There is no evidence that building more housing has ever reduced housing prices or that it will do so into the future.
> To be clear, this debate is not about whether new housing can reduce housing prices overall. At this point, that idea isn’t really in doubt. There’s good reason to believe that in regions with high housing demand, building more housing can help keep the prices of existing housing down. In their Supply Skepticism paper from 2018, Vicki Been, Ingrid Gould Ellen, and Katherine O’Regan offer an excellent introduction to the broader question of how market-rate development affects affordability. Citing numerous individual studies and reviews of dozens more, they conclude that “the preponderance of the evidence shows that restricting supply increases housing prices and that adding supply would help to make housing more affordable.”
Because of course it does. Demand doesn't exist in a vacuum, it's a number judged against supply.
If you want to see the real world impact, look at rents where the rules make it easy to build housing. For a city of its size and national importance, Tokyo has dirt cheap rent compared to the states: https://www.numbeo.com/cost-of-living/compare_cities.jsp?cou...
Why? Fixed assets exist outside the supply/demand cycle of high school economics. You can’t make more land but you can always build more houses irrespective of demand. Aside from conjecture and speculation there is no evidence (data) linking house price reduction (not rent) to new housing availability.
Yes, because rules in the US handicap new housing growth.
> The prices increase directly proportional to the current velocity of new housing availability at any given moment.
Yes, because they have the same cause: demand increasing.
Imagine that every car maker was heavily constrained in how many cars they could make. As demands for cars rise, they find every angle to try and produce more cars, but the price keeps going up. Did the new supply cause the price to rise? No, they just have the same cause.
There have been myriad studies on this, almost every economist finds that new housing in booming areas makes housing prices less bad than they would be otherwise.
> You can’t make more land but you can always build more houses irrespective of demand.
This isn't true. Zoning severely handicaps more housing in the places people want to live.
Well, except for Houston (sorta), and indeed, rent there seems substantially lower than other major cities in Texas like Dallas and Austin.
You can rent small two and a half tatami sized apartments in Tokyo that wouldn’t even be legal to let in most of the west. Is that what they mean by reducing zoning rules?
Also, by basically mandating that all housing be rebuilt every 20-30 years, Tokyo effectively prevents speculation on residential real estate (housing depreciates as it gets older, negating land appreciation to some extent).
Japan tearing down building after 20-30 years is, as far as I’ve seen, greatly exaggerated. You see apartment complexes all over the place obviously older than that.
Also, https://www.rethinktokyo.com/news/2019/02/12/whats-lifespan-...
47 is the max, rebuilding is possible. Regardless, older structures are cheaper than newer ones. From:
https://thetokyofiles.wordpress.com/2016/02/25/in-japan-home...
> “half of all homes in Japan are demolished within 38 years — compared to 100 years in the U.S. There is virtually no market for pre-owned homes in Japan, and 60 percent of all homes were built after 1980. In Yoshida’s estimation, while land continues to hold value, physical homes become worthless within 30 years. Other studies have shown this to happen in as little as 15 years.”
I’m all for a similar culture in the USA, it would cut down on rampant and pointless residential real estate speculation.
https://www.youtube.com/watch?v=iGbC5j4pG9w
Notes:
* No one thinks of residential housing as an investment, so there is no speculation.
* Building codes are such that residential can be built almost anywhere. Japan has zoning, it is just really simplified.
* There is no resistance to rebuilding, so it is done a lot (why houses last only 30 years, the market demands new housing).
* Housing can be built on really small lots, only 2 meters of clearance is required.
* A $300k low end house is around 6-700 SQF, which might not make sense from an American context.
The difference is real competition: there's only so much land that exists, and localities only allow so much housing on that land. Demand goes way up, supply goes up only feebly, the result is predictable.