New houses generally cost more than used houses. If people already think a used house is more than they can afford, who is going to pay even more to build a new house?
If you truly believe you can build new houses in Vancouver for less than the cost of its used houses, you've found one amazing arbitrage opportunity. You should be asking yourself why investors aren't lined up at your door.
Building new houses reduces the cost of used houses!
Coincidentally, the price of used cars went way up during the pandemic, right when the supply of new cars was bottlenecked by industry shutdowns and a global semiconductor shortage. Even though new cars generally cost more than used cars. Strange but true!
> Building new houses reduces the cost of used houses!
You're not wrong if you live in a house inside a vacuum, but, again, in the real world, if people are already struggling with the used price, who is going to pay even more to build new?
As surprising as it may be, houses won't magically materialize on the back of hopes and dreams. They require intense amounts of real labour to build and labour isn't going to show up if you aren't throwing copious amounts of money constantly in their face. If nobody wants to pay that labour the unfathomable amounts of money they require, a house is not getting built.
> Strange but true!
Not particularly strange, but cars are now stuck in the same situation, with the price of new cars having become prohibitively expensive and used cars are failing to come back down even as supply chains are no longer bottlenecked. In fact, the assembly plant near me just closed citing weak demand, so it seems there is even excess capacity. Much like houses, cars don't magically materialize either. They need willing buyers. But if you have no willing buyers...
If you truly believe you can build new houses in Vancouver for less than the cost of its used houses, you've found one amazing arbitrage opportunity. You should be asking yourself why investors aren't lined up at your door.