Quote:
Originally Posted by mr1138
But I'm more interested in the questions introduced about incremental urban growth, and of whether simple supply and demand can fully explain the degree of housing scarcity we see in cities experiencing a boom of high-paid jobs. The argument that landowners are willing to hold on to vacant property for DECADES waiting to max out their FAR is something that we see all around our own city - many lots downtown have been sitting vacant since DURA. If property owners were more of the mindset that they could build something smaller or lower quality today, and then rebuild in 30 years, could this provide more affordable units in the short term? What if the city could get thousands of new units in the form of ADUs financed by private home loans? And could the author be right that dramatic up-zoning is a primary cause of land value distortion?
|
Let me take a different tack. My problem (if you will) is that I'm more a Big Picture guy. But I do understand supply and demand. From the simplistic graphs of Econ 101 into the real world where there's a multitude of different dynamics and complexities, it's much easier to understand from 30,000 feet. There are both random and irrational factors to consider. Recently the Dikeou family holdings have been discussed. They've owned their properties for decades with no intention of doing anything. It's not rational; but it is a real world fact.
In the aftermath of the recession, with many investors escaping the mayhem and with cash to burn, RE investor/developers started taking advantage in the more obvious coastal cities like NYC to San Francisco.
Denver became one of the earlier flyover cites to attract investment bcuz they didn't get overbuilt like many places did. Texas which had been growing rapidly and continued right through the recession also attracted investment. BTW, Portland was moderately over supplied and it's bounce-back was a couple of years behind Denver.
Early on I recall Mill Creek buying a block east of Broadway and I thought it good that someone was willing to venture there - more risk I assumed. Looking back from today my thought now seems ludicrous. Mill Creek built a four story project. Early on even investors that were smart to come to Denver were uncertain on how strong the market would be; otherwise Mill Creek would have built a much denser project. That's how it was in the early years.
Certainly developers became aware of the migration to urban centers; but how strong or how long would it last? Well it just grew and grew now that we can look back. For a few years many have thought we were reaching saturation and headed to an oversupply. Even the Fed threw out a 'caution flag' to their member banks. If you've lived through the cycles you know that getting overbuilt has been a common problem. Also many 'experts' have predicted for 5 years that another bubble was being created and that interest rates would rise rapidly and kill the golden goose.
The point is that some of the savviest and smartest minds in the business have continued to lag what continued to happen. There's no algorithm for predicting future demand.
Stonemans_rowJ recently pointed to the tsunami of a apartments coming so maybe, finally Denver will reach (at least temporarily) saturation.
With respect to Zoning
It would have been good to follow the Great Denver Rezoning Project a few years ago. While I'm not familiar with the more granular the object was to update the code and look to the future including more dense development. It was logical and generally
incremental changes were intended. What may seem logical and straightforward becomes anything but that when you start holding neighborhood meetings. Homeowners etc are not always rational; they're often emotional and resist/fear change. How many NIMBY conversations have we had over the years. Too many to count for sure.
BTW, using San Marcos as an example shows partly how little Marohn knows about Texas. In the land of 2nd amendment and property rights zoning is a suspicious interloper. Houston is well know for having NO zoning downtown. Build whatever your heart desires. It's the Texas way of doing things. Worth noting is than San Marcos is on the Austin to San Antonio tech corridor so expecting higher future values is not far-fetched.
Whether Marohn's 'theory' has any merit we'll never know bcuz it's unrealistic once you get into the real world of real people and real complexities and random factors. In other words life happens while we're making other plans.
Prev
Fortunately I did a search of that and yup, it was an invitation to Malware.
Linear Mode
