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Comment by mattnewton | Hacker News Reader

I think the answer is to stop forbidding the kinds of housing that would increase supply. But higher density housing is illegal and disliked by current residents who fear their property values decreasing as supply increases and poor people move in, so they fight tooth and nail to keep supply restricted in areas that would most benefit from density.

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California has done this with recently passed SB9 and its aggressive ADU laws allowing them by default.

Can’t wait to see whether and how well it works, or where it evolves, but some places are trying!

Repeat after me, apartment buildings.

This builds a monoculture of housing and ignores the fact that the housing crisis isn’t just about not having enough housing, but that what's available is exorbitant in rent and the low-income people that need housing can't afford it.

We need a mix of housing, including multiple classes of housing that more reflects the diversity of incomes, not more gigantic corporate owned apartment blocks.

There is no simply sound byte answer.

> gigantic corporate owned

Well, there is your problem.

The lack of housing gets solved by, gasp, adding more housing. A house in a city is luxury, the only way to keep rents down is by adding more to the offer, and guess what, apartment buildings add a lot of housing in a small surface.

Corporations are bound by economics, they can't charge out of bounds rents if the average rent price is much lower, and you get that by, you guessed it, building more.

> We need a mix of housing

No, you need a ton more housing, not a mix, you have to aim for efficiency here, specially in cities. Having a SFH in a city is a luxury, townhome I would say is above average, and everyone else should be in apartments. Apartments don't have to be ugly, if I could I would buy a 2/3 bedroom apartment, however there isn't much offer, and everything is from ages ago because the USA doesn't build.

I’m down for a ton more housing in any form so I won’t disagree with you.

I want to see better lives for people in whatever capacity they want to make it honestly.

I don’t think it’s an OR situation but I don’t think counterpointing is going to help the conversation any. You’re not wrong. I just think we also need to do things like actually build new cities instead of just adding more and more to existing ones. That’s a formula that we used to have that has just stopped completely happening and now it actually worked.

But more housing and better lives for people is the point so I’ll leave it there.

I don’t think higher density decreases prices. On the contrary a plot of land that previously could only have a single family home but now can have a six story apartment building is more valuable. The homeowners just don’t want to live next to the apartment building or move.

But a six story apartment can now house six families. If a city has 10,000 families and 10,000 single family houses, and just 1,000 of those single family houses become 6 story apartments, there are now 15,000 living places people can choose between. That is called "an increase in quantity supplied", and the supply curve slopes downward. You see where I'm going with this.

It's less rosy than this because those 6 story apartments are built on credit where the valuation of the building is based off the market rents. If rent goes down the bank comes-a-calling telling you that your LTV dropped and you have to put up more collateral. The building owners just straight up can't afford to do this so they're stuck between keeping rents high and accepting vacancies which limits their revenue and foreclosure.

The spice must flow, property valuations must go up or the whole thing collapses. It's why non-SF-esque cities only allow expansion in-line with population growth or a little less because they will immediately be tarred and feathered if they make everyone's mortgage underwater.

To be clear this isn't a good thing, but no one wants to blink first and start another 2008.

Thanks for the extra context from the credit holders. It seems that this is completely overlooked in the solutions proposed to solve the housing crisis. Seems like there is an argument to be made that we need new policies to change this calculation at either the state or federal level. Wouldn't public private partnership funding help with this?

I'm not sure I follow. If the building owner lowered their rent, wouldn't they find it easier to fill that vacancy? Or if you're saying the bank decides to take one of the units as extra collateral, why wouldn't the bank then rent out the unit?

Owners frequently have loan covenants that mandate bank approval for rents below a threshold.

You've securitized the cashflow from the property, so if that cashflow dips, the lender has an assurance they can reprice the security in line with your new cashflow story.

Even if you cover the shortfall in cashflow out of pocket, this is better for both you and the bank because you don't have to admit that the market rates at which you got your loan have changed.

Oh, okay. So you've been offered a loan partly _on the basis_ of that future cashflow, and probably wouldn't have been able to get one on equally good terms if it was "just" to build a building?

Yeah. I can see how that would create perverse incentives downstream.

Same reason no working schmucks go to their mortgage servicer when they lose a job. They don't even want to know!

Sibling comment covers this, but to expand: it decreases the overall price of units of housing, not of land. Which is ultimately what matters here, because we live in houses or apartments or condos, not in square feet of land.

I could not have afforded the plot of land my first city apartment was on, but I could afford an apartment in the building!

But the incumbent single family homeowners that are so opposed to upzoning currently own both land and a housing unit. While upzoning might make the value of their housing unit go down the value of their land will go up.

For this reason it would be best to allow single family homeowners to be able to vote on the zoning policies of whichever side of the city is exactly opposite and ideally non-adjacent to them. Single family homes for me, affordable high rises for thee. (The dead center can be rezoned to high scale commercial as a kind of urban Switzerland.)

> I don’t think higher density decreases prices.

https://www.investopedia.com/terms/l/law-of-supply-demand.as...

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