Hacker News Reader

Comment by adamredwoods | Hacker News Reader

I think building materials, labor, and land is increasing prices. So the market cannot meet demand and is partly causing the problem.

I do think cities can work on accelerating permits and zoning, but cities are strapped for funding to assign people to help with this. Again, shortage of workers.

Down the street from us, is a nice land that has been parceled, they cleared and leveled the land, laid sewer, underground electricity, all set to build houses. Only one problem, the demand for housing has crashed, due to the market. 6 houses all set to be built, completely stalled.

>> stop financializing homes as a financial asset

I don't understand. Isn't this dictated by the market?

View on HN

> accelerating permits and zoning, but cities are strapped for funding to assign people to help

Permits are one of the few municipal services where this argument doesn't make sense. Permits aren't free, after all. Permit revenue scales with the number of permit applications. A city overwhelmed with permit applications by definition has more money to hire staff to work the permitting process.

> A city overwhelmed with permit applications by definition has more money to hire staff to work the permitting process.

Let's say you are paid "appropriately", and that your income comes from the fee payments associated with the tasks you complete. You're fully occupied, and the income from fees matches the expenses (including your salary). Things are in balance, so to speak.

Now we increase the number of fee payments by 80%. You can no longer complete all the associated tasks in any reasonably time frame, but the fee payments will not pay for an additional full time member of staff.

> the fee payments will not pay for an additional full time member of staff

Fortunately, there is no requirement that municipalities only employ people full-time.

> Only one problem, the demand for housing has crashed, due to the market. 6 houses all set to be built, completely stalled.

Are you kidding? They're is good if demand for houses. Maybe not at the price they originally thought they could get for it, but that doesn't mean the demand is gone.

A larger portion of monthly payments now go to interest instead of principal since rates have climbed, but houses are still way more expensive in terms of monthly payments than they were 2 years ago.

The demand is still there, people just can't afford it.

There was lots of demand for townhouses at $900k a few months ago. That demand has decreased.

> building materials, labor, and land is increasing prices

In most high-cost housing markets, this isn’t true [1]. Land value appreciation dominates construction cost factors. In my case, structure is 10% of the value of my home—I could rebuild the structure for 10% of the house’s value.

> don't understand. Isn't this dictated by the market?

Americans treat their houses as an asset. So we vote for policies that increase housing prices in real terms. Contrast that with Japan, where housing is a depreciated asset.

[1] https://www.construction-physics.com/p/how-much-do-construct...

> I think building materials, labor, and land is increasing prices

Denser housing provides more functional housing for a given amount of material, labor, and land. For example, if you're building a townhouse, you just need a 10 inch wall instead of two 8 inch walls. That's less material and labor.

> the demand for housing has crashed, due to the market

The demand for housing that can be supplied within the context of the given regulations has crashed. If you allow people to build more efficient housing, then it could be financially viable again.

Near my house (Seattle) they recently built 12 townhomes, just as you describe and the prices for them is US$900k. While they are slightly less than a single family home, affordability is not a key word I would use.

These townhomes, are still available and not selling quickly.

> These townhomes, are still available and not selling quickly.

Then price will have to drop until they sell

Reply on news.ycombinator.com