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nacho1599 t1_ivzi2yg wrote

Reply to comment by Bewaretheicespiders in [OC] Housing has become increasingly unaffordable in Singapore, more so than in other high-cost cities by earthlymonarch

Wouldn’t density keep land value low because there is more free land relatively? Can you elaborate on that?

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Bewaretheicespiders t1_ivzqj9l wrote

Land value is directly correlated to the profit you can make of developing it. The higher the density, the higher the value. When cities change the zoning to allow more density, land value increase correspondingly because the vote is even tallied.

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Maguncia t1_ivzxdhe wrote

People care about housing cost, not land value. A limited upzoning on a few plots will make those plots of land more valuable because there is a scarcity of developable land. Individual housing units will still become cheaper, though, since supply will increase (obviously a developer will not be able to sell the new units on upzoned land above the market, and they will provide competition to existing single-family homes). A large-scale upzoning will remove that scarcity, and land prices won't change nearly as much, except in truly prime locations that were very underzoned for some reason. Marginal land on the periphery (outer suburbs, exurbs) will lose a lot of value, since people are no longer squeezed all the way out there. Individual units will become significantly cheaper everywhere, of course.

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Bewaretheicespiders t1_iw08878 wrote

Land value diffectly affects housing cost. Its why you see dilapidated buildings selling for millions of dollars in Vancouver.

If you think density can solve housing cost, point us to a city that became cheaper by densifying.

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nacho1599 t1_iw0swzm wrote

I don’t see how that’s the case. Obviously a tower than can house 500 people would be more valuable than a duplex, but that tower then takes 500 people’s worth of demand away from the rest of the real estate system, decreasing prices.

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Bewaretheicespiders t1_iw13m11 wrote

Im not talking about the value of the tower, thats a whole other thing, but the value of the land underneath it. If you change the zoning from single family house to, say, 10 units on the same area of land, and if there is enough demand, then land value immediately climbs by 10x, because a developper now can make 10 times as much profit on that parcel of land. And that takes away any of the affordability gain you would expect from density.

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nacho1599 t1_iw14t65 wrote

Sure, but it cost the developer $50 million to build that tower, which improves the land's value legitimately. I'm saying the tower lowers the price pressures in the rest of the area because it increases the supply.

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Bewaretheicespiders t1_iw1cuzd wrote

The land value improves way before the tower is built. Sure you build supply, which is better than doing nothing, but that new supply takes way more manpower per sqft to build, AND increase land value, compared to sprawling.

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