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Comment by aussieguy1234 | Hacker News Reader

There is one issue with the developers - they have less incentive to build enough homes to actually drive down prices via market forces because it means less profit for them.

If all red tape were removed, it would take years and years to bring down prices if you are just relying on private developers. It would happen eventually, but would take a very long time.

One possible solution here is for the government themselves to get involved and build homes, this will bring down prices much more quickly. Not as welfare or "low income" housing, but as an actual market intervention. This happened in Australia in the mid 20th century and had good results.

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Developers are not a unified cartel, in fact they can be very far from it.

The problem is that developable land supply in expensive metros has become so small that a few large developers can corner the market; however, historically a good portion of housing stock comes from conversions or developments built by small time landlords (to go from one units to three on a plot of land, as an example). There was an article recently on how a lot of the new ADU units recently are actually being built by the homeowners who currently live on that land. https://www.nytimes.com/2021/10/08/business/economy/californ...

> There is one issue with the developers - they have less incentive to build enough homes to actually drive down prices via market forces because it means less profit for them.

People were building their own homes for centuries before there were "developers". I would argue that over-regulation has made it extremely difficult for small builders or family builders to attempt to build their own homes. Only large corporations with a legal team can run that gauntlet.

If regulation were reduced, we'd probably see a lot more small time builders, or people taking classes to learn how to build their own homes, cooperatives being set up (possibly organized through Y Combinator startups dedicated to that) where people could Amish-style bring a community together to build homes.

> they have less incentive to build enough homes to actually drive down prices via market forces because it means less profit for them

If a developer can replace a $5mm house with a 30-unit tower of $500,000 apartments, that's good business. Of course, if you put ten years of planning commissions and environmental reviews in between, the cost might need to be $1mm. And if the neighborhood blocks the building because it changes the character of the neighborhood, the entry cost will remain $5mm.

Why would it take long?

Rich people in SF live in crappy homes today and would love to free them up and move to nicer homes.

The more rich people that move out of the older homes, the more affordable the older homes become.

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