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0 pointsdclusin3y ago0 comments

My personal belief is that the housing supply scarcity is having the opposite effect and is actually holding property values down. Let’s say there’s two 1 acre lots that have a market value of $1m each. A developer can buy them and turn them into 8 condos and sell them each $600k yielding $4.8m. Is it possible the developer would pay more than $1m apiece for these properties? Obviously, these numbers are made up someone who has no real estate experience. with current prices the way they are largely due to zoning and external factors, the base economic case for these things holding down property values seems at the least a defensible argument.

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lotsofpulp3y ago

At the property values referenced in above post, the opposition to apartment buildings is not exactly about properties’ sale prices. Presumably, the residents are happy where they live, so their priority is not in maximizing the sale price, but keeping the riff raff out that cannot afford $1M+ homes, and hence have to live in apartments.

The concern about decrease in home prices is just cover from accusations of discrimination, although keeping home prices high is a necessary component. But maximizing them is not.

dclusinOP3y ago

Yeah that’s a good point. That the value argument is actually just a veiled way of saying people and buildings that don’t look like the way we want them to look.

carom3y ago

This is 100% true up until demand is met, then it will stabilize. Currently though, the more you can utilize land the more it is worth.

Single families can compete against 2 families for the land, it is a lot harder when you can fit 10 units on the same property.

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