That means there’s an invisible hand keeping prices up, or basically that the market is not free enough. That’s caused most of the time due to excessive regulation.

Another reason is high demand in locations where offer is limited due to physical limitations. There’s always demand to live in Broadway, and offer can never catch up due to its physical limitations.

there are many things you can do, but essentially you want to make it profitable for builders to make houses at a lower price point, or give the average person more money. Some approaches (not all of which I'm endorsing):

- reduce restrictions around planning / construction / etc (because it takes time and expertise to comply, both of which cost money)

- find a way to bring in cheaper labor, or make it possible for construction companies to hire the same labor at a lower price. Maybe a subsidy, maybe reduced taxes, maybe relaxed labor laws

- add a subsidy for homes

- make your citizens more wealthy, so the price is no longer above their means

- outsource construction to a place that can build it more cheaply (eg, prefab homes)

Remove parking minimums and work to address inequality? If that the case in Austin though?

Won't the market fill the gap? For example, in Indonesia, "standard size" houses are mostly out of reach for new buyers (young generations), so they build houses farther away and/or smaller.

I never claimed the balance will occur at a point that I like. This is just math, it’s not a political stance. If you want more homes, go build homes.

I don’t understand your sentence. What’s the subject of the verb “housing.”

The difference is between buying and asset and producing an asset. Even if RAM costs are falling, it can still be profitable to produce more RAM, as long as the costs are far enough below the eventual sales price.

It's entirely different if you're buying the housing already built; there's no productive activity, you're just a rentier and do not benefit at all from falling housing prices.

The differences in interests between an asset holder and a productive builder are night and day.

You think the government knows better how to identify land that is profitable than private builders? Why? Or is this one of those opinions based on "is OK for the state to pay for it because there's infinite money for my pet project"?

If you live in a magical fairy world where supply and demand are fixed, sure. In the real world, prices going down 10% leads to a surge in demand, and so you can fill more of your units. This leads to either equal or increased revenue, for the same construction (flat cost), which actually yields higher margins. This is why developers are usually concerned with occupancy rates, and prices are more a concern for homeowners.

There are only really 3 scenarios where prices are low and demand is low:

[1] There is a dramatic surplus of supply, in which case if a developer is trying to build they've not done research and probably should not get financing

[2] There is some other factor (usually high crime) in which case again, developer should do their research, and the market is operating fine

[3] You are developing super early and operating within incentives offered by the city, usually tax abatements, which drive down the carrying cost and make it a better investment.

Also important to note that in scenario [3] a smart developer will slowly release inventory to restrict supply to meet demand, and as demand grows, release more inventory at the newly raised price, continuing to do so as long as the tax abatements advantage the strategy. This is common in successfully developed areas e.g. Jersey City, and is fine as long as broad scale collusion doesn't occur

Can you define razor thin? Grocery stores have very small margins, as little as 1%.

Homebuilders make at least an order of magnitude more on a very expensive item.

For nearly every homebuyer, a home is the largest purchase they will ever make and the bulk of their net worth. It needs to be a good long term investment that at least reasonably paces with inflation, otherwise you are losing money by buying a home and everyone has to rent and then you have feudalism with extra steps.

The good news is this is totally fine with keeping cost of living under control and overbuilding, because prices will go back up over time. Most people aren't going to own their home until the 30 year mark so it really is a much, much longer term investment than anything like overbuilding or other factors can reasonably affect.

The problem is really that people started seeing 2x-10x returns on homes and started treating that like the norm. That is not a 'good investment' that is a 'money printer,' and in most cases the government does not want to safeguard that behavior, but it's hard not to when those same people panic like crazy if their home only goes up 2% in value in a year or, god forbid, decreases in value for a year.

There is really no good solution to that mentality, if there really was one then Wall Street would have uncovered it ages ago to get more people into long term ETFs.

They can throw up 8-10 story apartments in Tokyo despite land being very expensive because they tear them down and rebuild them after 20-30 years. Also, Tokyo outside of a few areas isn't that tall, it is definitely dense, but 3-4 story tall building dense (those homes are also torn down and built anew ever 20-30 years, so construction buzzes in Tokyo).

It would be better if you considered new actual living capacity in Tokyo rather than just new constructions.

Why are you accrediting Houston to the free market rather than Tokyo?

Have you seen Tokyo?

Of course, many.

To be sure, are you asking if society does better when its people are homed vs. homeless? Because that seems like a question with an obviously-yes answer.

I'm under the impression that more supply=lower rents, even if execution is not perfect, but I'm not an economist.

Not really? "The projects" are a consequence of a very specific approach to government housing construction.

There's an alternative approach which mirrors the public healthcare concept of "public option". Instead of restricting government housing to means tested individuals or specific low income populations, you develop a public competitor to drive prices down and to eat costs in regions where housing is needed but the economics just don't make sense yet.

i.e. the US Postal Service model. It works extraordinarily well as long as you don't repeatedly capture and handicap the org/agency (like has been done to the USPS). And even with the USPS despite being severely handicapped it still provides immense value by driving prices down while maintaining the essential service of last mile delivery.

A similar approach could be envisioned for a public construction agency.

There are multiple city and state housing facilities in my area that are perfectly fine. They are not huge or luxurious but they're safe, clean, and well maintained.

When the options ar homelessness or subsidized housing, subsidized housing is absolutely the best option, which is backed up by decades of data.

I’ve seen some housing projects around my city that are actually quite nice. They didn’t end up being shabby because they were built poorly. They were shabby because they were reserved for the very poor and, consequently, became extreme concentrations of poverty and crime. This makes people unwilling to invest in maintenance and continued improvement of their homes.

If the government just went on a building binge of housing to be sold at market rate, or even set an upper bound before qualifying to buy them at a middle class income, it’d work out fine. That’s basically how Singapore does it only they couple it with somewhat aggressive policies to encourage people to downsize their living situations once they’re empty nesting to free up family dwellings for people with families. We probably wouldn’t need to do that second part since we’re not a claustrophobic island, and could just count on natural turnover.

Yes really, that deeper understanding is exactly what is meant when somebody says "the cost to build is lower than the price." If we're going to be pedantic, you're ignoring the huge amounts of uncertainty on costs that are inherent to any project, the amount of risk versus the expected profit.

And indeed that amount of uncertainty: will I be allowed to build eventually? How long will I have to pay interests on assets before I'm allowed to build? Can I actually build what's specified in code or will discretionary processes arbitrarily change what I'm allowed to do, 18 months into the project?

I would expect the development of Austin to continue until market equilibrium and then pause. Decreasing margin does not mean equilibrium. Obviously austin is not at equilibrium because we still have price data on developer activity and that would be near zero if developers couldn’t make returns given risk etc.

I guess I don’t see where we disagree?

Your explanation of fluctuations in supply and demand are not very revelatory. Everything being in flux at all times is kind of an elementary fact of life.

The problem is it can't drive prices below what the free market would dictate?

Talk about praising with faint damns.

I get what you mean, but I doubt corruption is good for building good housing

The opportunity cost has already factored that in. Unless you think cost calculations are arbitrarily forgetting to include certain costs for no reason?

> Politically, we must stop prioritizing the views of homeowners at the local level. They already got their reward, massive unearned capital gains on their residence, there's no need to give them priority on land use over the general needs of society.

They are the majority of people in most areas, so it does make sense that they would be given priority in some ways.

The rest of your post is unsubstantiated vitriol, which isn't exactly convincing.