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epistasis | on: Austin’s surge of new housing construction drove down rents
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 | 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.

gnopgnip | root | parent | next
Dr Horton is the largest builder in the US. In q3 2025 they had a 21.8% gross margin.
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epistasis | root | parent
It was not clear that it was your point at all! Yes of course, gotta get your return on capital invested or the money goes elsewhere, probably into a REIT that invests in the existing assets and drives up prices even further. Because the demand for housing goes somewhere: either existing owners profit or the people building and alleviating the shortage profit.

Every single municipality in the US I'm familiar with has done everything they can to make it expensive to build and try to remove any profit margin from building. Which leads to capital moving towards piggybacking on the rentierism of the average homeowner, the people who control the policies that make it unaffordable to build.

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pandaman | 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.