> Apartments and other attached units are now so expensive, and prices rising so steadily, that the logical thing to do is let them sit empty.
I highly doubt this is going on over any long period of time. If there's a bubble like this, it'll pop.
Why do you think these new apartments are luxury apartments? It's because living in your city is a luxury that people with enough money are paying for. If they didn't exist, people would be paying even more for living spaces that do exist. So, build new apartments and prices go up. But don't build new apartments, and prices go up more.
The most reliable way to get affordable housing (besides a lottery or waiting list, which doesn't solve the problem) is to have built new housing 30 years ago.
Luxury has some scientific definitions. Top of the list is size for a single-family dwelling. My city has liberalized zoning for size, but kept limits on number of occupants and such for fear of impacting infrastructure. The result is ever-larger units. New houses seem less like houses and more like diagrams of local building codes. Property line minus ten feet, there's your wall.
Luxury apartments can also be defined during zoning as units that the city assumes will rarely be occupied. It is often easier to get a permit if you can claim that the people in your development aren't going to contribute to traffic problems. I've even seen the pre-selling to overseas investors trotted out as justification for not upgrading traffic connections to a development. So-called "elder living" units also fit this scheme.
As for rents, the standard has always been that yearly rent should be around 1/20th of the unit's value, the "20-year" rule. But with property prices rising so quickly, some units are renting out at 1/50th their value. Once you get into those areas, rent becomes irrelevant and you run into the paradox that many units (houses and condos) are worth significantly more without tenants. You don;t want to bother asking tenants to clear out so you can show the unit. So investors planning to flip something in the next couple years don't bother with rent. Only when they think that they may have to hold on for a while do they consider.
If the problem is that overseas investors are buying the houses, sure, that's a problem that decreases the amount of living space. But how would restrictive zoning fix that problem?
And I still don't think the flipping is relevant in the long run. It's pent-up demand sorting itself out. They can't keep flipping forever.
> But how would restrictive zoning fix that problem?
Not only does restrictive zoning not fix the problem, it only makes it worse. Part of why you have investors buying properties in places like SF is that housing is such a hot commodity due to the restricted supply. If it was easy to make lots more apartments and condos there, it would be less attractive as an investment, which would mean less speculation.
It's not so much the level of zoning, but its recent liberalization. Properties that are not living up to their zoning potential (ie you are now allowed to build something much bigger) are being pulled off the market for redevelopment. Then the new units are so geared towards ownership and investment, many being pre-sold individually, that they never return to the rental pool.
A more restrictive approach could discourage such redevelopment and sequestration, keeping rental units as rental units.
I highly doubt this is going on over any long period of time. If there's a bubble like this, it'll pop.
Why do you think these new apartments are luxury apartments? It's because living in your city is a luxury that people with enough money are paying for. If they didn't exist, people would be paying even more for living spaces that do exist. So, build new apartments and prices go up. But don't build new apartments, and prices go up more.
The most reliable way to get affordable housing (besides a lottery or waiting list, which doesn't solve the problem) is to have built new housing 30 years ago.