Viewing a single comment thread. View all comments

sluman001 t1_jefcs0n wrote

Reply to comment by TooManyDraculas in 47-story apartment building is planned above CVS store at 19th and Chestnut by ColdJay64

That’s simply not true. Regardless of the price range, more supply reduces overall prices.

80

RustedRelics t1_jegm14b wrote

I don’t think I’ve ever seen rents decrease due to increased housing supply/development — either here or in NYC before moving here. I’m all for more housing in Philly, but it’s not going to bring rents down.

10

xander_man t1_jegmki7 wrote

If building would reduce rent they wouldn't do it. They're doing it because rents are going up anyway.

If they overbuild, they would end up staying the same or going down a little in some markets or segments.

9

RustedRelics t1_jegnm62 wrote

Precisely. And Philly is not one of those markets. (Neither are the other large coastal cities and Chicago)

1

AbsentEmpire t1_jeh2ywq wrote

Philly only has a less than ~5% vacancy rate on apartments. That's so low that the small amount of incoming supply isn't enough to have any meaningful impact on decreasing rates.

The answer to that is that we need to build even more of everything to account for all the demand. The clowns saying we shouldn't build new housing are the same people who bitch about how expensive rent is. They're too dumb to connect the lack for supply with the incoming population, and the subsequent increase in rent.

10

TooManyDraculas t1_jefeyat wrote

Ha.

No.

The current real estate market, especially on rentals, is basically engaged in price fixing. They all use a single algorithm based pricing service. One that's major innovation was discarding the idea of maximizing occupancy in favor of high turn over and continual rent or price increases.

We also have a tax system in the US that gives massive write offs for real estate losses due to vacancy, and allows pass through of those losses to individuals. And breaking them up over multiple years. That's how Trump ended up not paying taxes for a decade.

Then there's the consolidation of housing, particularly single family homes by investment capital and major banks. Which practically speaking means there's always a buyer.

Nationally we've been hearing housing costs would be going down for a variety of reasons since the great recession. They've just continued to sky rocket.

What tends to happen with this model of development. Is it actually reduces supply of middle income housing. As more and more space gets pushed as high priced housing, regardless of demand. Fewer and fewer units are available to most residents, driving up average rents.

The new expensive units, turn and burn, often sitting vacant. Then get flipped to a bank or sold off as investment properties.

Without a crash of some sort or a regulatory step in I don't see that changing any time soon. We've been watching it happen, over and over, in cities around the globe for over a decade now.

−27