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Comment by somewhereoutth | Hacker News Reader

Let's take SF as an example. If a significant number of new units were built (somehow without detracting from the character of the city), would it really lower prices much? Likely not - instead prices would dip just enough to make it viable for large numbers of high income people from outside SF to come to the city (which by massing effect may make SF even more desirable, so actually higher prices!)

Wealth taxes are not a fairly tale, though of course they are a nightmare for the excessively wealthy! In the UK we used death duties to finish off the aristocracy.

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This is a bizarre idea contrary to how many housing affordability crisis were actually solved in the past. Would SF's housing prices go down if you were to build 10,000 new units? You're right, probably not that much. Would SF's housing prices go down if you were to build 1M new units? No doubt.

Shenzhen grew from 100,000 people in the 1980s to 13M now with no housing affordability crisis...by building. The whole pearl river delta region is essentially an 80M people megacity with no housing problems...because they continuously built. Tokyo is also a classical example of continuously building infrastructure to support millions more people per decade.

Are you sure it's profitable to build 1million units in Soma (or whatever portion isn't protected historic houses limited to 3 stories) ?

"Profitable" and "necessary" might sometimes be at odds.

That's why we have governments, though.

> Shenzhen grew from 100,000 people in the 1980s to 13M now with no housing affordability crisis...by building.

I wouldn't use China as an example of solving the housing problem by simply building. There's currently a large oversupply problem [0] and, not entirely unlike the US (but more extreme), excess supply of housing has lead to people simply owning more than one property as an investment strategy.

0. https://www.wsj.com/articles/chinas-smaller-cities-struggle-...

yeah thats because the building was centrally planned, which is always a worse choice than just allowing the market to work itself out. It doesnt detract from the mind numbingly obvious statement that increasing supply decreases prices.

Increasing supply doesn't necessarily decrease prices. Increasing supply above demand is required for prices to decrease.

Unrelated to the above, but China's excessive building isn't actually from central planning, but because real estate is the one of the only viable investment methods in China, and because selling land to developers is one of the only ways local governments can raise revenue. Chinese cities are quite expensive to live in (especially if you have Western standards)

> mind numbingly obvious statement that increasing supply decreases prices

Only in idealised markets. Housing markets are often not like that.

can you explain how and when this wasnt the case barring regulatory interference?

This idea among residents of San Francisco that all 8 billion of us humans want to live there and it’s impossible to build enough housing to satiate demand never ceases to crack me up.

Shenzhen and Guangzhou are some of the least affordable cities in the world when it comes to housing prices. Yes, rents are actually not that bad and many units are vacant being just used as investments, but the cost to buy is astronomical given the Chinese housing bubble.

Tokyo is an example where houses are torn down every 39 years so a new one can be built. Also, given the lack of population growth in Japan as a whole, the growth rate in Tokyo is anemic. Tokyo metro area has even been losing a small amount of population in the last three years: https://www.macrotrends.net/cities/21671/tokyo/population

Houses often are torn down, but not apartments.

Apartments are torn down every 40-50 years instead of 30.

Tokyo capped out and is now declining in population because there isn’t a backlog of millions of people who wanted to live there but couldn’t or had to move out because rent is 3x in Tokyo compared to Osaka.

Rent is maybe 30% higher in Tokyo, even less if you live on the end of a train line. Can you imagine how many people would move to Bay Area CA or New York City or Boston or Seattle if their rent was only 30% higher? Pre pandemic my 3 bedroom in Boston area was 3500/mo. Since the pandemic rents have gone even higher. We have bidding wars of people trying to win a rental unit. Bidding wars. It’s ridiculous.

Also I don’t see your point about houses being torn down. If anything that should make it more expensive (since buying used and not rebuilding is cheaper). Realistically rebuilding is vital (in conjunction with subdivision) because that’s how you increase density

> but couldn’t or had to move out because rent is 3x in Tokyo compared to Osaka.

Osaka and Nagoya are losing people also. The changes are for metro areas, not city cores.

> If anything that should make it more expensive (since buying used and not rebuilding is cheaper).

It simply means that you can't compute new housing very easily by new housing construction rates (you have to subtract old housing demolitions).

Density currently isn't increasing (you tear down one three story narrow house and replace it with another three story narrow house, you need to buy a bunch of SFHs to make a new apartment building).

> Would SF's housing prices go down if you were to build 1M new units? No doubt.

Where could you built 1M units in San Francisco? It is less than 50 square miles surrounded on 3 sides by water.

If it works temporarily, but gets consumed by induced demand, then do it again. And then again. And then again.

This is a good thing. If SF is so great, many more people will be able to go there.

So you are claiming that if SF becomes as dense as Manhattan, it will be as cheap as Manhattan? Or maybe Hong Kong’s density and housing affordability is the target here?

The ideal situation is Tokyo, where a lack of culture in speculating on housing coupled with population decreases leads (going down in the metro area for the last three years) to housing affordability.

I'm claiming that the balance of supply and demand affects housing prices.

If you increase the supply by enough, that will tip the balance to where the market clearing price will go down.

The real underlying problem is that you have X million people who want to live in the quaint version of San Francisco. It's literally impossible; the quaint version dies at some point as more and more people are piled in, even if the resulting city is world-class and quite desirable.

Just like the entirety of Los Angeles couldn't move to Santa Barbara without Santa Barbara being changed forever.

The closest reasonable equivalent we can do is maintain the quaint "old town" and build a "real city" around it where people actually live and work, and the old town remains as a tourist destination, basically.

This is the case in much of Europe. The Paris you visit and the Paris people live in are often mixed, but they're noticeably different.

Rapid mass transit to city centers can hide the distinction.

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