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'Renters Are Struggling': Economists Back Tenant-Led Push for Federal Rent Control
(www.commondreams.org)
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this post was submitted on 06 Aug 2023
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Yes existing structures need to come down. Homes built for one family should be purchased and turned into large homes for many families.
Yeah but by whom? What's the incentive for private sector builders to do that at scale if it means lower prices and lower margins by dramatically increasing supply?
Why do you think this will significantly impact margins? If a builder builds a house for $300k right now, the cost of the lot is eating a shitload of that $300k. If my home doubles in value (which it has), the land itself is more valuable.
By the same token, if I build a 4 story apartment building on my same lot, I make significantly more money over time than I would selling it once to a homeowner.
Your own answer from earlier said so: increase supply massively whilst demand stays constant, means prices come down. Fair enough.
Well, if prices come down, margins by definition decrease, because building materials and labour aren't decreasing too.
Ergo, even if zoning restrictions were relaxed massively, and permits handed out quickly and easily, there's no incentive to flood the market like in 2007. This is especially true of big high rise, high density properties, as there usually are only a few companies who can build such buildings (in central London there's like 4), so it makes collusion to keep supply low much easier. Sort of like how OPEC works.
This is not accurate.
This is not how the housing bubble popped. It was demand-side, due to (absurdly) loose credit. Home prices were still rising dramatically in 07 - supply was not keeping up with demand.