House Prices And The Building Stock

Capn Transit says:

Last weekend I read Matt Yglesias’s concise 76-page critique of housing policy, The Rent is Too Damn High. I agreed with pretty much everything he says, and I think everybody who’s interested in these issues should read it.

He goes on to muse about how in a society with rich people and poor people there will still always be differences in what people pay for housing even in my ample supply utopia and wonders what they’ll look like. I agree with what he has to say on this, but a specific factor to consider is the age of buildings. Right now it’s often the case in cities that older buildings are the most desirable ones, but that’s generally related to the fact that they’re located on particularly desirable parcels of land. If you imagine a city with fewer regulatory constraints on building, then in dense neighborhoods you would have a blend of newish buildings with the most modern amenities and older buildings that are structurally sound but a bit unfashionable, a bit more likely to be suffering from plumbing problems, and lacking in some of the latest features. What’s more, since society gets wealthier over time the older buildings will probably have smaller units on average. Within tall buildings you’d also expect to see meaningful price differentials based on vertical location. I am a density advocate, but there are obviously some downsides in terms of noise and light that are mitigated on higher floors.