Quote:
Originally Posted by WarrenC12
There is no affordable market housing. That's the whole problem, the real estate market in Vancouver has gone beyond affordable.
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I swear I am writing in English.
Of course, there is a lack of supply of affordable market housing. That's exactly what I have been saying all along. But most importantly, I have been arguing in detail
why that supply is not being provided despite the overwhelming demand for it (something you have failed to explain since high density plays a similar role in the production of housing as economies of scale play in the production of TVs and there is no shortage of affordable TVs). I have thus been arguing in detail
why the conservative and prohibitive land use policies you apparently defend will ensure there will
never be any affordable market housing in Vancouver (short of a total crash), and how the adoption of
liberal and
permissive land use policies, by contrast, mitigate high prices by lowering costs and increasing supply and thus why such policies are needed more than ever when a real estate market is hot.
Quote:
Originally Posted by WarrenC12
Let me use a basic example. If the market will bear $800/sf pricing for condos, that it what they will be sold at. Full stop. Developers will not sell for less, regardless if their price to purchase the land and build the condos is $200/sf or $500/sf. The market sets the price, and they will build for as low cost as possible to extract the highest profits.
Given the real estate market is willing to pay $800/sf for the end product, there is no way the developer will sell for less.
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Do you not understand how
competitive markets work and the role that liberal economic policies play in the
degree of competitiveness a market exhibits and the
abundance of supply it produces?
In a competitive and well-supplied market, of course developers will sell for
less than $800/sf, even though there are buyers who could afford to pay more. Let me use a basic example: Are you going to pay $800/sf, if another developer is offering $700/sf for a comparable unit? No. That's exactly how
competitive and
well-supplied markets work. And the more liberal a market is, the more competitive and well-supplied it is.
Moreover, liberal markets are most responsive to the demands of the
middle class, not the wealthy. Selling things at a lower profit margin per unit to a
huge number of people produces larger gross profits than selling things at a higher profit margin per unit to just a few people. Competitive industries do not set prices at the level the wealthiest are willing to pay; they respond to the diverse demands of a diverse population, most particularly the demands of the middle class. That's why we have many more McDonalds than Hawksworths.
Let me use another basic example: If a group of people are looking for non-luxury homes at non-luxury prices, are some developers going to respond to that demand, even though the profit margin per unit is less? Yes, especially if that "group of people" constitutes the middle class, the largest demographic, the satisfaction of whose desires will net them
higher gross profits by selling many units at lower profit margins than selling few units at higher profit margins.
Now if you respond "But the number of people able to pay luxury prices (i.e., prices out of reach of the majority of Vancouverites) is roughly equal to the number of available units" then you would be correct. But then you would also be conceding there is a gross under supply of housing in Vancouver and that land use policies are not nearly liberal enough to respond adequately to the demands of the middle class, precisely what I have been arguing all along.
As I said before, your argument is not with me, but with basic economic principles and empirical facts. Read the article and scholarly paper I linked to and address the arguments and empirical research they contained, if you can.
Actually learn something.
That's my last word on this topic in this particular thread, which is for updates, not arguments.
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