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Andrew Burleson's avatar

Your point about Del Ray is interesting because it illustrates how much people with money are willing to pay to live in a particular kind of neighborhood that has been illegal for 80 years. and that they are willing to tolerate small spaces and very substandard actual buildings for that surrounding experience.

A powerful YIMBY move would be for us to legalize and then start building new “streetcar suburbs.” It’s difficult in our existing metros because you’d need a quantity of land that only exists on the periphery, and short commutes are one of the key features of the streetcar suburb. But when New Urbanist developments get built far out they still tend to sell well.

IMO that’s an underrated part of the shortage. We need more units period, and an all of the above strategy is called for, but the *biggest* mismatch between supply and demand is in that missing middle where you can own a home or townhome and still walk to “main street.”

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Seth K's avatar

Great article Luca! Really hit the nail on the head.

I have a theory that I'd love to see you take a deeper look at: that housing shortages increase transaction costs for tenants/buyers while reducing them for landlords.

For the landlord, the costs of finding a new tenant are very low. Worst case; the unit sits empty for a few months, and even then the landlord can use this time do maintenance or improvements.

For the tenant: the costs/risks associated with finding a new apartment are astronomical. Worst case is literal homelessness. Median case is probably finding a worse unit for the same price.

The asymmetrical risks associated with ending a tenancy allows the landlord to pass almost all of the potential transaction costs on to the tenant in the form of higher rents.

Maybe that's all already baked in to your model, but I think it could be worth exploring at a deeper level.

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