Lack of supply is a problem, but is it caused by an inability to turn a profit? It seems like developers have no trouble making money from new construction. The difficult part, and the part that limits supply, is getting permission to build.
The problem with the "simple" solution of "just add more supply" is that supply creation is physically restrained by real world factors. It's not lines on a chart like in econ 101 class.
New development is constrained by available trades, construction times, design time, and city review time. Already the City of Vancouver has increased development application fees in order to hire more persons to review development applications faster.
In my neighbourhood there is a high rise under construction that is still not completed but already one year over due. The development industry is continuously stating that more supply is required, but they can't even finish building their own buildings.
I think it good that developers in the city are able to meet the demand rather than ignore it. I'd like to see this level of development happening in US cities. It looks like progress.
Presumably what happens is that selling housing becomes so insanely lucrative developers throw up massive amounts of new places to live, solving the housing issue through added supply.
If the city is prohibiting that construction from happening, perhaps that's where you should point the finger rather than the people buying and selling at market prices.
Agreed. For example, near Charlotte. My dad lives there and they are building like crazy due to hyper grow. Problem is, the roads, sewer and water infrastructure can't handle all the new people. 20 years ago what was a 10 minute trip to the store can now be over an hour, due to massive traffic jams.
The developers are (probably) paying off politicians to get permits, but there is no money (due to low taxes) for the necessary projects.
No but don't you see? They "have been building for decades" (in the sense that, every year, some small number of new units are built) and prices haven't fallen! So clearly "building more units" can't be the solution. That's just an excuse to line the pockets of developers! And besides, the "build more crowd" wants nothing but to "provide financial and regulatory incentives to developers", there is definitely no movement to remove regulations that prevent building! No, the author, who clearly has a deep understanding of this issue, has never heard of such nonsense.
That's not necessary - developers are happy to build.
They just need to relax zoning, and also open more areas to constructions. (i.e. make a suburbs, that will over time be subdivided into an Urban area.)
How can you push supply? They would not build it unless there was some demand to meet it. They could build larger flats but they would cost more. There is apparently a market for people that want to live in a specific neighborhood at a certain budget.
There are plenty of examples in NYC of forcing the developer to build infrastructure in order to get more building rights. In the suburbs developers are often required to build the underlying infrastructure for their subdivisions.
It's simple math. If the cost of building the development + required infrastructure is less than the price can sell it for then things will get built. It's the responsibility of the city to bundle the infrastructure requirements onto the building permit.
I'm guessing it's because many cities still strangle development. "Overbuilt" could be concluded from a lack of feasible projects within a city.
There's also the nebulous problem of investors buying units in new luxury buildings but not occupying or renting them. This could preserve high rent prices as new units are not being faithfully put into the housing pool. Stories about that pop up often but don't seem quantified as an issue.
Development requires demand. You can't just build houses willy nilly and then have them sit empty, because then nobody is paying the property taxes and the infrastructure that was built for those empty houses requires maintenance.
So, while there may be plenty of land on which _to_ develop, they can only develop at a certain rate commensurate with demand, otherwise they'll build too much, property values will fall, and subsequently tax receipts will fall.
So, they need to build just enough to keep up with demand, and ahead of their infrastructure costs, but not too much.
So your concern isn't the ongoing operation but that they start working with waterfront TO on these 12 blocks and leave before their ideas are implemented?
Why would the city require more of them than any other developer? Any development has a chance of falling before completion.
No clue, but I will tell you as a property developer myself I would love to build more, faster. Everyone I know in the business would love to build more as well.
Time from project to building permit here in Lisbon can stretch to two years and vast tracts of land close to infrastructure are considered unbuildable by the municipality for no good reason. Also consider that developers need the government to work with them on roads, subways, sewers and others to be able to build.
In large parts of urbanised Asia where building more housing is encouraged this problem does not exist.
The frustrating thing about the supply side solution is that the answer to every argument is always "add more supply!" even if the city is obviously already doing so at an aggressive pace.
The reality is that there are real world physical limits to adding supply. There are a limited amount of trades for example. There is a limited capacity to review and process development applications. It takes time to complete buildings.
Unlike Silicon Valley Metro Vancouver has steadily built condos for decades and the region currently has more housing starts than at any other time ever.
Vancouver's issues are deeper and more urgent than a one dimensional supply side solution can solve.
At the macro level, landlords and property owners stand on one side opposed to developers on the other. Developers are incentivized to add housing supply and the others are incentivized to secure it against competition. Tenants _should_ stand on the side of developers but I’m not sure that’s true in general, given the anti-developer sentiment in some of most dense and progressive cities in America.
It’s zoning, it’s environmental review, it’s historic/landmark review, it’s good neighbor agreements, it’s disorganized and/or corrupt permitting departments, etc. All of this gets weaponized against new supply. Ultimately. City electeds answer to voters, not builders, so they get the government they deserve.
Some places are building, adding supply, and consequently lowering prices. Austin is a prime example.
From JosephPolitano on X:
Last year, Austin MSA (population: 2.4M) permitted 21,300 units worth of 5+ unit apartment buildings—more than LA (pop: 12.8M) and SF (pop: 4.6M) combined.
San Francisco permitted 1,151 housing units over the last 15 months. Austin permitted 1,248 in January alone.
Austin averages 28+ units per day this year. San Francisco has allowed 15 units total in all of 2024.
I'm not anti-development but your last statement is not necessarily guaranteed. These days new units are being sold off-plan before construction to wealthy international non-residents who simply want to park their money. They will remain empty. Unless there are provisions in the permits to prevent this, but it's difficult to enforce.
Not only that but it’s a failure of the city zoning laws to allow enough construction. They would have loved to fund more housing if the city allowed it
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