Comment by underlipton | Hacker News Reader

Comment by underlipton | Hacker News Reader

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This is the common refrain, however, consider:

There were two shitty, cheap units. The people in the first were forced to move out when a developer bought it, tore it down, and built the luxury unit. They have been homeless/going into debt renting a third slightly-less-shitty third unit. Without the first shitty, cheap unit, the second's competition was that third slightly-less-shitty unit; they raised their prices commensurately.

The well-off person moved into their nice new unit. The poor person's choice is staying in the unit they can't afford, or spending thousands on moving costs to go to a shittier unit that they also can't afford. Oh, and the city "motivated" the luxury unit's development with tax incentives. A larger percentage of the poor person's check is now going toward paying that back.

This is the reality once you get past simple narratives and reconcile with the fact that building tons of luxury units hasn't actually moved the needle.

The whole point of this article is that building tons of new "luxury" units actually did lower rents, moving the needle exactly as predicted.

The zoning code in the location of your anecdote must be completely suffocating, or that developer would not have left so much money on the table by failing to add more units.

Where I live, a developer recently tore down the cheap, shitty house on the corner and built not one new "luxury" townhouse, but eight of them. Across the street, a larger building was recently demolished, and now they're putting in twenty-one new units. Two cheap homes lost: but a net of twenty-seven homes gained. That represents a whole lot of competitive pressure taken off the lower end of the market.

See https://news.ycombinator.com/item?id=47858770

It's not traditional development lowering rates. Think about the math. You've replaced two cheap homes with twenty seven "luxury" homes. How would that lower the average price? You've weighted the average rate with an order of magnitude more samples on the top half of the range. The only way to see a drop is for there to be a precipitous drop in low-end rates, or a significant increase in low-end, non-traditional development. I think it's the latter, because California has uniquely supportive ADU policy, and implemented it on a timeline that tracks with the rate decreases.

EDIT: Also the end of ZIRP and refinancing finally coming around.

Oh, wouldn't it be funny if lower rates had nothing to do with building volume, and everything to do with landlords having to pull units out of warehousing because their interest rates increased recently?

Thank you. Too many people genuinely believe it is a simple supply and demand problem. Housing is a much more complicated "commodity" than people want to concede.

Where do you see developers buying up units to tear them down and replace them with the same number of units?

When I see properties getting redeveloped it's usually a tiny house getting replaced with an apartment building. Often it's a strip mall or surface parking lot that wasn't housing anyone getting replaced.

I don't think I've ever seen a redevelopment that doesn't significantly increase the amount of living space.

>Where do you see developers buying up units to tear them down and replace them with the same number of units?

DC. And when there are more units afterwards, they're luxury. Building more units doesn't magically lower rates; it has to drive landlords of older units to lower their rates. Did that actually happen? You'd have to prove it. Something else could have, like increased non-traditional competition or the end of ZIRP and refinancing horizons coming to bear.

That's nonsense. DC has gone from 297k housing units in 2010 to 369k housing units in 2024[1][2].

Developments generally involve more units than what they are replacing.

[1] https://www.census.gov/data/tables/time-series/demo/popest/i...

[2] https://www.census.gov/data/datasets/time-series/demo/popest...

Row houses often become more expensive row houses. It may not be the bulk of "new" housing in DC, but you asked where it happens, and that's where. So, chill.

In any case, gentrification, infamously kicked thousands of families out of projects, subsidized housing, and regular rentals, replacing them with... definitely not affordable housing. Rent has only gone up. And unless you're a builder, the goal is not building, it's only a means to the end of putting people in affordable homes. If building isn't doing that, it's a policy failure, and other avenues need to be pursued.

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