Hacker News Reader

Comment by fastaguy88 | Hacker News Reader

Perhaps this is true on average over all housing classes, but in my university town, there has been a tremendous increase in supply (luxury appts for rich undergraduates) and no decrease in costs. And now there is a proposal to remove all R-1 (residential) zoning, so large appts can be build anywhere, all in the name of making housing more affordable.

But past increases in supply have not made housing affordable, and the effect will be to convert older smaller (cheaper) single family homes into apartment complexes that are designed for students, not single families. It seems pretty clear that the up-zoning will not make housing affordable for the middle class. Perhaps it will be more affordable for less price sensitive students.

View on HN

The scope of potential impact from building luxury apartments is wider than a price decrease. It' likely your area has a far larger demand for housing than the amount that is being built + existing housing stock, regardless of type (luxury vs affordable).

Put another way, building the luxury apartments helped prevent an acceleration of price increases across all levels of housing stock. Students from high income families need a place to live, and instead of taking housing stock from the affordable pool, further driving up costs, they have additional desirable supply at their income level.

But! That only prevented price increases due to limited additional supply and was insufficient to drive down costs. Overall aggregate demand still exceeds supply. The simply answer is to build more at all price levels. Small incremental increases of supply are unlikely to drive down costs.

Besides the other commenter's point (that had the apartments, luxury or otherwise, not been built, prices would have gone up), I think college towns are an exceptional market, especially depending on what type of college it is. If it's an elite, highly selective university, a lot of the students going there are largely price-insensitive. Same for universities with a lot of foreign students.

And in general, college towns are highly desirable places, with a blend of small-town feeling and cultural amenities that punch way above their weight due to all the students. It's hard for prices to fall in situations like that.

You're assuming prices wouldn't have increased by even more if the apartments weren't built. I'm not sure why. Increasing supply has absolutely made housing more affordable relative to where it would be if supply hadn't expanded. You're just not expanding supply fast enough to see a decrease in cost.

Perhaps more affordable on average, but if the apartments replace older smaller single family homes, then the supply demand thesis suggests that those single family homes would become less affordable.

So yes, things become cheaper if everyone wants to live in an apartment. But for modest income folks in small old houses, up zoning means moving out of the community.

By the pigeonhole principle not everyone who wants to live in a growing city can own a house. So long as houses are allocated economically (as opposed to submitting an application to join the queue at the People's Bureau of Housing or whatever) this will reveal itself as some people being unable to afford houses. So we can conclude that the affordability of single family homes in isolation isn't the problem we should focus on.

> So yes, things become cheaper if everyone wants to live in an apartment.

People make tradeoffs all the time. Lots of people would love to own a nice house in a nice neighborhood within walking distance to a forest and to downtown for not very much money. But too many people want to live there for them to all own houses. So some will choose to live in an apartment instead, and others will choose to move farther away to be able to own a house. Preventing upzoning will just mean that fewer people get to make the tradeoff to live in that neighborhood, and only the richest of them will be able to pay through the nose to do so.

> But for modest income folks in small old houses, up zoning means moving out of the community.

Well, nobody's forcing them to. After their house has been upzoned they can live in it for as long as they want, then sell it to a developer for millions of dollars when they want to move. The developer will use the land to build apartments, and sell them to people who don't have a million dollars to buy a house. Everybody wins.

Interesting to hear that zoning ordinances are equivalent to the people’s bureau of housing.

And nice to know that the market serves everyone (if they have enough money), but those retirees in their little house will be moving out, because they will not be able to afford the property taxes. So actually, the “market” is forcing them out.

It is also interesting to hear the argument that even though increased supply has not slowed (and may have accelerated) housing prices, we should ignore that data, because theory tells us that in the absence of increased supply, prices would have risen even more. That’s a difficult point to argue, since it seems more like faith than fact.

Reply on news.ycombinator.com