheaper for this reason.  Any changes that affect the supply side of these homes like removing single family zoning will probably only make them more expensive.  What we can do is make the substitutes more affordable (through construction) and more attractive through things like improved transit access, more walkable neighborhood layouts, and more commercial amenities.  That's what most self-proclaimed "urbanists" are advocating for.

Where's the logical inconsistency?[/quote]
So are they telling the truth or lying when they say that zoning is preventing housing from being built?[/quote]

Current zoning puts an artificial limit in what could have been built or what might be built in the future.[/quote]

This urbanist nonsense again? How can you possibly argue that zoning is restraining housing development in this area when developers are sitting on approvals for tens of thousands of units and building under limits even in prime locations? It’s comical. A site was approved for 450 units. The developer built 300. Yet you claim zoning is limiting production. Maybe we need to start having density minimums instead of maximums.

It’s also fascinating to see how many affordable housing champions and purveyors of urbanism disappear as soon as politicians start talking about pandemic relief for renters. Like you say, housing is infrastructure, so when we’re in a crisis the infrastructure providers should be stepping up to help people out. The publicly traded REITs are putting up big profits, so I imagine the situation for large private landlords is the same. [/quote]

I don't know where this development you're referring to is located.  I look out on my neighborhood in NE DC and see that every new development is being built right to the height and zoning limits.  But, taking your argument seriously here...

Your claim appears to be that developers limit the rate of housing production to prevent declines in real prices.  I agree that it's not impossible, but an equilibrium like this requires either collusion or monopoly power at some point in the chain. 
After all, it's individually rational for each developer to keep producing housing until prices decline to the point of 0 economic profit.  So how does this cartel work?  Is it the REITs or other financiers colluding to deny money to projects that build too much?  Is it the developers themselves cutting deals with each other to prop up rents?  Is it that certain developers own all the plots in certain neighborhoods and therefore have local monopoly power?  Surely if we can identify the mechanism that encourages builders to build less, then we can eliminate the issue through anti-trust enforcement and other existing tools.

The only other possible explanation is that when someone doesn't build to the max allowable zoning it's because there actually is no increase in profit to be gained by building more.  In an expensive housing market like DC, we know that this isn't because of materials costs.  But, it could be because of high regulatory or legal costs, or other building regulations that bind at lower density (things like limits on the use of wood frame construction).  Most of the "urbanist" folks I know recognize that zoning laws are just one kind of regulation that can limit housing supply, and that being sensible about other restrictions is also needed to reduce housing costs.  That opinion gets a lot of flak for being pro-developer, of course, but it's really just pro-development.  In a world where housing is built by private entities, there really can be no meaningful distinction in terms of encouraging housing supply.

If you want to make a cogent argument, I'm all ears.  But if you want to solve the problem of high housing costs, you have to actually define the problem.[/quote]

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