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by marssaxman
58 days ago
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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. |
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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?