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Comment by endisneigh | Hacker News Reader

> The reason housing increases in value to the extent that it does is that areas where it's in high demand prohibit creating more of it. It would be like prohibiting the construction of new cars. Obviously that would make existing cars cost more in general, independent of the fact that some cars are worth more than others.

Yes, and the areas that are desirable and the ones that are restricting the construction. Even if we suppose that you allow infinite construction, there will always be certain houses or parcels of land that will cost more, perhaps because of being closer to certain things.

Your example ignores reality. It is sometimes just not possible to build more housing that shares the exact same properties of existing houses.

If an area is desirable because of nature, then naturally those who first live there will prevent the destruction of said nature that brought them there to begin with.

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You're the one ignoring reality. In your defense, basically every clueless voter living in the US and a lot of Europe does it too, though.

In Tokyo, you can work part time as a non-union, non-salaried janitor or a nail stylist and make enough to live within 20 minutes of the bustling heart of downtown. That's due to light zoning restrictions making housing into a depreciating asset for everybody instead of a stupid fucking pyramid scheme

https://www.worksinprogress.co/issue/the-housing-theory-of-e...

I can't believe that anyone who actually lives or has lived in Japan and who has also lived outside of Japan could defend the property market in Japan, so I am willing to presume that you are not in that group.

It's a corrupt, poorly regulated market that suits the construction industry and produces - on the whole - ugly, poorly insulated and tiny living spaces, surrounded by concrete (again, the amount of concrete used seems to be driven by corruption) that leads to overpriced land and buildings that depreciate so much that they are destroyed within one or two generations.

A quick search of this site alone will bring you reams of complaints about Japanese housing and plenty of good reasons why it should not be held up as an exemplar.

Never set feet into Japan, but the US construction industry is no better. The only difference is that what you get isn't tiny and made from concrete, instead it's huge and made from sheetrock and chipboard. But it's ugly, shoddy, poorly insulated and overpriced. And the industry and the permitting process is corrupt.

> Even if we suppose that you allow infinite construction, there will always be certain houses or parcels of land that will cost more, perhaps because of being closer to certain things.

In which case those parcels of land would end up with high density housing on them so more people can live near those things, until such time as the cost per square foot falls below the construction cost.

> If an area is desirable because of nature, then naturally those who first live there will prevent the destruction of said nature that brought them there to begin with.

"Nature" e.g. Montana or Alaska or the Ozarks. Do you believe these to be the places with high land costs and restrictive zoning laws?

> In which case those parcels of land would end up with high density housing on them so more people can live near those things, until such time as the cost per square foot falls below the construction cost.

Why would this happen? You're talking about the construction of more housing like it's free.

Perfect example of this is something like Chicago - let's say you live right near the loop and are fortunate enough to have a SFH that's huge. The land is worth a lot, and you like your lifestyle. Sure in some perfect world that house would be purchased and turn into a high rise, but you want to live near the loop and have a SFH. Therefore that house will be expensive.

Others in similar situations will do the same. Later more people will come to Chicago and see that they want that lifestyle as well - these types of houses will then command a premium.

Not everyone will sell to a developer to turn it into a high-rise.

> "Nature" e.g. Montana or Alaska or the Ozarks. Do you believe these to be the places with high land costs and restrictive zoning laws?

Are those areas desirable? I've never been.

> Why would this happen? You're talking about the construction of more housing like it's free.

Not free. Less than the market price of existing real estate.

Suppose you have a 10,000 square foot building and it costs a million dollars to knock it down and build a 20,000 square foot building on the same lot. If doing this would cause the new building to be worth $500,000 more than the existing building (because local housing supply is high relative to demand), you're not going to do it, because you'd lose half a million. If doing this would cause the new building to be worth $1,500,000 more than the existing building (because local housing supply is low relative to demand), you are going to do this -- unless prohibited by zoning. Because you'd make half a million.

So when housing prices go up, you'd get more construction, until they go back down below the construction cost.

That doesn't cause housing prices to hit zero, but it establishes a long-term price ceiling, because any price above it makes new construction profitable, and increased supply lowers prices. So housing costs would converge on construction costs even if demand changes.

> Are those areas desirable? I've never been.

Those areas are beautiful, and the land is cheap and hardly anyone lives there because they're far from major cities. It's not proximity to nature that makes land expensive, it's proximity to jobs.

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