Real estate folk are nothing if not persistent. Housing prices collapse? It's a buying opportunity!
The latest thing I'm hearing is that we need to create more buildable land, thus should extend the UBG boundaries. More land would lower housing prices.
I just can't see this.
If the price of the land was the main component of housing prices, then all those houses that were built before land prices went up should be cheaper still. Hell, any houses built with cheaper materials, with cheaper financial services. That isn't happening, because the main component to housing prices is.....the going rate. I don't believe that when I had my house appraised last time, they asked either the original land price....or for that matter, the price I paid for the house.
Ask yourself this. If supply and demand were strictly functional, wouldn't the huge supply already be bringing down prices? I think they are, but the prices are sticky, and people don't want to sell for less if they can help it. More land wouldn't change that psychology in the slightest.
Only if the government absolutely mandated the prices be held artificially low. They'd have to create a lottery system for buyers, because who wouldn't buy a house that was 1/3 lower?
Well, lots of people. Because again, the psychology of the buyers and sellers. I've heard complaints for years that sports cards were too expensive, yet every single time a cheaper brand has been created, it has been rejected by the consumer. "That's junk," the customer will say. "But why do prices have to be so high on these other brands I want?" Hey, I got news for you, buddy. All cards are made of paper, and all have pictures of players on them. The 'value' is created by the marketplace, not by the frakken material.
What would happen if another 500 houses were suddenly created on lower cost land? What's more likely, that those houses would sell significantly below the going rate, and that would force the other 2000 or 3000 houses to lower their prices? Or that the 500 houses would be near the median price, pricing themselves at the going rate? I'd be willing to bet that prices would be dictated by comparable prices, and not the other way around.
So you have to admire the real estate people for trying to create an even bigger glut of housing. Takes real hubris.
2 days ago