If you don't build it, they won't come

"The owner of the 5-acre creamery property is on board," Hampton said of Scott Ingalls. "It doesn't have to become another sub-development. When all's said and done, this is going to be something that everyone loves, that all of Richmond needs."

From this article in the BFP, focusing on the town of Richmond's "schemes for economic innovation."

I'm not sure what a sub-development is, but let's assume that it's what most of us would call a housing development.  Who benefits from one house in a housing development?  Easy.  One family.  That's why houses, and housing developments, are not popular in Vermont.  The alternative uses for the land--whether it's a park, open land, or anything else--benefits "everyone" in a town while a house benefits only the people living in it.   

Multiply Richmond's actions by every other town in Vermont and you get why housing in Vermont is overly expensive.   Suppose a developer (or a sub-developer, in Richmond's case) could have put 10 houses on that 5 acre parcel.  Ten families would have lived there.  Where will those houses be built now and where will those families live?  Somewhere else in Richmond, out in the rural areas?  No, that's sprawl.  In some other town nearby?  No, they have the same issues that Richmond residents have.  And so on.

The result:  fewer houses get built in the county, which simple supply and demand analysis means that all housing is now more expensive--for the rich, the middle class, and the poor.  Then we see calls for more affordable housing, like this, in today's Rutland Herald, where Senator James Condos says that

Working Vermonters are struggling to meet rising costs of housing, food, energy, transportation and health care. Affordable housing must be defined as housing which working families in Vermont can afford.

Why is it that the private sector cannot provide affordable housing?  I think the citizens of Richmond have just helped me answer  the question.

Comments

[Lani Duke]

Developers say they make more profit on a single over-sized luxury home than they do by constructing more moderately-priced and sized structures.

[Art Woolf]

This is a true statement. But car companies make more profit by building large cars than small ones. They can't produce and sell an unlimited number of large cars (or pickups/SUVs).

Similarly, every builder can't build an unlimited number of mansions. Suppose there is a demand for 10 new $700,000 houses in Chittenden County, 20 new $500,000 houses, and 40 new $350,000 houses. Zoning restrictions only allow 40 houses to be built. What will be built? All 40 won't be $700,000 homes. There will be 10 $700,000 homes, 20 $500,000 homes, and 10 $350,000 homes. And probably 30 existing homes that would have sold for $300,000 now sell for $350,000, or close to it.