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terminalshort | on: Austin’s surge of new housing construction drove down rents
Because home builders don't make money by buying and selling houses, they make money by building them and selling them.
mrcode007 | parent | next
This 1000x. Folks don’t get that the primary market != secondary market. Same as pre-IPO stock holder != IPO time buyer.
estearum | parent | next
And... how is this relevant?

I'm not sure what you're trying to imply here. You should spell it out explicitly.

epistasis | root | parent
The difference is between buying and asset and producing an asset. Even if RAM costs are falling, it can still be profitable to produce more RAM, as long as the costs are far enough below the eventual sales price.

It's entirely different if you're buying the housing already built; there's no productive activity, you're just a rentier and do not benefit at all from falling housing prices.

The differences in interests between an asset holder and a productive builder are night and day.

estearum | root | parent | next
> it can still be profitable to produce more RAM, as long as the costs are far enough below the eventual sales price.

Right... my point is that the costs are not far below the eventual sales price. That's why construction is slowing down.

And as mentioned several other times, it's actually not as simple as cost > sale price. It's margin > margin of alternative investments of similar scale and risk profile.

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pandaman | root | parent
There is a difference but not in the way you think. Producing an asset is just buying other assets and labor. The difference with buying an asset is that a part of the assets you bought for production is illiquid for a term of the production. Generally you can only sell unfinished construction at a huge discount during most of the stages. So producing an asset is as same as buying an asset but with a lockout period, when you cannot sell.
nsnzjznzbx | parent
But building cost > sale value is possible.

Or land ends up better value left as suburban house than developing up.

Or they build where sale cost - build cost is maximized. I.e. different city.

Governments need to build more housing. Make it bland so snobs can price discrimnate themselves to buy builders' homes. Why thrifts by the government home for value for money (and quality).

vasco | root | parent
You think the government knows better how to identify land that is profitable than private builders? Why? Or is this one of those opinions based on "is OK for the state to pay for it because there's infinite money for my pet project"?
nsnzjznzbx | root | parent | next
Because I grew up in the UK and there is a fuckton of government housing from 60s and 70s. It is ugly but it is housing people.

Government doesn't need to make a profit due to taxation.

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Spivak | root | parent
Because government has a unique pricing advantage, they get additional value from the houses they build in the form of all the positive externalities and property tax revenue. So projects that wouldn't be profitable for private builders might still be worth it to the government. So it should be both.

They're just gonna pay builders a sum anyway so it's not like they need to shoulder the full upfront cost anyway.

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