Reply to The government has always been here. So why was the 50s, 60s, 70s, 80, 90s COL here so affordable?

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Reply to "The government has always been here. So why was the 50s, 60s, 70s, 80, 90s COL here so affordable?"

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[quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous]One way to make housing more affordable is to increase density. Change zoning laws so that we have more condos/townhouses/duplexes, etc. instead of SFHs. Of course this means we will need to address infrastructure too (roads, schools, etc). If I was a savvy real estate entrepreneur, I would look into buying SFH property and replace it with multi-family units. (vs. the mcmansions that developers are building instead). It might be easier in neighborhoods that don't have an active NIMBY mentality. [/quote]

100% this. It's such a shame that zoning restrictions mean that all the teardown activity in close-in suburbs goes into building huge houses instead of 2-unit or 4-unit dwellings.  This would be such an easy way to increase density and help solve the affordability problem.[/quote]

A number of recent academic studies have questioned whether this is actually true. They both found that upzoning does more to increase the amount of luxury residences than anything else.

https://www.citylab.com/equity/2019/05/housing-supply-home-prices-economic-inequality-cities/588997/

https://www.citylab.com/life/2019/01/zoning-reform-house-costs-urban-development-gentrification/581677/[/quote]

That first study is, frankly, kind of crap.  You can't say anything credibly just by looking at correlations across cities without taking into account other economic differences (e.g. industry and demographic composition)  Also, I think it's well-acknowledged that many or most cities in the U.S. are still able to price new construction housing at close to marginal cost of construction. It's a handful of high-cost cities that have this problem.  Including those low-cost cities without appropriate controls tells us nothing.

The second study appears to be well done and interesting.  What the paper tells us is that land prices respond immediately to upzoning, but construction does not.  It's possible that construction just takes longer. Chicago is not an especially high cost city, so it's also possible that current prices just aren't high enough to justify the construction yet, or that uncertainty is enough that it's better to what and see what becomes of the neighborhood before beginning a project.  In both cases, we'd still expect the expected value of future construction to be priced into the land, which is what we see.  But that doesn't automatically mean that the demand curve slopes upward.  Indeed, even the author is cautious about drawing strong conclusions from it, saying that he believes that upzoning is probably still beneficial at metro scale.[/quote]

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