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Comment by bokonist | Hacker News Reader

If you break out the numbers further, it's land prices that have been responsible for the housing price increases, not the cost of construction. The main culprits are zoning laws. It's simply not possible to build duplexes or more densely packed homes in most suburbs, and so all the land gets spoken for and no more housing can get built.

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The main culprit are zoning laws.

I disagree. The Vancouver area is one of the most expensive in the world for detached house (median house price > 10 x median income), but that's not for lack of denser housing options. I don't know anyone under age 40 who has even considered buying a detached house here; the default option is to buy a condo in one of the many towers which are going up, and the expensive "yuppie" option is to get a townhouse.

Land is expensive because people want to live close to the city center; not due to excessive zoning restrictions.

But excessive zoning restrictions exacerbate the problem. In Cambridge, MA there are significant limitations on how high buildings can be thus limiting construction of larger apartment buildings. This in turn drives up the cost of housing due to the lack of supply.

In the Boston area, where I live, the central city and inner suburbs have bans on how high a building can go and generally make it extremely difficult to get building permits. I've heard it takes up to 10 years and millions in lawyer fees to get a permit to build a new apartment tower. The mid to outer suburbs have strict laws against duplexes, have minimum lot size, and greatly restrict new development.

So either way, it is nearly impossible to build. With unrestricted supply, the cost of housing would be no greater than the marginal cost of building a new apartment tower. But because of the supply restriction, any house within 30 miles of Boston costs far, far more.

The marginal cost of building a new apartment tower needs to include the cost of increased public services or you end up with perverse incentives.

Very true. Of course, the cost of building public infrastructure has also dramatically increased due to the various unions of government workers.

There are different municipal incentives at work in a large urban center than in a suburban environment. In the suburbs there is a definite bias towards larger detached homes that cost more money as it increases the tax base while only slightly increasing the per capita costs (for water + sewer + roads, etc).

Every city with wide swaths of land with restricted density has an oversupply of detached housing, which lowers prices relative to the alternatives, but increases prices across the board due to the overall reduction in available units. Reducing restrictions on density allows developers to build what they think people will buy, and people can choose the price they're willing to pay for it. If anything, the gap between condo and house prices in Vancouver is evidence that zoning in other cities is raising prices. Vancouverites clearly prefer to trade detached housing for a better location, and cities that prevent people from making that choice are doing their citizens a disservice by making any given location more expensive to live in.

If Vancouver had zoning similar to Sun Belt cities, people under 40 would buy more detached houses, but they would be in the suburbs. Housing in those suburbs would be more expensive than it would be in current suburbs if there wasn't an urban growth boundary.

> "people under 40 would buy more detached houses, but they would be in the suburbs."

The trick with Vancouver is that it's completely boxed in, and almost all land is spoken for already. Pacific ocean on the west, mountains to the north, mountains to the east, and the US border to the south. There's not a lot of land to sprawl into, especially if the province wants to retain agricultural output.

Far-away suburbs like Surrey have already seen skyrocketing housing prices, and developers are trying to convert as much farmland as possible, but the reality is that Vancouver simply doesn't have the luxury of sprawling outwards. I'm not particularly sad about this fact (I just can't get behind suburban models of cities), but it does contribute to the ridiculous housing prices.

Ah, I didn't realize that. My point was that in the absence of boundaries, suburban detached housing will be cheaper without zoning that restricts density to an artificially low level.

Vancouverite here - the city has infamous height restrictions as well as maximum density bylaws in zoning. The downtown core would be an even denser maze of skyscrapers if it weren't for these laws, and IMHO they do contribute to the sky-high housing prices.

Vancouver's transit was essentially in standstill since the 80s until very recently, and "reasonably accessible to downtown" land was already all spoken for. Couple this with onerous zoning restrictions and you see why stuff got expensive real fast; the influx of rich immigrant housing speculators really didn't help either.

The city's overdue for a major reckoning of housing prices, and I for one will be happy to see it. It is ludicrous for housing to be 10x income.

While the fact that more people want to live in Vancouver than there are houses in Vancouver contributes to the cost, the city does place a premium on views of the north short mountains and it being a livable city to the detriment of increasing supply:

http://bit.ly/cEBUTG (CBC NEWS article, "Vancouver rejects downtown high-rise proposals")

While the 10x median stats has many causes, one cannot discount the zoning element as being trivial. I imagine one can find similar practices in most major north american cities.

Vancouver is an exception because there isn't much land. They are choosing, as a city, to build up, not out. There are only a few roads out and if you've been stuck in the traffic on the 1 just outside the city, then you know it isn't convenient to live far from downtown. Commuting isn't fun and Vancouver has almost the best weather in Canada, definitely the best for a major city not on an island.

Even more, the hongkongese loved vancouver and chose it over many of the other options for post brit rule.

And I know some < 40er's with detached homes, so I suspect your hyperbole is a bit extreme and indicates a lack of real effort to communicate honestly or a lack of real understanding of the situation in vancouver.

I'm from Vancouver, my folks own a detached home there... and the previous poster isn't entirely incorrect in his statements on Vancouver housing.

The speculative bubble started in the mid 90s, and housing has been rising ever since. It was still within reach of middle class folk all the way up till, oh, about 1997-98 or so. The announcement of the Olympics drove prices even higher, so that's where we're at today.

My folks bought in about 15 years ago, and even then our modest 2-story cost about $300K. It is worth $800K now, and our neighbourhood is not even one of the explosive-growth neighbourhoods. Heck, we're not even in Vancouver proper. Buying a detached home in Vancouver city itself is, to put it strongly, impossible for anyone who only has a day job as income. Tiny single-floor bungalows are priced into the $700K's, it's just all so absurd.

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