> Increasing housing supply does not decrease home values

This contradicts every common theory of economics I've heard.

bwhiting2356 4 days ago | parent | next [-]

https://en.wikipedia.org/wiki/Network_effect

	▲	pibaker 4 days ago \| parent [-]
		https://en.wikipedia.org/wiki/Supply_and_demand

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bryanlarsen 4 days ago | parent | prev | next [-]

He said home values, not prices.

The value of a home to an owner should be higher than the price, otherwise they should sell and move. (We're talking theory here, there are a lot of good reasons why people don't do what they should).

Building more houses will decrease prices, but increase value. Until the two meet and then the new houses will stay unsold and will stop getting built.

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slopinthebag 4 days ago | parent [-]

Can you explain the difference between price and value here? Like I understand in general that the market price of a good might not align with the price an individual ascribes to a good, but in this case why would value rise with more supply?

	▲	nrr 4 days ago \| parent [-]
		In the case of housing, agglomeration effects play the biggest role. A single family house in the middle of nowhere is very scarce, but it also has limited economic productivity[0]. Notably, that lone house isn't enough to support commerce. It's also worth observing that land supply is a fixed constraint[1], and a platted parcel is what everyone should be looking at. The more inhabitants we can keep on a parcel, the more potential customers and employees we have for the businesses adjoining that parcel. -- 0: In some models, it's also said that this house has limited utility, but I'm reticent to put this front-and-center on HN. I've nonetheless left it here as a footnote to split the difference. 1: At least, it's fixed barring, like, land reclamation, which is extremely expensive.

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al_borland 4 days ago | parent | prev | next [-]

I wonder if it’s akin to how adding lanes to a road doesn’t reduce traffic. Once the road has more capacity, people use it more, using up the added capacity and leaving it in the same congested condition.

I think their theory with housing was similar. Added supply would create the conditions for increased demand to fill it, and everything would equal out. Maybe a short term dip (as is the case with traffic), but not a a long-term downtrend.

Bringing people to the city could also act as more of a feeder for future single-family home buyers in the area, and those still do have a more limited supply.

I think the big question will be what happens if we build a ton home housing right as the baby boomers are vacating their homes. Is this a short term crunch, where building to meet it will create a surplus of housing over the next 10-15 years that will tank the market?

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majormajor 4 days ago | parent | prev [-]

Are there more housing units in Manhattan or Dubuque?

Which one has more expensive housing units?

Part of the purpose of development is to make more shit happen and increase demand. It's rarely just "new increaesed supply vs constant demand"

Or rather: a demand that would result in anyone producing new housing units does not happen in a vacuum. And outpacing that rate of demand rarely happens from construction alone.

	▲	smallmancontrov 4 days ago \| parent \| next [-]
		If you built more houses in Manhatten, would it increase or decrease Manhatten house values? If you built more houses in Dubuque, would it increase or decrease Dubuque house values?
	▲	orangecat 4 days ago \| parent \| prev \| next [-]
		People in hospitals are less healthy than the general population. Clearly hospitals make you sick.
	▲	kstrauser 4 days ago \| parent \| prev [-]
		> Are there more housing units in Manhattan or Dubuque? Which one has more expensive housing units? That's an interesting question, because it's often — not necessarily in this case, but often — asked by people who ignore capitalism when it's inconvenient to their case. Other askers simultaneously claim things like "Dubuque has a lower cost of living" and "Dubuque is a better place to live". That ignores the fact that Manhattan is more expensive because more people want to live there, to the point that they're willing to pay several times more for the benefits they believe it gives them. When someone argues that city X is n% more expensive than city Y, it's another way of saying that residents believe they're getting at least n% more value from Y than they would from X.