Quote:
Originally Posted by Weitz
While I don't disagree with the point you make about new communities pay the share of the burden that is commiserate. Do you actually mean that the innercity homes go for $700k because of cost of to the city? Or do you mean in a different way?
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No, inner-city homes go for $700k because that's more their market value. I built my house in 2012 in Inglewood and it was about $500k for land and construction. I would list it for somewhere between $700k and $800k (which I will next summer).
The cost of a new build in a new community is artificially lower because they're not paying for their share of infrastructure. The idea is that the new properties will bring in enough tax revenue over their lifetime to offset the capital investment that the city puts into those new communities, as well as the operational costs. But they don't.
Developers front some of those costs (more than they used it until Nenshi), but not all of it. The developer pays for the infrastructure within the community, but the city is responsible for getting that infrastructure connected to the rest of the system. If the city shifted more of that burden onto the consumer by pushing more of it onto the developer, then the cost of the homes would go up a lot more.
These new communities also have lower density than a lot of brownfield communities, so they're cost burden to the city is higher. But increasing the prices of those homes makes them less attractive and evaporates the market for them. It's a bad situation to be in because the city is so far behind.