I live just outside Minneapolis. There's an absolute glut right now of largely unoccupied apartments that have sprung up in the last couple years anywhere there was an open lot and many places there wasn't - tearing down a number of historic buildings in the name of cheaply built wooden framed apartments. Well over 100 new buildings in the last five years within a 10 mile radius. Most of them cost more per month to live in than my monthly home payment. I frankly don't understand why someone who could afford to live in them would.
The homelessness problem is also visibly the worst it's been in my lifetime.
I'm genuinely doubtful the problem is lack of housing alone. The person curled up under the bridge, the person screaming on the corner, they need more than another apartment they still can't afford added to the world. That doesn't help them.
No matter how many of these luxury apartment buildings you build, these people can't afford the rent. The owners of the buildings would seemingly rather see them sit at quarter occupancy than lower rents, and it's kind of understandable.
We're drowning in unaffordable housing and people are still homeless.
I feel you there with only luxury housing being the only kind of housing being built in many areas. Honestly, a lot of it is damn ugly too. Allowing developers to construct non-luxury housing would help much more than only allowing them to build luxury housing.
I'm not even sure it's entirely a matter of being blocked from doing so as much as the incentives merely not being there. What is the incentive for a developer to build affordable housing? The margins are surely much lower.
The city could set rent restrictions on new development and all that, but that removes the incentive for developers to actually build in that area at all, especially when they can just find an unrestricted space to develop a couple miles away in the next town.
>What is the incentive for a developer to build affordable housing? The margins are surely much lower.
This makes sense to me, and I hear it all the time, but when was it ever in a builder's interest to make affordable housing? Why does this perverse incentive seem like a recent thing?
My wild guess would be urban renewal grants and drastically lower land costs made it easier to recoup investments. I'm sure that's only part of the equation though. Part of it is probably also just the realization they could be making more money.
where i live (Boston) it is impossible to build anything new that is not qualified as "luxury" because its competing with a 150 year old tenement with 20year old appliances.
i dont even know what it would mean to build a new non-luxury apartment. No one has ever explained this to me. New housing is always lampooned as being shit quality yet luxury at the same time just because it has.... cabinets that arent falling off the walls and a floor that isnt slanted so badly that i roll away from my desk?
When the existing current housing stock is so old and bad you just need to build to bring up the average quality of an apartment. Rich people will go to the new stuff and it brings up the floor of housing quality.
Same here. I am in a small midwestern USA city of less than 100k people. Someone got a grant to build some housing. Instead of building affordable housing they tried to build a huge "luxury" apartment complex with rent way above average for the city.
Ithaca built a lot of housing in the last few years but is still said to be the most expensive small city in the US. Some of these buildings have a high fraction of "affordable" units, but one "luxury development for seniors" is about as late as a nuclear reactor and hasn't found any tenants because... seniors who have money go to Florida and don't stay in upstate NY.
where i live (Boston) it is impossible to build anything new that is not qualified as "luxury" because its competing with a 150 year old tenement with 20year old appliances.
i dont even know what it would mean to build a new non-luxury apartment. No one has ever explained this to me. New housing is always lampooned as being shit quality yet luxury at the same time just because it has.... cabinets that arent falling off the walls and a floor that isnt slanted so badly that i roll away from my desk?
When the existing current housing stock is so old and bad you just need to build to bring up the average quality of an apartment. Rich people will go to the new stuff and it brings up the floor of housing quality.
Right. The solution (or part of the solution, there is no "all-around solution") is not only building more housing, but having a social structure that allows people to earn enough to afford the housing. But our society isn't set up that way. Employers want to pay as little as possible -- or feel they have to pay as little as possible to stay competitive and above water. If you're not earning a living wage, then it doesn't matter how much housing is being built.
And to say "just build so much that supply > demand and prices will drop" doesn't work, because private developers won't build housing they can't make a tidy profit on.
It's very understandable once you get into the nitty gritty economics of it, where there is no tax on unoccupied housing. F there were a substantial tax on homes that were empty, that would incentivize landlords to rent out housing instead of having it sit empty.
It would crash the economy though. Apartments are valued in terms of asking rent hence being content to eat at some rent earning potential to maintain value of an otherwise appreciating asset. Many people are leveraged in this real estate market by virtue of buying wide index funds which contain companies in this industry, either directly or in their retirement package.
The homelessness problem is also visibly the worst it's been in my lifetime.
I'm genuinely doubtful the problem is lack of housing alone. The person curled up under the bridge, the person screaming on the corner, they need more than another apartment they still can't afford added to the world. That doesn't help them.
No matter how many of these luxury apartment buildings you build, these people can't afford the rent. The owners of the buildings would seemingly rather see them sit at quarter occupancy than lower rents, and it's kind of understandable.
We're drowning in unaffordable housing and people are still homeless.