It's actually the other way around. Major landowners want to build more units because there's plenty of money to be made.
It's existing renters who are stopping new development. Long term renters have fantastic rates because of how rent control laws are written. And they want to keep their rent low (for themselves, new arrivals can get screwed), their streets sunny (instead of being overshadowed by high rises), and their neighborhoods not too crowded.
Large scale landlords actually want to invest in more property. E.g. the apartment building I reside in was built only a few years ago by a publicly traded REIT.
It is nativist homeowners that oppose new building because it reduces home appreciation and brings traffic and ethnically different people to the neighborhood / city.
What? That makes no sense. More expensive housing increases the incentive to build more, which decreases prices. The problem is many governments, local councils etc regulate land use so heavily that if a developer wants to build a block with 200 apartments NIMBYs are up in arms to protect their own interests while locking out anyone trying to get into the market.
House owners are fine with this arrangement, as they get all the benefits and bear none of the costs inherent with excessive land regulations. Non-owners get screwed.
I think as long as a landlord can make twice the amount of money, its gonna be really hard to keep that down.
It also creates a lot of incentives to increase housing stock though no? If suddenly I can make $4k/mo on an apartment I'm building instead of $2k, wouldn't I want to build more apartments?
We've tried just about everything other than being permissive with new housing. We refuse to scale our most popular areas to live, with the idea that what makes it nice will go away if there's more people. That just makes it exclusive and expensive.
Uhhh, 'more homes' is absolutely the last thing any landlords want as it does the exact opposite of 'driving up home prices'. Especially given this is a new development, there's no erstwhile 'home prices' to drive up ...
If existing owners are allowed to build how they want, it would actually make their portfolio shoot up. Fewer restrictions on property use makes property values rise, obviously and trivially.
"New development" covers a wide range of development types. Most of the types that are "allowed" to be developed - per regulation, public investment, what does and doesn't trigger the NIMBY predatory instinct - are types that raise "market rates" like low-density SFH and luxury condos.* The government could "radically incentivize" developers to build high-density housing with basic finishes and fewer amenities, to be sold or rented at affordable rates, but that bumps up against https://news.ycombinator.com/item?id=36632171's impeccably correct observation: prices are high because the people who own the housing stock want them to be high. Inventory influences a fraction of the cost.
*(That is, however far you're convinced that there even is a market; for rent, thanks to "discounts" that allow property owners to avoid actually advertising lower rates, supply and demand don't exist, only the imperative to raise rates annually.)
No. People will just build more residences until supply and demand meet a happy medium.
Rent control actively pushes prices up for everyone by discouraging new development (unless you win the rent control lottery).
Of course, there will be certain ultra trendy neighborhoods that will still be out of reach for all but the wealthy. But allowing developers to build new residences in urban areas make it more likely that poor, just out of college graduates will have some place they can afford to live.
And if you think it is not possible to build new residences in already urban areas: note the article says that residences in lower Manhattan have doubled to house 50,000 people since 2001.
Another idea might be to require that the developer first offer to rent a unit in the new building to all the old tenants, at their old rent, if they want to move back after construction is complete. A side-effect is that this doesn't encourage the developer to build something nicer than what was already there. But in some cases that might actually be a good thing.
But yeah, these sorts of things generally reduce the amount of money available to do the new development in the first place. But maybe that's ok too?
People are being fact weenies to your post, but your point is fundamentally sound and showcases foresight. Some new construction is rent-only because its corporate backers rightly assume it will let them wring residents for all they're worth. If things continue to trend this way, then merely building more is not a sustainable solution to the housing squeeze.
Seems like an easy enough solution, though in an environment of plunging rents developers very quickly seem to put projects on hold and shift gears to other sorts of things. I've witnessed this first hand in my city whenever there's bumps in the road (eg. global financial crisis, recent introduction of various foreign buyer/speculation taxes).
This should intrinsically make sense. Private developers don't have to build and there's other ways for them to invest their money.
Now if the developer was a public entity with a mandate that they had to build now that would be different.
Build more housing. When an area gets overbuilt, units start going vacant, developers start going bankrupt, and vulture capitalists can swoop in, buy the properties for cheap, and rent them for cheap. Or if they don't, squatters move in and just start living in the abandoned buildings for free.
Ironically, this is the one outcome that is bad for both the city and the developer. The developer goes bankrupt, so obviously they and the bank don't like it. The city usually has a problem collecting tax revenue from bankrupt developers, and during the transition period between when the developer goes bankrupt and when another landlord buys the property, they face problems with crime and blight. It's good for enterprising bottom-feeders and for the city's poor, but neither one of them get a seat at the table. So here's a case where the incentives are directly aligned to let the people who make the decisions profit at the expense of the people who don't make the decisions.
Bringing new units online in a high demand market earns far more money than simply raising rents.
It's not large property owners that are opposing new housing, it's existing small (usually single) property owners opposing new housing, usually so their way of life doesn't change due to changing demographics of newcomers, increased traffic, etc. and possibly to restrict supply and increase their property's value.
If new construction is allowed though, the people parking money will encourage more development. You can always add another 5 floors to the top of the building which nobody lives in like they do in NYC.
Landlords would gladly accept new development because... it would let them make more money?
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