Build more housing, lots and lots more housing. Central Paris is beautiful and it’s almost uniformly dense eight story walk ups. Build new cities. It’s not like the Dutch haven’t built commuter cities around Amsterdam before. Do it again, taking account of the lessons learned from places like Almere.
Sydney is a great example of where that doesn’t work. There’s a crane every 100 meters here and everyone but people with loads of money or rich foreigners is priced out.
We've already tried this, it doesn't work. Housing is valued exclusively by the value of the housing around it. Building more housing raises the value (and therefore the cost) of all nearby housing, and does so continuously until the economy resets.
So, if you are a private equity firm, you love this, because it's a guaranteed safe place to park tons and tons of money.
But if you are a human who needs to buy housing to survive, more housing hurts you, because it drives the "fair-market value" for all nearby housing higher, making any specific unit less affordable to you personally. Paradoxically, the more housing construction happens, the less likely a person can actually get housing.
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There isn't a "just supply vs demand" on housing, because supply isn't fungible, and (with the exception of perhaps California), the demand is not primarily driven by people, but by private equity. You can't out-build private equity, no matter how many cranes hit the sky, because (currently) the act of taking the loan to begin construction generates more of the private equity that you are trying to outbuild. To fix housing, you have to fix equity first, because (in most but not all cities) the finances are the problem, not some huge influx of new residents.
"We'll just out-build these high prices" is the housing equivalent of "we'll lose money on each transaction, but make up for it in volume".
> We've already tried this, it doesn't work. Housing is valued exclusively by the value of the housing around it. Building more housing raises the value (and therefore the cost) of all nearby housing, and does so continuously until the economy resets.
Really? Maybe I'm being overly simplistic, but surely building enough dwellings to exceed the immediate demand would lead to prices dropping?
Could you point towards some links to learn more about this?
> Maybe I'm being overly simplistic, but surely building enough dwellings to exceed the immediate demand would lead to prices dropping?
I thought Toronto was doing a good enough job at building lots of housing, and it still hasn't worked.
The issue is that in order to actually have prices dropping, you need to overbuild by a bit. But prices dropping is an undesirable outcome for real estate developers, who are almost exclusively responsible for building new housing in a city. Naturally they don't want to shoot themselves in the foot, so they will only ever build as much as to satisfy the current demand, but not quite, and try hard not to exceed it.
Even with government-issued social housing, there's no way to solve this: as long as there's any space for developers in a market, their new supply is going to adapt elastically to just underserve current demand.
The only thing that has practically lead to supply-related price drops is an irrational boom followed by a realization that developers have actually (unintentionally!) overbuilt this time. Unfortunately, irrational booms are also accompanied by prior fast price increases and a lot of pain on all sides, so we probably shouldn't advocate for one.
So, I'm not sure what a good solution is to actually provide more supply than needed and have prices dropping, but the free market is not it. Especially as real estate developers get better with forecasting demand.
Maybe demographics will help a bit in 20 years or so.
Instead of building more housing, build more narrow-gauge electrified commuter railway lines and stations--with large multistory parking garages adjacent in the US, and maybe bike lockers attached in the EU.
If you make everywhere effectively closer to everywhere else, there is more competition for "good location", and landowners can't charge as much for any specific spot. Or at least they can't until demand goes up again.
I dont think that matters. The only time you care about existing city architecture is when youre building a tram. Most trams use standard gauge and that works fine.
Tunnel width does not depend directly on the gauge but on the loading gauge, i.e. the size of the car. That is generally wider than would be required by the gauge.
On the other hand, using the same gauge as other rail means you can run trains across both old and new infrastructure.
> We've already tried this, it doesn't work. Housing is valued exclusively by the value of the housing around it.
Not sure about the claim that this has been tried. Most cities where building housing is happening are having rents increase at much lower rates than cities like SF that refuse housing construction.
Moreover if we didn’t just focus on private construction and returned to pre 1980s style construction of massive public housing projects, it seems likely to me that supply and demand could start working and hold rents steady or reduce them. (E.g. something interesting I saw on this recently https://twitter.com/RottenInDenmark/status/11080317257523363... )
Instead of public housing most anti-housing activity seems to be focusing on failed policies like rent controls.
If your model of the property market is correct then you should be able to reliably make enormous amounts of money by investing in real estate investment trusts with exposure to the appropriate property markets or construction or construction materials companies that are publicly traded.
There’s nothing special about private equity that gives it better access to markets like property.
“We’ll just out-build these prices” is the equivalent of “Charge more” when the problem is that you, a consultant, are too busy. If you keep doing it for long enough the problem goes away. Tokyo has grown by 1.5m people since 2001. House prices and rent have been basically flat throughout. Have the metropolitan areas you’re talking about added about 100,000 people a year for almost two decades?
If people are just building investment properties to park money that sit empty of course that's not going to help things, it's not really increasing the supply if no one lives there and no one can rent it. They might as well be building a statue or some non-housing object.
That doesn't mean actually increasing the housing supply is a bad idea. Heck, maybe they could have a tax on vacant units to try to force those investment properties that are already built on to the rental market. Or if that's too hard to enforce, raise the property taxes enough where vacant units look undesirable as an investment.
I don't know about the speculative investment market, but at least for the rental market demand is people. I think there are very few people just renting a place with the intention of leaving it unoccupied forever. If there were affordable rental properties everywhere, I think it would be less of a problem even if real estate investments remained expensive.