Comments on: Sightline is the Bomb http://noisetank.com/hugeasscity/2008/09/04/sightline-is-the-bomb/ Efficiency is the straightest path to hell.* Wed, 07 Jan 2009 17:44:12 +0000 http://wordpress.org/?v=2.0.2 by: Joshua http://noisetank.com/hugeasscity/2008/09/04/sightline-is-the-bomb/#comment-31654 Sun, 07 Sep 2008 09:59:14 +0000 http://noisetank.com/hugeasscity/2008/09/04/sightline-is-the-bomb/#comment-31654 Matt (and Dano) - Thanks for correcting my statement. I understood your point, just a typo. I'm not sold, though. We had increasing supply and increasing prices for a few years before the charts that you cite. Like I said, I think these two trends have correlation (there is some relationship between them), but you can't subtract out the effect of the sub prime crisis here. There is decreased demand right now because people are afraid to buy. Temporary oversupply is a result of subprime, as are leveling/dropping prices. We shouldn't rely on this type of market force to supply us with affordable housing! Matt (and Dano) - Thanks for correcting my statement. I understood your point, just a typo. I’m not sold, though. We had increasing supply and increasing prices for a few years before the charts that you cite. Like I said, I think these two trends have correlation (there is some relationship between them), but you can’t subtract out the effect of the sub prime crisis here. There is decreased demand right now because people are afraid to buy. Temporary oversupply is a result of subprime, as are leveling/dropping prices. We shouldn’t rely on this type of market force to supply us with affordable housing!

]]> by: dan bertolet http://noisetank.com/hugeasscity/2008/09/04/sightline-is-the-bomb/#comment-31427 Sun, 07 Sep 2008 01:49:37 +0000 http://noisetank.com/hugeasscity/2008/09/04/sightline-is-the-bomb/#comment-31427 MTE, if you must know, I had my infatuation with Ayn Rand about 20 years ago, read Atlas Shrugged and one or two other shorter ones. But over time her point of view began to seem more and more fable-like. Book recommendation back at ya: For the Common Good, by Daly and Cobb. I would suggest checking out their discussion of the "fallacy of misplaced concreteness." Housing is not a simple commodity like socks. MTE, if you must know, I had my infatuation with Ayn Rand about 20 years ago, read Atlas Shrugged and one or two other shorter ones. But over time her point of view began to seem more and more fable-like.

Book recommendation back at ya: For the Common Good, by Daly and Cobb. I would suggest checking out their discussion of the “fallacy of misplaced concreteness.” Housing is not a simple commodity like socks.

]]> by: Dan Staley http://noisetank.com/hugeasscity/2008/09/04/sightline-is-the-bomb/#comment-30607 Fri, 05 Sep 2008 22:24:25 +0000 http://noisetank.com/hugeasscity/2008/09/04/sightline-is-the-bomb/#comment-30607 I should also say that in a place like Seattle with impediments to development - seismic, slope, water, etc., that there are limits to increasing supply - in fact, this blog likes to look at high-rises, which are being used to increase supply. Is this increase - market tanking notwithstanding - driving down SFD prices in, say, Wallingford, Ballard, Queen Anne? If someone can do this study and print it, it would go a long way toward validating whether simple supply increases will reduce prices. Seattle, IMHO, is likely the hardest market in the country (maybe SFO) to state that increasing supply will reduce prices. Too many things in the way. I should also say that in a place like Seattle with impediments to development - seismic, slope, water, etc., that there are limits to increasing supply - in fact, this blog likes to look at high-rises, which are being used to increase supply. Is this increase - market tanking notwithstanding - driving down SFD prices in, say, Wallingford, Ballard, Queen Anne? If someone can do this study and print it, it would go a long way toward validating whether simple supply increases will reduce prices. Seattle, IMHO, is likely the hardest market in the country (maybe SFO) to state that increasing supply will reduce prices. Too many things in the way.

]]> by: Dan Staley http://noisetank.com/hugeasscity/2008/09/04/sightline-is-the-bomb/#comment-30594 Fri, 05 Sep 2008 22:11:53 +0000 http://noisetank.com/hugeasscity/2008/09/04/sightline-is-the-bomb/#comment-30594 <i>Bump our housing stock up, and we can beat any rising demand and greatly reduce the overall housing costs. </i> I argue this topic quite often over at another blog. This italiczed is incorrect. Well, only partially correct to be generous. Housing prices are not purely driven by macro supply and demand. Micro factors are at play too - <i>equilibrium</i> for one. In fact, urban economics has arisen to try to get a handle on urban dynamics. (yo, Curtis, pipe in at any time). For example, you can graph your equation for assuming the price decrease for increasing supply. But what will happen is that there will be a tipping point where QOL will go down due to lack of amenities/crowding/whatever - and too many houses in an area will decrease prices even more, as no one will be bidding up rents to obtain that housing, and equilibrium rents will fall as the area is no longer as desirable. Bump our housing stock up, and we can beat any rising demand and greatly reduce the overall housing costs.

I argue this topic quite often over at another blog. This italiczed is incorrect. Well, only partially correct to be generous.

Housing prices are not purely driven by macro supply and demand.

Micro factors are at play too - equilibrium for one. In fact, urban economics has arisen to try to get a handle on urban dynamics. (yo, Curtis, pipe in at any time).

For example, you can graph your equation for assuming the price decrease for increasing supply. But what will happen is that there will be a tipping point where QOL will go down due to lack of amenities/crowding/whatever - and too many houses in an area will decrease prices even more, as no one will be bidding up rents to obtain that housing, and equilibrium rents will fall as the area is no longer as desirable.

]]> by: Andrew http://noisetank.com/hugeasscity/2008/09/04/sightline-is-the-bomb/#comment-30515 Fri, 05 Sep 2008 20:57:36 +0000 http://noisetank.com/hugeasscity/2008/09/04/sightline-is-the-bomb/#comment-30515 "the bomb"? Yikes is it 1994 again? “the bomb”? Yikes is it 1994 again?

]]> by: Spencer http://noisetank.com/hugeasscity/2008/09/04/sightline-is-the-bomb/#comment-30508 Fri, 05 Sep 2008 20:50:18 +0000 http://noisetank.com/hugeasscity/2008/09/04/sightline-is-the-bomb/#comment-30508 It looks like the message is getting lost in the mirth. The problem here is how to we get to low cost housing now? We shouldn't wait for the market to correct itself. By Matt's graphs that is painfully too long to wait while we need the housing now. Pendulum swings of supply and demand economics do not seem to be the solutions to creating low-income or workforce housing. We also shouldn't rely on government funding to bail us out of this problem. Certainly subsidies are helpful but as a country we could use a better mix of capitalism, socialism and philanthropy &#38; good faith for each other's well being. I'm a bit of an idealist on these issues but it's pretty clear from where I sit that a lot of people are doing well while many people work hard to just barely get by. also in Matt's graphs I would like to point out the $/sf cost. Anyone have thoughts or insights on what that number means to this discussion? Especially as it relates to profits? It looks like the message is getting lost in the mirth. The problem here is how to we get to low cost housing now? We shouldn’t wait for the market to correct itself. By Matt’s graphs that is painfully too long to wait while we need the housing now. Pendulum swings of supply and demand economics do not seem to be the solutions to creating low-income or workforce housing. We also shouldn’t rely on government funding to bail us out of this problem. Certainly subsidies are helpful but as a country we could use a better mix of capitalism, socialism and philanthropy & good faith for each other’s well being. I’m a bit of an idealist on these issues but it’s pretty clear from where I sit that a lot of people are doing well while many people work hard to just barely get by.

also in Matt’s graphs I would like to point out the $/sf cost. Anyone have thoughts or insights on what that number means to this discussion? Especially as it relates to profits?

]]> by: wes http://noisetank.com/hugeasscity/2008/09/04/sightline-is-the-bomb/#comment-30443 Fri, 05 Sep 2008 19:45:47 +0000 http://noisetank.com/hugeasscity/2008/09/04/sightline-is-the-bomb/#comment-30443 Matt, I'm so glad you are here. You say everything I want to say, no matter the subject, but due so much more intelligently than my bumbling and often insulting method of argument. Thank you. Matt, I’m so glad you are here. You say everything I want to say, no matter the subject, but due so much more intelligently than my bumbling and often insulting method of argument. Thank you.

]]> by: Matt the Engineer http://noisetank.com/hugeasscity/2008/09/04/sightline-is-the-bomb/#comment-30403 Fri, 05 Sep 2008 19:04:59 +0000 http://noisetank.com/hugeasscity/2008/09/04/sightline-is-the-bomb/#comment-30403 Sure it's the right link. Take a look at the orange line between Oct 1 to Jan 1 - as housing stock increases, price goes down. Between Jan 1 and Apr 1 housing stock goes down, and prices level off. Apr 1 to now - as housing stock increases, price levels off and goes down. Wait - "increased demand has led to decreased prices" - that wasn't my point at all. Increased supply leads to decreased prices. Demand, despite Dan's claims, is quite limited. Bump our housing stock up, and we can beat any rising demand and greatly reduce the overall housing costs. Sure it’s the right link. Take a look at the orange line between Oct 1 to Jan 1 - as housing stock increases, price goes down. Between Jan 1 and Apr 1 housing stock goes down, and prices level off. Apr 1 to now - as housing stock increases, price levels off and goes down.

Wait - “increased demand has led to decreased prices” - that wasn’t my point at all. Increased supply leads to decreased prices. Demand, despite Dan’s claims, is quite limited. Bump our housing stock up, and we can beat any rising demand and greatly reduce the overall housing costs.

]]> by: Joshua http://noisetank.com/hugeasscity/2008/09/04/sightline-is-the-bomb/#comment-30316 Fri, 05 Sep 2008 17:40:02 +0000 http://noisetank.com/hugeasscity/2008/09/04/sightline-is-the-bomb/#comment-30316 Matt - I'm not sure if you provided the right link. If you did, I'd have to argue with you on your conclusion that increased demand has led to decreased prices. As is often the danger with comparing two trends out of context, I think you're seeing correlation and not causation here. The cause for a drop in prices is not simply the increased supply. It's due to both moronically easy access to capital (which inflated prices) and the resulting sub-prime crisis, which has led to our current inability to access capital and general consumer fear. Per subsidized housing, I think there are ways of structuring subsidies and other incentives so as to diversify between homeless, low-income, and workforce. That all being said, subsidies aren't the silver bullet - they are one tool in what should be a broad strategy put forward by the city. I haven't seen it yet. Matt - I’m not sure if you provided the right link. If you did, I’d have to argue with you on your conclusion that increased demand has led to decreased prices. As is often the danger with comparing two trends out of context, I think you’re seeing correlation and not causation here. The cause for a drop in prices is not simply the increased supply. It’s due to both moronically easy access to capital (which inflated prices) and the resulting sub-prime crisis, which has led to our current inability to access capital and general consumer fear.

Per subsidized housing, I think there are ways of structuring subsidies and other incentives so as to diversify between homeless, low-income, and workforce. That all being said, subsidies aren’t the silver bullet - they are one tool in what should be a broad strategy put forward by the city. I haven’t seen it yet.

]]> by: Matt the Engineer http://noisetank.com/hugeasscity/2008/09/04/sightline-is-the-bomb/#comment-30284 Fri, 05 Sep 2008 17:07:29 +0000 http://noisetank.com/hugeasscity/2008/09/04/sightline-is-the-bomb/#comment-30284 (Oh and have you read Ayn Rand? I strongly recommend the Fountainhead. And I find most of the people that use her as an example haven't read her work.) (Also, I need to say I wholeheartedly agree with the title of this post.) (Oh and have you read Ayn Rand? I strongly recommend the Fountainhead. And I find most of the people that use her as an example haven’t read her work.)

(Also, I need to say I wholeheartedly agree with the title of this post.)

]]>