Comment by dlcarrier
1 day ago
Market rate housing doesn't need to trickle down. Most NIMBY regulations focus on the prevention of building low-value housing. Let developers flood the market with small, high density units, and they'll be cheap right away.
Developers are incentivized to build whatever units are most profitable, not what lowest income people need. More expensive units make more money.
Besides that, land and construction are both limited resources that constrain developers ability to “flood the market with small, high density units.” For example in high-land-value urban areas, developers need to build expensive units to be able to make a profit.
Yes, developers are incentivized to build whatever units are most profitable, but the price per square foot is much higher for small units than for large units, so without regulations prohibiting high-density projects, you'll end up with far more units for a given amount of resources. Instead of building 20 units of 2,000 sq ft, if allowed a developer could instead build 40 units of 1,000 sq ft, for a similar cost, and sell them for less per unit but more per square foot. Without using any more land, foundation, or roofing, and only needing extra fixtures and interior walls, it would reduce the labor and materials needed per unit, while increasing the income.
It’s more than just extra fixtures and interior walls but bathrooms, kitchens, plumbing, and HVAC - some of the most expensive parts of a build. For example if a developer has 4,000 square foot of land, and it costs $1.6 million to build 4 units selling at $2.4 million total - vs costing $1.2 million to build a luxury unit selling at $2.2 million, they will build the single luxury unit. The overall price for the construction is lower, the price per square foot is lower, but they make more profit.
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there are a ton of build code issues in the US that raise the cost of construction without substantionally improving benefits. As an example, I am in Europe right now, most apartment buildings here have single stair entry and smaller elevators, both of which are prevented by US building regs for bad reasons. Fixing these regs would expand the market for new construction at the low end (lower costs for marginal opportunities) and the high end (makes 4 unit condos feasable).
Western Democracies usually (always?) have planning laws that allow for democratic (ie for the benefit of the people) building plans. In short, we don't have to allow developers to choose.
We could equally levy pressure to improve quality.
In UK, house price inflation has well outstripped material and wage inflation, we should be getting exceptional housing that fits the need of the demos.