[danieltillett]

The complication with the supply/demand story is speculation. What happened pre-2008 was demand was artificially boosted by speculators (i.e. a bubble). The true demand for housing didn’t change much, but the speculative demand for housing driven by rising prices and cheap money increased massively. The downside of all speculative bubbles is when they pop.

The best way to avoid speculative run ups in prices (and subsequent crashes) is effective taxation. Of course taxation of land is not popular with the rich and powerful as it can’t be avoid.

[branchless]

Exactly. Forcing supply below demand through zoning restrictions does help, but once speculation begins this hurts supply also.

It amazes me on HN where on most other complex behavioural problems if someone came along and shouted "it's because of X" they would be laughed out to cries of "it's more complicated than just one thing".

Yet when it comes to millions of people with varying priorities interacting with government and the banks anyone who comes up with anything more complex than "it's supply and demand" is told "no, I've done econ 101 thank you".

Hacker news can't be bothered with Georgism, they've done econ 101 syllabus (provided by their establishment).

https://www.amazon.com/Progress-Poverty-Industrial-Depressio...

[bayesian_horse]

You are running into the fallacy that you can know what is a bubble and what is not, before the fact.

[danieltillett]

Not at all. We know in hindsight that the pre-2008 run up in prices was a bubble, but at the time this was debatable. I am just trying to explain to the OP that prices are set by supply and demand, but that demand may not always be rational.

Personally I do think it is a good idea to try and avoid speculative bubbles in assets and the best way to do this is via taxation.