> The purpose of real estate development is to make real estate more valuable.
Nope. It's to make money for the developers.
> Even ones not doing the development benefit financially - landlords love being able to raise the rents cause other people in the area built a bunch of new shit.
Gentrification is a result of shortage. When wealthier people are priced out of rich neighborhoods, the only place for them to go is poor neighborhoods. It just so happens that poor neighborhoods with the least amount of political power are the first ones to be redeveloped when there's a shortage of housing.
> And the long-term property values trends clearly shows that cities with more development, that more people want to move to, are where you find ROI.
Reversed causation. It's literally just supply and demand. Places with high demand and not enough supply have growing property values. Places that are actually able to build housing to even kinda meet demand are doing much better.
You can see a ton of development but that doesn't really mean anything. Often there's not even enough development to meet the rate of growth in a given city, let alone reduce prices meaningfully.
Let's look a simple condo case: Developer pays X for property. Developer spends Y to build a building. Developer sells N units for Z. To make money, NZ has to be greater than XY aka the total value of that parcel is now higher.
> Reversed causation. It's literally just supply and demand. Places with high demand and not enough supply have growing property values. Places that are actually able to build housing to even kinda meet demand are doing much better.
Yeah, short-term, why was that parcel before the condo building worth less? Because there was less demand for what was there before than for what was there after it. Development increase short-term values by providing immediate units with nicer amenities or better condition or more size or whatever. Probably pretty uncontroversial.
But also development increases long-term values by continuing to grow long term demand. Development, residences, businesses, services - in the most successful cities, all that flow of money produces more and more demand and value over time. Not a lot of demand to live on an empty lot in the middle of nowhere where there's not a nice house and there's no nearby jobs...
So flip the causation: if there hadn't been development to allow all the people in [popular city of your choice] in the first place, it wouldn't be so popular and have such high demand today. That's not completely separate from geographical factors like rivers, but it's also got a lot to do with development - take, say, the land where a river meets a train line and compare it to the land downstream without the train.
When you build new housing (as in, increase the number of units of housing that are available in total), you make your lot more valuable, which makes other lots less valuable. So a developer makes makes money by making their lot more valuable, but they do not "make real estate more valuable" generally.
This is much like, you know, every other thing in the world. When a shoe manufacturer makes shoes, their shoes have value, but the value of all other shoes are slightly less because there's now one more competitor for demand for all those other shoes.
With housing, it depends. There can be a proximity effect. The old house next to all the nicely redeveloped new houses is now worth more, even if the total number of bedrooms hasn't changed during the redevelopment, because it is in a nicer environment (and a buyer might want to redevelop the old house, and live in a nice house in a nice suburb).
Long term development is good for everybody's property values, in the exact opposite way that losing businesses and residents is bad for those property values. Phoenix vs Detroit, say.
"Demand" is a dynamic thing, it responds to changes in the built environment of a city, region, or nation. London didn't spring into being fully-formed and fully in-demand at today's levels. It found a virtuous (for property-owners financially) cycle of both increasing housing units and increasing population and demand for certain areas.
There are in-demand cities that have relatively affordable housing (like Tokyo), that allow lots of housing to be built, and cities that have extraordinarily high costs of housing (like London) generally have a hard cap on housing development.
While there is obviously some amount of this whole thing where more housing allows more people to come to a city which can in some circumstances drum up more jobs or whatever, I think it's a significant oversimplification to say that more housing increases property values in the long run. Ceteris paribus, more housing depresses property values. It is possible for there to be a feedback cycle where more people in the area increase the overall prosperity -- and thus property values -- of the area, but I do not think that generally more housing is the most important factor there.
Nope. It's to make money for the developers.
> Even ones not doing the development benefit financially - landlords love being able to raise the rents cause other people in the area built a bunch of new shit.
Gentrification is a result of shortage. When wealthier people are priced out of rich neighborhoods, the only place for them to go is poor neighborhoods. It just so happens that poor neighborhoods with the least amount of political power are the first ones to be redeveloped when there's a shortage of housing.
> And the long-term property values trends clearly shows that cities with more development, that more people want to move to, are where you find ROI.
Reversed causation. It's literally just supply and demand. Places with high demand and not enough supply have growing property values. Places that are actually able to build housing to even kinda meet demand are doing much better.
You can see a ton of development but that doesn't really mean anything. Often there's not even enough development to meet the rate of growth in a given city, let alone reduce prices meaningfully.